Full Text - Universiteit Leiden [PDF]

Cover Page

The handle http://hdl.handle.net/1887/45261 holds various files of this Leiden University dissertation. Author: Marcuzzo do Canto Cavalheiro, C. Title: Assessing the Brazilian-Chilean bilateral relations: public diplomacy, nation branding and presidential diplomacy Issue Date: 2017-01-18

Assessing the Brazilian-Chilean Bilateral Relations: Public Diplomacy, Nation Branding and Presidential Diplomacy

Carmela Marcuzzo

Assessing the Brazilian-Chilean Bilateral Relations: Public Diplomacy, Nation Branding and Presidential Diplomacy

Proefschrift ter verkrijging van de graad van Doctor aan de Universiteit Leiden, op gezag van Rector Magnificus prof.mr. C.J.J.M. Stolker, volgens besluit van het College voor Promoties te verdedigen op woensdag 18 januari 2017 klokke 16.15 uur door Carmela Marcuzzo do Canto Cavalheiro geboren te São Paulo (Brazilië) in 1978

Promotiecommissie Promotor:

Prof.dr. P. Silva

Overige leden:

Prof.dr. E. Amann Prof.dr. R.Th.J. Buve Prof.dr. D.A.N.M. Kruijt (Universiteit Utrecht) Prof.dr. A.M. Stuven (U. Diego Portales, Chili)

CONTENTS Acknowledgements ..........................................................................................................v Introduction ....................................................................................................................1 Chapter 1 Public Diplomacy, Nation Branding and Presidential Diplomacy ............................... 23 1.1 The Emergence of Public Diplomacy ..................................................................... 26 1.1.1 Public diplomacy and propaganda: impacts on traditional diplomacy ............ 36 1.1.2 Paradiplomacy and public diplomacy ............................................................ 39 1.2 Brazil-Chile Relations and the Emerging Field of Nation Branding ........................ 47 1.2.1 The emergence of nation branding ................................................................. 54 1.2.2 A nation branding perspective........................................................................ 61 1.2.3 Brazil’s global rebranded image .................................................................... 66 1.2.4 The Chile’s nation-branding politics .............................................................. 71 1.2.5 Chile’s nation branding and historical backgrounds ...................................... 74 1.3 The Dimensions of Brazil and Chile’s Mutual Perceptions ..................................... 78 1.3.1 The Brazilians’ multiple perceptions of Chile ................................................. 82 1.3.2 Chileans’ views on Brazil .............................................................................. 86 1.3.3 The Chile-Brazil multifaceted approach ......................................................... 88 Chapter 2 The Historical Dimension of Brazilian-Chilean Relations ............................................ 93 2.1 Brazil-Chile Nation State Building ........................................................................ 97 2.1.1 Chile image background ................................................................................ 99 2.1.2 Chile’s independence and the process of nation building .............................. 105 2.1.3 Brazil’s historical roots ............................................................................... 108 2.2 Chile Economic Evolution During the Nineteenth Century ................................... 115 2.2.1 Chile’s second economic cycle and its consequences .................................... 121 2.2.2 Chile’s political roots and physical framework ............................................. 123 2.3 Brazil’s Historical Economic Evolution ............................................................... 126 2.3.1 Brazil’s industrialisation during the First and Second World Wars ............... 132 2.3.2 Chile’s economic roots ................................................................................ 134 2.3.3 Brazil-Chile similarities to German immigration aspects .............................. 135 2.4 The Triple Alliance War and the War of the Pacific: Brazilian and Chilean Positions

i

................................................................................................................................. 137 2.4.1 The Triple Alliance War (1864-1870)........................................................... 137 2.4.2 The War of the Pacific ................................................................................. 140 Chapter 3 Brazil-Chile Bilateral Relations since the 1990s ......................................................... 147 3.1. Linking the ABC Pact with Brazil-Chile Ties from the 1990s Onwards ............... 147 3.1.1 The Brazil-Chile decentralised approach ..................................................... 150 3.1.2 Brazil’s international insertion vis-à-vis Chile ............................................. 155 3.1.3 Brazil-Chile dialogue within the multilateral perspective.............................. 158 3.1.4 Redefining the Brazil-Chile bilateral approach ............................................ 162 3.2 The Background of the Latin American Context During the 1980s ....................... 165 3.2.1 The military influence in the transitional period ........................................... 168 3.2.2 Brazil and Chile’s regional policy during the 1980s ..................................... 173 3.2.3 The development of Brazil-Chile links from the 1990s onwards .................... 177 3.3 Mercosur vis-à-vis Brazil-Chile Bilateral Relations .............................................. 183 3.3.1 The potential benefits of UNASUR regarding Brazil-Chile relations ............. 194 3.3.2 Brazil-Chile relations in the democratic context ........................................... 199 3.3.3 Brazil-Chile cooperation in infrastructure.................................................... 202 3.3.4 Brazil-Chile background of paradiplomacy .................................................. 214 3.3.5 The growing para-diplomatic approach to Brazil-Chile bilateral affairs ....... 221 3.4 Brazil-Chile Relations within the Economic Context............................................ 226 3.4.1 The Brazil-Chile relationship: economic background ................................... 226 3.4.2 The shifting scenario of the 1990s and the emerging power of the business sector................................................................................................................... 228 3.4.3 The growing influence of foreign direct investment on bilateral affairs ......... 234 3.4.4 Nation branding within the foreign direct investment environment ................ 238 3.4.5 FDI and the multi-faceted approach in bilateral affairs ................................ 241 3.4.6 Brazil’s FDI in Chile ................................................................................... 245 3.4.7 Chile’s FDI in Brazil ................................................................................... 250 3.4.8 The economic and historical FDI perspective ............................................... 253 3.5 Brazil-Chile Ties during the Administrations of Presidents Rousseff and Piñera ... 256

ii

Chapter 4 Brazil, Chile, the United States and Argentina Managing their Nation Brands ........ 259 4.1 Chile’s Reformulated Nation Branding ................................................................ 266 4.1.1 Brazil’s energy brand .................................................................................. 267 4.1.2 Chilean and Brazilian relations with the United States ................................. 270 4.1.3 The United States’ strategy towards the continent ........................................ 275 4.1.4 Brazilian and Chilean diverging strategies towards the FTAA ...................... 281 4.1.5 The limited scope of the FTAA ..................................................................... 286 4.1.6 The diverging aspects of the FTAA and Mercosur ........................................ 289 4.2 The Brazilian Business Sector vis-à-vis the FTAA ............................................... 293 4.2.1 Brazilian economic strategy in the 1990s ..................................................... 295 4.2.2 Chile’s liberal economic backgrounds.......................................................... 296 4.3 United States Foreign Policy Under George W. Bush vis-à-vis Latin America ...... 299 4.3.1 Brazil, the United States and Mercosur’s biofuel and ethanol markets .......... 302 4.3.2 Mercosur vis-à-vis Brazilan and Chilean foreign policy ............................... 304 4.3.3 The fundamental matters concerning the FTAA ............................................ 306 4.4 The Present Course of Brazilian Foreign Policy ................................................... 307 4.4.1 Brazil-United States bilateral relations during the Obama administration .... 312 4.4.2 Chile’s expectation with regards to the United States ................................... 317 4.5 The Pacific Alliance vis-à-vis Mercosur ............................................................... 319 4.5.1 Brazil-Chile-Asia......................................................................................... 323 4.5.2 The background and potential of a Brazil-Chile-Asia partnership................. 324 4.5.3 Chile as a bridge to Asia .............................................................................. 331 4.5.4 Brazil-China................................................................................................ 333 4.5.5 The Brazilian-Chilean coordinated policies towards Asia ............................. 338 4.6 Latin American Infrastructure.............................................................................. 340 4.6.1 China’s power and its impact on Brazilian and Chilean foreign policy ......... 343 Chapter 5 Brazilian-Chilean Energy Scenarios and their Impact on Bilateral Relations ........... 347 5.1 Brazil and Chile’s Energy Matrix ........................................................................ 355 5.1.1 Natural gas ................................................................................................. 359 5.1.2 Chile’s natural gas issue .............................................................................. 365

iii

5.1.3 Brazil-Chile natural gas demand in the foreseeable future ............................ 369 5.2 Nuclear Energy ................................................................................................... 371 5.2.1 The historical background of Brazil’s nuclear programme ........................... 374 5.2.2 Brazil-Chile nuclear power dialogue............................................................ 377 5.3 Renewable Energy Sources ................................................................................. 381 5.3.1 Brazil as an emerging energy leader vis-à-vis Chile ..................................... 386 Conclusion ................................................................................................................... 388 References ................................................................................................................... 398 Summary in Dutch ...................................................................................................... 435 Curriculum Vitae ........................................................................................................ 444

iv

Acknowledgements First of all I want to express my gratitude to my supervisor Prof. Patricio Silva for his inspirational guidance and thoughtful insights during the entire process of this dissertation. This doctorate dissertation would have not been written without all those who provided support to my research. Particularly, I would like to express my gratitude to the Navy Commander Ricardo Wagner de Castilho. I would like also to thank the Brazilian Ambassador Frederico César de Araújo and the Brazilian diplomat Daniel Pontes. Also my thanks to Odilon do Canto (President of the Agência Brasileiro-Argentina de contabilidade e controle de materiais nucleares, ABACC) and Silvio de Almeida (Inspector of ABACC). I received the support of key actors who represented both public and private sectors of Chile. I would particularly like to thank Alberto van Klaveren (Vice-Minister of Foreign Affairs, 2006-2009), Luis Maira (Minister of Planning and Cooperation, 1994-1996), Roberto Pizarro (Minister of Planning and Cooperation, 1996-1998), Alvaro Díaz (former Chilean Ambassador to Brazil, 2007-2010), Jaime Gazmuri (Chilean Ambassador to Brazil), Álvaro Camargo (Director of ProChile in Brazil), Jaime Baeza (Professor at the University of Chile), Carlos Parker (Chilean Ambassador), Mladen Yopo (Subdirector, Centre for Strategic Defense Studies, ANEPE), Jorge Riquelme and Alvaro Gusmán (Officials from the Ministry of Foreign Affairs), Horacio del Valle (Consul to Rio de Janeiro) and Carlos Monge (international analyst). My eternal gratitude to my parents Marilene and Luis Carlos (in memoriam) for their dedication and support in all my pursuit. My mother-in-law Janete, my brother Gabriel and sister-in-law Mariana who have always supported me. I dedicate this book to my admirable husband Paulo for his endless support in all moments of my studies and to our little son Luis Paulo who is a loving and happy child and inspiration for move forwards.

v

Introduction Brazil and Chile are countries with very different dimensions and features in terms of their territory, geography, culture, landscape, climate, economy, and civil-state society relations. This partly explains the lack of comparative studies so far between these two South American countries on any topic whatsoever. Although both countries share a common Iberian and Catholic heritage, several factors help explain the relative detachment and distance between both countries from independence up until today. For some, Brazil has always showed a relative lack of in the rest of the Spanish-speaking American nations, with the country concentrating on its own concerns. For others, the fact that Dom Pedro II declared Brazil an empire in the early nineteenth century raised suspicion among the other emerging Latin American states, such as Argentina, Paraguay and Uruguay, who had all adopted the republican model. Therefore, from the very beginning of the post-colonial period, Brazil has been an exception in South America and has had to try to gain its place in a group of nations that obtained independence from Spain after a long emancipatory war. The relationship between Brazil and Chile has changed over the years to the extent that bilateral relations cannot exclusively be studied using a narrow, state-centric approach that solely focuses on the classic channels of traditional diplomacy. Contemporary international relations are not the exclusive domain of state-centric actors, given the increasing importance of emerging non-state actors in foreign affairs. The rapid expansion of global media (including social media) in recent decades has certainly contributed to the direct involvement of larger audiences, who have acquired a voice in foreign affairs. This new scenario demands a multi-faceted approach involving the various actors who participate in discussions on foreign affairs vis-à-vis the official actors. Since the 1990s Brazil-Chile relations have involved multiple actors. Therefore, concepts such as public diplomacy, nation branding and presidential diplomacy are useful to help understand the complex and multilayered nature of contemporary Brazilian-Chilean bilateral relations. Brazilian and Chilean engagement with diversified sectors cannot be underestimated, since non-official actors have become extremely active in international relations. The concept of public diplomacy is congruent with 1

the nature of present-day Brazilian-Chilean ties. Indeed, the importance of public attitudes to how foreign policy is executed, to public-private interaction, to communication with civil society in a two-way dialogue, and the growing participation of non-official actors in the international arena have all become evident. The traditional view of public diplomacy has to do with government dialogue with the public in order to influence public opinion. The relevance of public diplomacy has grown in recent years. Thus, the important role played by culture in a public diplomacy strategy has led some authors to highlight its cultural nature.1 Public diplomacy is about building ties with state-centric and decentralised actors when managing foreign policy targets, which means that the Brazil-Chile pragmatic approach goes hand in hand with a flexible outlook on public diplomacy. Public diplomacy is a diplomatic instrument to exert what is known as soft power, in which the communication and messages transferred to public opinion from thirdparty countries are essential. 2 The wide variety of sectors involved in foreign affairs currently demands 1

See Maria Susana Arrosa Soares (2008), “A diplomacia cultural no Mercosul”, Revista Brasileira de Política Internacional, vol. 51, n o 1. pp. 53-69. In contrast to the concept of media diplomacy which encompasses an exclusive communications system, public diplomacy embraces a broader approach. See also Leonardo Valente and Maurício Santoro, “A diplomacia midiática do governo Hugo Chávez”, Observatório Político Sul-Americano. Rio de Janeiro. http://www.plataformademocratica.org/Publicacoes/22372.pdf. Public diplomacy laid the groundwork for discussions and strategic action to promote long-term foreign policy strategy. Raquel San Martín (2015), “Diplomacia pública: cómo vender un país sin que se note”, La Nación, 4th January 2015. 2 Alfredo A. Rodríguez Gómez (2013), “Estrategias de comunicación y la nueva diplomacia pública”, Revista Científica de Comunicación, Protocolos y Eventos, no 1, pp. 61-76. Madrid: Ediciones Protocolo. According to Nye, soft power lies in the ability to attract and persuade. The ability to attract others to our side. Joseph Nye (2005), Soft Power: The Means to Success in World Politics, p. 11. New York: Public Affairs. Public diplomacy also deserves attention regarding the other Latin American states. For instance, the Peruvian Embassy in Ecuador has at Public Diplomacy Department to promote cultural activities as the way of establishing confidence. Departamento de Diplomacia Pública, Embajada del Perú en Ecuador, http://www.embajada.pe/sites/ecuador/laembajada/ Paginas/Diplomacia-publica.aspx. In Brazil, the Ministry of Foreign Affairs of Peru carried out initiatives in order to promote the country’s history and culture as part of its public diplomacy strategy. Ministerio de Relaciones Exteriores, “Diplomacia Pública peruana: una puerta abierta al mundo”, Monday, 23rd December 2013, in http://diplomaciapublica peru.blogspot.com.br/.

2

that theoretical explanations pay attention to the collaborative context in which international relations take place. The main difference between traditional and public diplomacy is that the former embraces relations between state-centric actors, whilst the later also involves interaction between non-official groups. For instance, trans-governmental networks and international organisations frequently pursue their own agenda, irrespective of and sometimes even contrary to the declared policies of their own governments. Transnational and trans-governmental issue networks seem to have a major impact on the global diffusion of values, norms and ideas in such diverse issue-areas such as as human rights, international security or the global environment. However, there is no reason to assume that transnational relations regularly promote good causes, since transnational terrorism and drug trafficking, for instance, have a terrible impact on international affairs. Moreover, transnational relations have different implications according to each country. For example, the idea of spreading democratic values had an important impact on Brazil and Chile’s foreign policies.3 Public diplomacy has turned into an important tool for creating international power, inasmuch as it encompasses the use of soft power as a mechanism of persuasion rather than the use of force, coercion or payments to achieve foreign affairs goals. According to Nye, this concept includes elements of culture, values and foreign policy (2008: 95-96). In recent years, soft power has emerged as a core concept for understanding the importance of public diplomacy in current international relations. Hard power has been at traditional tool of foreign policy, using military or economic coercion in order to get results. However, in recent years, soft power has become an indispensable instrument for approaches in international relations. Soft power creates the appropriate framework to explain why international relations have become more complex.4 Therefore, public diplomacy has become more influential in contemporary foreign policy, given its role in convincing audiences rather 3

Thomas Risse-Kappen (1995), Bringing transnational relations back in non-state actors, domestic structures and international institutions. Cambridge: Cambridge University Press. 4 Judith Trunkos (2013), What is soft power capability and how does it impact foreign policy. University of South Carolina, http://www.culturaldiplomacy.org/academy/content/pdf/participantpapers/2013acdusa/Wha t-Is-Soft-Power-Capability-And-How-Does-It-Impact-Foreign-Policy--Judit-Trunkos.pdf.

3

than imposing policy. For instance, Bolivia’s perception of Chilean foreign policy is different to Brazil’s. This means that the perception of each country’s audience differs, especially in the case of Bolivian-Chilean relations which have been hugely influenced by historical events. Therefore, public diplomacy reflects the uneasy relations between Bolivia and Chile. 5 As a result of Brazil-Chile bilateral relations, the Brazilian audience is much more receptive to Chilean foreign policy. Attention must be paid to both sides the two dimensions of the public diplomacy concept. On the one hand, traditional public diplomacy deals with the influence of public attitudes on the formulation and implementation of foreign policies. It embraces the different dimensions of the interaction of private-public groups and interests in one country with those of another, as well as how foreign affairs are reported, their impact on foreign policy; and the two-way communication channels between official actors and foreign audiences.6 On the other hand, there is the emerging role played by new public diplomacy whenever the popularisation of access to information turns citizens into independent observers and assertive participants in international relations. The growing number of participants in international relations (such as states, international organisations, non-governmental organisations, transnational companies, the media, scholar, and others) has widened the focus of traditional diplomacy. As Bolewski points out, as well as traditional diplomacy, modern society is creating more and more innovative diplomatic denominations. The dynamic channel created by the Brazilian Ministry of Foreign Affairs for receiving comments and suggestions from civil society to be incorporated into the formulation of public policy illustrates this point. These new participants are capable of prejudicing and possibly forcing the state’s position to varying degrees. Foreign ministers no longer play the role of gatekeepers in foreign affairs but are, at best, coordinators (Bolewski, 2007: 18). While traditional public diplomacy focuses on national interests, new public diplomacy points out universal values such as democracy and human rights and goes about broadening the role and function of the media and decentralised actors in 5

See “Chile debe mejorar su diplomacia pública”, El Mercurio, 5 May 2014. “What is public diplomacy?”, The Fletcher School, Tufts University, http://fletcher.tufts. edu/murrow/diplomacy 6

4

external affairs. New public diplomacy relies on strengthening dialogue and shifting the foreign policy paradigm, meaning it does not have the hierarchical structure of traditional public diplomacy. As Rubio points out, the difference lies in the hierarchical nature of traditional public diplomacy with state-centric actors as the exclusive executors of foreign policy aims (Rubio, 2014: 12). In contrast, new public diplomacy targets trustworthy relations between state-centric and decentralised actors, and encourages the creation of multimedia communication channels in order to promote the insertion of civil society in international relations.7 New public diplomacy encompasses the growing interdependence and proactive positioning of multiple actors in the foreign policy agenda, emphasising micro relations to the detriment of macro and state-centric links. 8 Therefore, it also embraces public-private collaborative initiatives and civil society’s participation in external affairs.9 According to Outhavong, the relevance of a nation’s reputation has grown in recent years inasmuch as a good country image favours foreign investment, trade, tourism, private sector competitiveness and world influence in different areas (2007: 4). As nations become integrated into the world economy, cross-border tourism and labour mobility rose; TV channels, movies and music became universally available to consumers, and, more recently, access to the internet has became universal. These factors have forced people to compare themselves to other cultures and national realities. Companies have developed fundamental market-oriented

7

The term ‘international relations’ is used within a broader understanding and with the participation of diverse actors. However, for some authors, the term international relations is too exclusive to refer to a multifaceted approach. Obviously, on many occasions it does represent broader of concerns about the political relations between nation-states. Nevertheless, the growing importance of other actors should be taken into account. See John Baylis et al (2011), The globalisation of world politics:an introduction to international relations. Oxford: Oxford University Press, p. 2. 8 See Bernardo Sfredo Miorando (2010), Diplomacia pública no Brasil: estudo sobre imagem internacional brasileira. Universidade Federal do Rio Grande do Sul, Faculdade de Ciências Econômicas. Porto Alegre, pp. 42-44. 9 The influence of civil society networkers gives them new responsibilities. For example, those involved in transnational civil society networks must become more transparent about who they are, what they are doing, why they are doing it, and where they get their financing from. For a better understanding, see Ann M. Florini (2000), The Third Force: The Rise of Transnational Civil Society. Washington D.C.: The Brookings Institution Press, p. 6.

5

strategies to project themselves as global brands. 10 Given that the world has become an interdependent marketplace, countries tend to develop campaigns to strengthen their nation brand.11 Since the early 1980s, Chile has dedicated a lot of efforts and resources to initiatives directed at improving the country’s image abroad. Chile ranked fourth behind Brazil, Argentina and Costa Rica as the most valuable of 21 Latin American countries. 12 Brazil, for its part, has more recently attempted to improve its international image by stressing the country’s diversified energy matrix. However, Brazil’s impressive economic growth over the past decade would not have been possible without a growing supply of energy. 13 In our view, the concept of nation branding is useful for analysing BrazilChile bilateral links. Nation branding efforts, combined with the increasing role played by the country’s presidents in foreign policy are indeed core elements to exploring Brazil-Chile relations. In this manner, the study of contemporary Brazilian-Chilean relations demands a dynamic approach simultaneously including the analysis of the role played by public diplomacy, nation branding and presidential diplomacy. However, the analysis of the bilateral relations between these two countries also requires the study of a broader historical perspective. The importance of the different Portuguese and Spanish colonial backgrounds that each country has inherited cannot be underestimated. In this way, differences in language, culture, history and political institutions have played a significant role in the relative lack of cooperation between both countries in the past. Moreover, until the nineteenth century border disputes with other countries were at the core of Brazil and Chile’s foreign policy 10

Douglas B. Holt (2004), “How global brands compete”, Harvard Business Review, September. https://hbr.org/2004/09/how-global-brands-compete. 11 Nation branding and the nation brand are two different concepts, since a nation has a brand image with or without nation branding. See Ying Fan (2006), “Branding the nation: What is being branded?” Journal of Vacation Market, vol. 12, no 1. Los Angeles: SAGE, pp. 5-14. According to Urrutia, nation branding also originates spontaneously as an international market demand. Amaia Arribas Urrutia, “La marca país no engloba toda la identidad nacional”, DIRCOM magazine no 80. http://www.revistadircom.com/dircom-enlatinoamerica/mexico-dircom/328-la-marca-pais-no-engloba-toda-la-identidadnacional.html. 12 “Chile es la cuarta marca país más valiosa de Latinoamérica”, El Mercurio, 23 September 2013. 13 See Mauricio Tiomno Tolmasquim (2012), “Perspectivas e planejamento do setor energético no Brasil”, Estudos Avançados, vol. 26, n o 74. São Paulo.

6

agenda, rendering whatever favourable environment had existed for cooperation practically non-existent. In this sense, boundary conflicts had undeniable implications when prioritising relations with South American states, to the detriment of developing possible partnerships in other areas. As Bernhardt indicates, during the Nineteenth century Latin America experienced five post-colonial wars related to the delimitation of national frontiers: two Cisplatine wars between Argentina and Brazil (1825-1828 and 1839-1852) based on territorial disputes and leading to the establishment of the Republic of Uruguay; the War against the Confederation (1836-1839) in which Chile destroyed the confederation established between Peru and Bolivia; the Triple Alliance War (1865-1870) in which Paraguay lost territory to Brazil and Argentina and the War of the Pacific (1879-1883) in which Bolivia became land-locked and Peru lost the southern territory of Tarapacá to Chile (Bernhardt, 1983: 61). At that time, neither Brazil nor Chile considered each other as a potential partner for dealing with regional issues and therefore no understanding were reached on different issues. In addition, Chile together with Ecuador, was the only South American country to have no direct border with Brazil. The fact that it had no common border meant that Chile was not among Brazilian foreign policy’s main priorities. According to Pochet, the lack of welldefined borders encouraged regional conflicts at the beginning of the nineteenth century (Pochet, 2005: 147). The historical context did not encourage the establishment of diplomatic ties either, so Chile has received very little attention from the Brazilian empire. The lack of important ties between both countries seems to have prevented the development of a longstanding partnership between Brazil and Chile, to the extent that significant links were only developed in the 1990s (Magnoli, 2016). Sharing essential similarities helps understand the study of the bilateral relations of these countries from the 1990s onwards. Both share geographical peculiarities with Chile’s location behind the high summits of the Andes and Brazil’s extensive Atlantic coastline leading to a certain sense of isolation from the rest of the Latin American region. In addition, both countries face totally different directions with Chile regarding the Pacific Ocean as a source of future prosperity while Brazil is part of the Atlantic world. In this regard, these countries have specific geographical 7

realities which do not facilitate strengthening ties with other Latin American states.14 Both countries are in the same boat, anchored by the difficulties of participating in regional projects. At the same time, these two countries do respect each other. Indeed, they share mutual historical perception of each other as being stable and trustworthy countries in a region filled with turmoil. Chile is considered one of the South America’s most stable and prosperous nations. It has been relatively free of the coups and arbitrary governments that have stood out so much in the region. It had Latin America’s fastest-growing economy in the 1990s and has weathered recent regional economic instability. 15 According to Collins, in the case of Brazil, many companies come to the country because the business environment is more familiar than that of the other BRIC (Brazil, Russia, India and China) countries (Collins, 2015). It also has a more stable public and private sector and a better-proven legal framework than some of the other BRIC countries.16 Moreover, contemporary international relations have become more diverse as non-governmental organisations (NGOs); civil society and multilateral, regional and international organisations have increased their presence and role in international affairs.17 Therefore, international relations 14

The great expectations linked to being part of the Pacific world are captured in Chile’s national anthem (“… and that sea that quietly washes up on the shore promises a splendid future…”). 15 See BBC News, “Chile profile”, Latin America & Caribbean news, 26th November 2014. http://www.bbc.com/news/world-latin-america-19357495. 16 BRIC was an acronym formulated by the Chief Economist at Goldman Sachs, Jim O’Neill, in a 2001 study entitled “Building better global economic BRICs”. It became an analytical category in itself in economic, financial, business, academic and media circles. In 2006, the concept gave rise to the foreign policy of the group, incorporating Brazil, Russia, India and China. In 2011, on the occasion of the Third Summit, South Africa became part of the group, who adopted the acronym BRICS. “Learn about BRICS”, BRICS 6th Academic Forum, 18th-19th March 2014, Instituto de Pesquisa Econômica Aplicada (IPEA). http://www.ipea.gov.br/forumbrics/en/learn-about-brics.html. 17 One of the critical points in the negotiations of the European Union and Mercosur agreement was the absence of channels for the participation of civil society. According to some authors, the new negotiating mandate should have included references to civil society’s involvement in order to promote political dialogue. Participation would occur through periodic conferences involving representatives of civil society organisations in European Union and Mercosur territory. More information in Deisy Ventura (2003), As assimetrias entre o Mercosul e a União Europeia: os desafios de uma associação interregional. Barueri: Manole. pp. 527-529.

8

cannot only be regarded from single state perspective, due to the emergence of multiple and dynamic foreign policy actors. Within the framework of contemporary international relations, new insights about the increasing role played by public diplomacy, nation branding and presidential diplomacy help to shine a light on the multi-layered nature of present-day bilateral relations. Several concepts and partnerships have been built in the margins of international instruments and traditional diplomacy, aiming at being more inclusive and enhancing implementation. The emergence of present-day issues demands a new public diplomacy approach, since traditional diplomacy offers limited conceptual areas for analysing contemporary networks. As Betsill and Bukeley indicate, the international governance of global climate change, for instance, takes place through processes and institutions operating at and between a variety of scales and involving a range of actors with different levels and forms of authority (Betsill and Bulkeley, 2006: 145). In the past, the absence of a common border helped avoid conflicts and long-standing rivalry in the nineteenth and twentieth centuries. As opposed to the reality of the Plata Basin (and the conflicts faced by parties such as Argentina, Brazil, Paraguay and Uruguay) the lack of boundary disputes laid the groundwork for a different type of relationship between Brazil and Chile. For obvious reasons, for example, Argentina and Brazil faced historical-geographical conflicts in the nineteenth century. The common border between both nations was also a source of tension between the Portuguese and the Spanish in South America in the seventeenth century (Maestri, 2014: 241). From a Brazil-Chile relationship perspective, Brazil’s stance of not directly intervening in Chile’s internal affairs has also played an important role in preventing undesirable situations. In addition, Brazil and Chile’s democratic and libertarian vocation and their constant commitment to human rights should be considered.18 Brazil and Chile also have experienced different moments of tension with their common neighbour Argentina. This explains why Argentine foreign policy has tried to avoid conflict with Chile and Brazil simultaneously, as Argentina cannot allow itself to be fighting on two fronts at the same time. 18

See “Bilateral relations”, Embajada de Brasil en Chile. http://chileabroad.gov.cl/brasil/en/relacion-bilateral/comercio-relaciones-bilaterales/.

9

At the same time, Brazil and Chile avoided showing their explicit alliance in certain historical circumstances to prevent retaliation from Argentina, even though their attitudes demonstrated their mutual support. Although the dispute over Acre in 1899 was treated as a bilateral issue, Chile only officially declared its support of Brazil after Argentina has shown explicit support for Peru and Bolivia in their conflict with Chile. In this sense, Chile shared common cause with Brazil in terms of, their unfriendly disposition towards Argentina and the United States (Vera, 2008: 243). For most of the nineteenth and twentieth century neither Brazil nor Chile was keen on the other strengthening their bilateral ties with Argentina. Indeed, neither of them had a trustworthy relationship with Argentina. Argentina and Chile have historically disputed the southern Andes and the waterways connecting the Atlantic and the Pacific. Their relationship was affected by the possibility of Argentina joining Peru and Bolivia against Chile or Chile forming an alliance with Brazil against Argentina. As Vera highlights, after the War of the Pacific (1879-1884) Chile became a status quo power, but its reputation as a successful aggressor in the past has plagued its credibility even up to the present (Vera, 2008: 351-352). Argentina consistently sought to make limited territorial gains and important advances to project its power into Peru and Bolivia, the countries bordering Chile’s north. Not until the 1990s however did Argentina abandon its goals and become a status quo power.19 The scenario has radically changed since the early 1990s, to the extent that, for the first time, Brazil and Chile share closer relations with their common neighbour. Shifting the focus, Argentina has become the country with which Chile and Brazil have their strongest links in the region.20 Currently, Argentina is considered Chile’s best regional partner. An example of this is the creation of a military partnership between Chile and Argentina illustrated by the COMPERSEG (the Permanent Security Committee). As a result, Argentina and Chile are now the most advanced South American countries with regards to cooperation in security matters. 19

See David R. Mares (2000), Exploring the impact of economic cooperation on political and security relations between Argentina and Chile. http://www.stimson.org/images/uploads/research-pdfs/mares.pdf. 20 It is difficult to establish to what extent losing the Falklands War against Great Britain in 1982 and the subsequent weakening of the Argentine armed forces played a role in the adoption of Buenos Aires’ more reconciliatory position vis-à-vis Brasília and Santiago.

10

According to Fuentes and Alvarez and considering the growing importance of international security cooperation, the military (that is, the armed forces of Argentina and Chile) have been involved in peacekeeping operations. However, in 1978, both countries faced one of their most serious periods of conflict. In 1977, Argentina rejected the ‘Arbitration Award’, judgement that recognised Chile’s sovereignty over a group of small islands at the southern tip of the continent. Following the end of the Beagle dispute and the restoration of democracy restoration in Chile in 1990, the important process of Argentina-Chile security cooperation began. This was symbolised by the Treaty of Peace and Friendship in 1984 and the Declaration of Santiago in 1990 signed by Presidents Aylwin and Menem (Fuentes and Alvarez, 2011). Brazil and Argentina have also established ties in the area of security through the ABACC (the Brazilian-Argentine Nuclear Agency to Account For and Control Nuclear Materials).21 Both the Brazilian and Chilean initiatives demonstrate partnerships in key areas, cooperating with Argentina on a host of issues ranging from trade to security and from hard power to soft power. Having said this, a favourable context is witnessed in the understanding of the Southern Cone balance of power and how Argentina has exerted influence on Brazil-Chile bilateral relations in the long run. In the past, Brazil has attempted to build good relations with Chile, anchored by the imminence of a war with Argentina.22 As highlighted by Moniz Bandeira, Brazil, Chile and Argentina understood that their partnerships would bring with them a clear set of benefits to counterbalance the growing presence and

21

The historical process of Brazil and Chile building trustworthy relationship dates back to 17th May 1980 when they signed the agreement for the Development and Application of Peaceful Uses for Nuclear Energy. “Criação da ABACC”, Agência Brasileiro-Argentina de Contabilidade e Controle de Materiais Nucleares (ABACC). http://www.abacc.org. br/?page_id=16. See Coperação Nuclear Brasil-Argentina complete 20 anos”, Estadão, Internacional, 8 July 2011. 22 Wars encourage a different kind of attitude towards the state, based on collective identity. Nothing unites a nation behind a faltering leader like a war, since the quickest way to make a nation is to form an army. A total war can help evade social conflicts and orient the same struggle towards external enemies. In the nineteenth century some thought it impossible to create a nation without war. Miguel Angel Centeno (2002), Blood and debt: War and the Nation-State in Latin America. University Park: Penn State University Press, p. 29.

11

power of the United States in the region. 23 Therefore, these circumstances paved the way for the establishment of the ABC (Argentina-Brazil-Chile) Pact in 1915. This pact resulted in the development of a coordinated approach to international affairs that included the three South American countries. According to Teixeira, this pact was important for Brazil, since it made Chile a strategic ally for Brazilian foreign policy in the long run. An important aspect of the Brazilian Baron of Rio Branco’s strategy was the organisation of South America along with the other regional powers, Argentina and Chile. The Baron of Rio Branco conceived the ABC pact as crucial for guaranteeing the peace and order in the southern half of the Americas (Teixeira, 2012: 27-29). The ABC Pact illustrates two important points: firstly, the Brazilian Ministry of Foreign Affairs (Itamaraty) had been targeting developing closer relations with the south since the first decade of the twentieth century. 24 Secondly, the Itamaraty’s idea of strengthening links with Chile to seek tangible gains was not new in terms of Brazil’s foreign policy strategy. For instance, Brazil and Chile had provided each other with mutual support in the multilateral field. Brazil and Chile, together with Argentina, were elected members of the Human Rights Council in 2008-2011.25 Despite the fact that the Brazil-Chile bilateral relationship only underwent important transformations from the 1990s onwards, Chile was recognised as a strategic 23

See Luiz Alberto Moniz Bandeira (2010), Brasil, Argentina e Estados Unidos: conflito e integração na América do Sul (da Tríplice Aliança ao Mercosul), 1870-2003. Rio de Janeiro: Revan. 24 Although the ABC Pact was created as a political instrument by the Baron of Rio Branco in 1904, negotiations continued until 1915 when it was signed with Lauro Müller as Minister of Foreign Affairs. The ABC Pact was not ratified, but its official aim was to maintain peace in South America. According to Heinsfeld, Brazilian diplomacy wanted to isolate Argentina in South America as well as prevent it from influencing other countries in the region. Brazil’s foreign policy strategy was to prevent Argentina from becoming supreme in South America. In this regard, Chile played a key role as a loyal balance. More information in Adelar Heinsfeld (2009), “As relações Brasil-Chile: o pacto ABC de 1915”, ANPUH XXV Simpósio Nacional de História. Fortaleza. http://anpuh.org/anais/wpcontent/uploads/mp/pdf/ ANPUH.S25.1436.pdf. See Adelar Heinsfeld (2012), “Rio Branco e as relações do Brasil e Chile no âmbito da proposta do Pacto ABC (1915)”, Revista História: Debates e Tendências, vol. 12, no 1, jan/jun 2012. Passo Fundo: UPF. pp. 11-21. 25 See Embajada de Chile en Brasil. “Bilateral relations”. http://chile.gob.cl/brasil/ en/relacion-bilateral/comercio-relaciones-bilaterales/.

12

ally in the long-term. As Pedroso and Pedroso indicate, although Operation Condor in the 1970s and early 1980s led to cooperation in the field of security, both countries were oriented towards the development of strategic economic models during the military period (Pedroso and Pedroso, 2007). As the father of Brazilian foreign policy, the Baron of Rio Branco said in February 1909 that “the relationship between Brazil and Chile is limitless”.26 The South American subsystem, in which Brazil, Argentina and Chile were the three most important regional economic and military powers, favoured the formation of alliances between the three actors. The agreement reached in 1902 between Argentina and Chile through the executing of the Treaty of Arbitration and Disarmament reduced their influence in areas to the Atlantic and the Pacific. As a result, these Southern Cone alliances led to a strengthening of the autonomy and independence of the region’s countries. During the nineteenth century, Brazil and Argentina struggled over hegemony in the Plata Basin. Brazil’s Proclamation of the Republic in 1889 occurred when strategic rivalry between both states still persisted. Argentine military power was a concern for the Brazilian army at that time.27 The declaration defined the nature of a stable long-term alliance between Brazil and Chile at a formal diplomacy level. In the 1990s, following the restoration of democracy in the region, the existing scenario favoured the development of closer bilateral ties. In those years, most Latin American countries underwent profound economic reforms allowing trade liberalisation. According to Figueiredo and Lamazière, sharing universal values led to the strengthening of the relevant traditional diplomatic links: Chile’s support of Brazil’s aim of becoming a permanent member of the United Nations Security Council; the United Nations peace keeping mission in Haiti involving Brazil and Chile as part of their foreign policy strategy; a common position promoting democracy in a multilateral context and the common defence of human rights, women rights 26

See Ministérios das Relações Exteriores do Brasil, “Ministro das Relações Exteriores, Discursos”. 8th October 2012. http://www.itamaraty.gov.br/pt-BR/discursos-artigos-eentrevistas/ministro-das-relacoes-exteriores-discursos/4555-intervencao-por-ocasiao-doseminario-brasil-chile-novos-horizontes-amizade-sem-limites. 27 Guilherme Frazão Conduru (1998), “O subsistema Americano, Rio Branco e o ABC”, Revista Brasileira de Política Internacional, vol. 41, no 2, July/December. Porto Alegre: UFRGS. http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0034-7329199800020 0004.

13

and environmental topics among others (Figueiredo and Lamazière, 2012). As the United Nations Security Council became more active, the separation between domestic and international security was questioned and the relationship between security, development and human rights became more intense and relevant. As Herz points out, peace operations are presented as instruments for global governance, especially if the country aims to play a relevant role in international debates (Herz, 2013: 25-26). The ever more important position of Chile as a major Latin American actor (involved in the discussion of many world issues) goes hand in hand with the projection of Brazil as an emerging global power.28 As Buono argues, this dialogue not only encompasses political and economic debate, but also includes a reflection on the dynamic process implied in sustaining an inclusive South American dialogue (Buono, 2006: 13). Along with raising regional issues such as as organised crime, money laundering, immigration and sources of energy, both dialogue between the Ministries of Foreign Affairs and the use of a decentralised approach were encouraged.29 The creation of official channels for the participation of organised civil society by the Brazilian Ministry of Foreign Affairs (Itamaraty) fostered their participation in the decision-making process. As Lima points out, there was a trend for the growing participation of organised civil society in the international negotiations headed up by the Itamaraty since the United Nations Conference on the Environment and Development (1992), the World Conference on Human Rights (1993), the International Conference on Population and Development (1994), the World Summit for Social Development (1995), the Fourth World Conference on Women (1995) and the Second United Nations Conference on Human Settlements (1996) (Lima, 2009: 7). 28

Brazil’s diplomacy of solidarity, built upon at commitment to human rights, social development and south-south cooperation based on international collective action and under the auspices of the United Nations Security Council became an important source of converging interests between Brazil and Chile. More information about Brazil’s diplomacy of solidarity in Ricardo Seitenfus (2014), Haiti: dilemas e fracassos internacionais. Ijuí: editor Unijuí. 29 International cooperation as a new instrument for external affairs began after the Second World War, as a result of the creation of bilateral agreements such as the Marshall Plan (drawn up by the United States). Abel Gallardo Pérez (2007), Cooperación internacional descentralizada. Valparaíso: Government of Chile, p. 39.

14

Furthermore, sustainable public-private partnerships (PPPs) for infrastructure projects increased participation in bilateral relations. The Brazil-Chile bioceanic corridor initiative is a case in point. Chile’s orientation towards the Pacific region is not merely geographical but also embraces an economic reality. As Muñoz highlights, although Japan and South Korea are its main trading partners, Chile is improving its economic links with countries such as Malaysia, New Zealand and Australia. Ties have also expanded between the Asia-Pacific countries and Mercosur and Brazil has also expanded its presence in Asia. Brazilian President Cardoso (1995-1998, 1999-2002) was the first Brazilian head of state to visit Malaysia. Joint ventures between Brazilian companies and Chinese enterprises are another advance in the same direction. In the meantime, Chile and Brazil have been working on making multimodal connections between the Atlantic and Pacific Oceans viable (Muñoz, 2001: 79). Business links cannot be underestimated considering Brazil’s position as the leading outward investor in Latin America combined with Chile’s nation branding initiatives oriented at attracting foreign investments. The BrazilChile Double Taxation Convention (2001) to avoid double taxation and fiscal evasion also illustrates the strengthening of fluid commercial and investments between these two nations. Such a convention is a key element when considering whether to set up a company in certain country. The two countries investment flux has a lot to do with avoiding double taxation.30 As part of their bilateral strategic relationship cooperation in energy, science and technology identifies new horizons for “friendship without limits”. 31 Brazil’s stable democracy and emerging position as a global power has helped the study of nation branding as part of its foreign policy strategy. As the host of the Football World Cup in June 2014 and the Olympic Games in 2016, Brazil has gained an overwhelming visibility that has enabled it to project a remarkable nation brand. Almost against the odds, the main reason 30

To ensure access to the Convention between the Federal Republic of Brazil and the Republic of Chile to Avoid Double Taxation and Prevent Fiscal Evasion with respect to income. This agreement has shown the strong connection between both nations tax system. See the Chile Brazil Convention. http://www.receita.fazenda.gov.br/principal/ingles/ Acordo/Chile/Chile03042001.htm. 31 This emblematic phrase from the Baron of Rio Branco set up a new paradigm for Brazilian foreign policy. Sean W. Burgers (2012), “Is the Itamaraty a problem for Brazilian foreign policy”, Política Externa, Dec/Jan/Feb 2012-2013. São Paulo: Editora Paz e Terra, pp. 133-148.

15

cities want to host the Olympics is that they are wildly popular with the voters who foot the bill. Rio de Janeiro’s hosting of the 2016 Olympic Games received strong local support during the bidding process. However, the World Cup hosted by Brazil in 2014 became the focus of protests against government waste and corruption.32 As Essex and Chalkey argue, the Olympic Games has become the most visible and spectacular public cultural event in modern society. The host cities are required to provide new sporting facilities that are up to world class standards. Indeed, wider investment in tourism, transport, telecommunications and hotel accommodation and environmental improvement are also often necessary to ensure the smooth running and success of the Games for both athletes and spectators. These wider investments also contribute to establishing a global image for the host city, which can promote inward investment and tourism in the long-term (Essex and Chalkey, 2003: 7). In the case of Brazil, the projection of a nation brand is related to presidential diplomacy and the charismatic figure of President Luiz Inácio Lula da Silva. As one of the BRICS (Brazil, Russia, India, China and South Africa), Brazil has also changed how it is perceived in international politics. BRICS countries include more than 40% of the world’s population and account for a quarter of the world’s economy. China may shortly bypass the United States to become the world’s biggest economy, despite the fact that leadership of the World Bank and the International Monetary Fund (IMF) remains the exclusive preserve of the United States and Western European countries. One of the important aspects of the BRICS lies in the fact that China wants to build its own global system with their help. India and South Africa need easier access to one of the biggest savings’ reservoirs in the world and Russia was ostracised after its annexation of Crimea. 33 Since mid-2015, Brazil has experienced growing economic problems as inflation rises and the rate of economic growth radically declines. At the same time, in its second term, Rousseff’s government has had to confront a mounting political crisis due to one of the biggest corruption scandals in 32

See “Why would anyone want to host the Oliympics?” The Economist, 8th September 2013. http://www.economist.com/blogs/economist-explains/2013/09/economist-explains-0. 33 Pankaj Mishra (2014), “China is driving the BRICS train”, Blomberg View, 20th July. http://www.bloombergview.com/articles/2014-07-20/china-is-driving-the-brics-train.

16

Brazil’s history. This brought her government to the point of near collapse in the early 2016. 34 The figure of Lula da Silva has also been totally eclipsed, since he has also been connected to a series of scandals concerning leadership of the Workers’ Party (PT).35 All this has severely affected Brazil’s international image and its previous efforts to improve its international brand.36 From the Chilean perspective, transitioning from a dictatorial regime to democratic rule in the 1990s required the rebranding of the country’s external image. Chile’s longstanding reputation as a highly institutionalised country with respect for institutions and for the rule of law contributed to its image as an exception in the Latin American context. According to Niesing, despite its recent declines, Chile remains a global leader in economic freedom and an example for other Latin American countries. Aided by prudent public financial management and successful fiscal policy, it has kept public debt low and budget deficits under control (Niesing, 2013: 107). Chile is second in the world in protecting property rights and has been renewing its commitment to open trade and investment by participating in the Trans-Pacific partnership talks. 37 Chile nation branding is part of the strategic international insertion of a small and little-known country onto the worldwide stage. The lack of studies on relations between both countries does not mean that strong bilateral links between Brazil and Chile since the restoration of democratic rule have not existed. On the contrary, most studies tend to focus on the traditional perspective of diplomacy, denying the existence of highly important actors in the international arena. Some of the topics that should be 34

In March 2014, the Brazilian Federal Police launched an investigation called ‘Lava Jato’ on car-washing services offered at gas stations. The aim was to investigate illegal currency exchange and money laundering. However, it led to the discovery of corruption in the Brazilian petroleum company, Petrobras and political parties involved in the Workers Party. See Folha de São Paulo, “Entenda a operação lava-jato”, 22/04/2016. http://www1.folha.uol.com.br/especial/2014/petrolao/. 35 See Valor Econômico, “Moro diz que Lava-Jato não tem culpa da crise e pede protesto pacifico”, 10/03/2016. http://www.valor.com.br/politica/4474336/moro-diz-que-lava-jatonao-tem-culpa-da-crise-e-pede-protesto-pacifico. 36 From 2003 onwards, PT governments were involved in a scheme in Petrobras that was aimed at securing a permanent hold on power. See The Economist, “How should presidential systems deal with political breakdown?”. vol. 419, 9th-15th April 2016. London, p. 38. 37 “Chile”, 2015 Index of Economic Freedom. http://www.heritage.org/index/country/chile.

17

pointed out in Brazilian-Chilean bilateral relations are energy resources, the emergence of Brazil as one of the BRICS and the importance of Chile as a bridge to the Pacific Ocean. 38 Furthermore, the lack of studies on Brazil-Chile bilateral ties does not mean that Brazilian foreign policy has not focused on strengthening ties with Latin American countries as a whole. As Marreiro points out, President Dilma Rousseff paid the region special attention. Given priority to Latin America became evident when President Rousseff cancelled her official visit to the World Economic Forum’s annual meeting in Davos, Switzerland (Marreiro, 2014: 23). Instead, she decided to attend the official inauguration ceremony of the Bolivian president, Evo Morales. This shows that Latin America was a high prior in Brazil’s foreign policy strategy.39 During the second mandate of Chilean President Michelle Bachelet (2014-2018), the Chilean government has emphasised a more proactive foreign policy towards Brazil.40 President Rousseff also prioritised the summits of the Community of Latin America and Caribbean States (CELAC) during her two terms in office.41 When she was in Quito for the 4th CELAC Summit on 27th January 2016, she mentioned an important partnership with Ecuador in important areas such as infrastructure, for example the multimodal MantasManaus route linking Ecuador’s Pacific coast to the Brazilian Amazon region with ports and highways. 42 The inclusion of a range of issues, such as the Pan-American Health Organisation (PAHO) on the Zika virus in the Americas, the bioceanic corridor project between Brazil, Chile and Bolivia, the Brazil-Chile agreement on joint Antarctic research efforts and the 38

In North America the railways linking the Pacific to the Atlantic coast dates back to the nineteenth century. See, A América do Sul e a integração regional: 28th September 2011, Rio de Janeiro, Brazil. Apresentação do Embaixador José Vicente de Sá Pimentel; discurso inaugural do Embaixador Antonio de Aguiar Patriota. Brasília: FUNAG, 2012, p. 13. 39 See Bruno Peres (2015), “Dilma cancela viagem a Davos e vai à posse de Evo Morales”, Valor Econômico, 13th January 2014, p. 10. 40 See Rosalba O’Brien (2013), “Chile under Bachelet to warm to Brazil”, Reuters, 16th December. http://www.reuters.com/article/2013/12/16/us-chile-election-foreign-idUSBR E9BF0JO20131216. 41 Valdo Cruz and Mariana Haubert (2014), “Dilma cancela ida a Davos para prestigiar Evo Morales”, Folha de São Paulo, 13th January 2015. 42 Ana Cristina Campos (2016), “Rousseff advocates closer cooperation in Latin America”, EBC Agência Brasil, 27th January 2016. http://agenciabrasil.ebc.com.br/en/politica/ noticia/2016-01/rousseff-advocates-closer-cooperation-latin-america.

18

Brazil-Chile decision to invest in higher education systems demonstrates that Brazil-Chile relations goes beyond mere commercial issues and the relevance of multilateral dialogue in Latin America. In addition to current international political topics, the importance of other actors in their relationship should not be underestimated. The structure of the book The fact that public diplomacy is about building relations and two-way communication challenges the idea that traditional diplomacy can be considered as the only way foreign affairs can be conducted. The need to amalgamate communication with traditional diplomacy allows countries to foster broader connections and contributes to enhancing mutual understanding. A crucial point is that public diplomacy supports traditional diplomacy inasmuch as both ideas are complementary for the understanding of current international relations and the multiple channels that connect countries, such as private-public partnerships, civil society, commerce and infrastructure. Brazil-Chile ties go about developing a lasting relationship, with public diplomacy bringing a deeper understanding of their bilateral links. In this study, public diplomacy, presidential diplomacy and nation branding are the core analytical tools used to analyse Brazil-Chile relations considering the relevance of national image projection and the different types of actors involved in international affairs. Brazil’s potential to become an emerging world leader demands a public diplomacy approach. A smaller country, Chile should be studied from a nation branding perspective, since this is an important component in understanding its foreign policy. After the introduction, Chapter 1 provides the theoretical framework for this study and deals with the working definitions of public diplomacy, presidential diplomacy and nation branding, which are the core analytical concepts of the study. Along with public diplomacy, para-diplomacy has also been the result of the growing participation in foreign affairs of decentralised actors, such as federal states, provinces and municipalities. In fact, public diplomacy embraces the idea of paradiplomacy and both concepts encompass the idea of cooperative arrangements, so the aforementioned ideas can help develop a deeper understanding of Brazil19

Chile relations. Public diplomacy goes hand in hand with the idea of opening up foreign policy communication channels using new medias such as digital devices that usually involve interactive users. Chapter 2 analyses the historical backgrounds of Brazil-Chile relations. Their bilateral relations go back to 1915 when the so-called ABC (Argentina-Brazil-Chile) Pact was established. The signing of this pact was a clear message that having a closer relationship with Chile was important to Brazil’s foreign policy. Sharing similar historical characteristics such as political stability and obeying the rule of law (in contrast to other Latin American states) was a relevant component to the establishing of mutual respect between both countries. Indeed, since the early nineteenth century, both countries were considered clear examples of stable political states in a region in turmoil. Although in many respects Brazil and Chile did not establish an explicit alliance, the continuous and smooth relations between them helped maintain the geopolitical balance and contain their common neighbour, Argentina. Chapter 3 shows how the establishment of mutual understanding was a core element in Brazil-Chile relations from the 1990s onwards. This chapter embraces the democratic period whereby the two countries developed the most important ties that help understand the nature of their bilateral links. Combining democratic restoration with the development of decentralised cooperation offers a new framework in which to observe different aspects of the Brazil-Chile partnership. The cooperation initiatives that emerged in the region among regional actors such as the Mercado Común del Sur (Mercosur) and the Unión de Naciones Suramericanas (UNASUR) established regular opportunities for dialogue to tackle regional issues with multilateral forums consolidating a new dynamic for bilateral dialogue. Despite their different foreign policy strategies, these two countries strengthened their ties from the 1990s onwards and developed decentralised links in different areas. Chapter 4 provides a broader context to understanding the fundamental aspects of the Brazil-Chile relationship, with Argentina and the United States playing a significant role in determining periods of closer relations between the two states. Argentina and the United States exert a great influence over Brazil-Chile ties, to the extent that closer links with either Argentina or the United States encourage closer or more difficult relations 20

between Chile and Brazil. The different standpoints adopted by Brazil and Chile vis-à-vis the United States foreign policy in the region was a fundamental factor in determining the way the two countries developed their present bilateral relations. For instance, their different diplomatic perspectives on the Free Trade Area of the Americas, launched by the United States in December 1994 influenced both Brazil and Chile’s decision on whether to strengthen their political ties or seek to develop decentralised bilateral relations. Intense links established with their common neighbour demands an analysis of how relations with Argentina interfere in BrazilChile links. This influence was not only important in the nineteenth century but is also important in the present, as Argentina continues to be a fundamental actor in Brazil-Chile bilateral affairs given their economic and trade interdependence as well as Argentina’s relevance as a political actor in the region. Chapter 5 describes the increasing importance of energy resources in foreign affairs taking into account the fact that energy is a relevant source of power. Brazil’s offshore discoveries of pre-sault in 2007 changed its nation branding projection in a significant way, giving the country a new level of oil reserves and production. Energy security encourages a new form of dialogue between states, since the topic has been gaining relevance in the last few years in the debate in the international community. Chile’s shortage of natural gas as a result of the President Nestor Kirchner’s decision to diminish Argentine gas exports in 2004 led to an unpredictable energy crisis in Chile. Brazil’s well-consolidated energy matrix and Chile’s ongoing energy supply problem fostered a dynamic dialogue between both parts. The Chilean government foresees energy shortages from 2017 onwards, which means energy discussions have become a priority on the country’s agenda. Due to its position as an energy provider, Brazil is an interesting partner for Chile’s import-dependent energy sector. The final section of the study highlights the relationship between Brazil and Chile. Both countries share common values, significant trade, complement each other economically, have direct investments and tax treaties and provide each other with mutual respect and support, which are core elements to establishing constructive, stable and trustworthy relations in the long run. Indeed, Brazil’s aim to become at recognised global player requires Chile’s support in the multilateral field. Both sides share coherent 21

values and are important allies at world summits. The existence of a variety of formal and informal bilateral arrangements between both states provides the potential for partnerships in a range of areas. Brazil is currently more integrated with the global economy than ever before and its status as an emerging power will certainly lead to the reformulation of Brazil-Chile bilateral ties, focused on a multilateral approach.

22

Chapter 1 Public Diplomacy, Nation Branding and Presidential Diplomacy The embrace between former presidents Fernando Henrique Cardoso and Ricardo Lagos at a meeting in March 2012 was definitely an historic moment, occurring, as it did, between two influential former South American heads of state, who shared similar well-known academic and political trajectories as well as matching democratic values.1 The expression on their faces revealed their mutual admiration and respect and a longlasting friendship between two remarkable political thinkers. Lagos and Cardoso were essential to transforming the economic and political arenas of their particular countries. Lagos played a fundamental role in the process of democratic restoration in Chile in the 1980s. 2 As an important leader during Chile’s transitional period, Lagos was a key figure in the Democratic Alliance opposition coalition and the founder and first president of the Party for Democracy (PPD).3 As Brazil’s Finance Minister, Cardoso implemented the most successful plan for economic stabilisation the Real Plan in June 1994 and then continued to apply pro-growth economic policies after he became President of Brazil in 1995.4 Lagos and Cardoso share similar academic experiences. Following the 1964 military coup in Brazil, Cardoso went into exile in Chile. At that time, 1

“Palabras para Venezuela: visiones de una economía con rostro humano”, a summit organised in Caracas on 10th March 2012, with the presence of the former Presidents Fernando Henrique Cardoso, Ricardo Lagos and Felipe González. 2 The socialist government of President Ricardo Lagos in Chile (2000-2006) stands out as a notable exception of economically and politically successful leftwing commitment to neoliberalism. Lago’s impressive approval ratings underlined the widespread acceptance among the people of his economic policies. Patricio Navia (2006), “Neo-liberal and socialist: lessons from the Ricardo Lagos government for leftist leaders in Latin America”, Beyond neoliberalism in Latin America. New York: Duke University Press, pp. 218-219. 3 See Paul W. Posner (2008), State, market, and democracy in Chile: the constraint of popular participation. New York: Palgrave Macmillan, p. 66. 4 The Economist, “The Real Plan: Echoes of 1994”, 3 July 2014. http://www. economist.com/blogs/americasview/2014/07/real-plan.

23

Chile was an island of freedom in Latin America and a regional centre of culture and intellectualism. As one of the so-called Dependencia theorists in Chile, Cardoso co-authored his most influential book, Dependency and development in Latin America with the Chilean sociologist Enzo Falleto. The intellectual affinities between Lagos and Cardoso provide an interesting context in which to understand the importance of Chile to the reestablishment of Brazil democracy. Alongside their genuine respect for democratic values and human rights, Cardoso and Lagos also shared a pragmatic approach towards the economy, which led to the signing of an agreement in March 2002 to reduce dues and implement quotas to facilitate bilateral trade.5 The broader context under which Brazil-Chile developed their links involves more than traditional diplomacy. The growing influence of business in foreign affairs and an increase in issues on the international agenda meant diplomacy not only concerned intergovernmental politics, with the insertion of diverse actors demanding a new approach to current Brazil-Chile bilateral affairs. For instance, a Chilean delegation made up of Economy Minister Luis Felipe Céspedes, Chile’s Ambassador to Brazil, Jaime Gazmuri, the Executive Vice-President of the Foreign Investment Committee, Jorge Pizarro, and the Deputy International Director of ProChile, Rafael Sabat, travelled to Brazil in November 2014 for meetings with local authorities and business people in a bid to boost the flow of investment between the two countries. 6 Contemporary diplomacy requires the introduction of concepts such as public diplomacy, nation branding and presidential diplomacy to face up to an increasing number of topics at both regional and worldwide levels. 7 The 5

Chile and Brazil share strong links considering that the friendship between presidents Lagos and Cardoso also extends to many Brazilian ministers, such as Paulo Renato Souza (Minister of Education), Francisco Weffort (Minister of Culture) and José Serra (Minister of Health, as President Cardoso highlighted in his formal speech to the Chilean National Congress. “Presidente destaca laços de amizade com Chile”, Agência Brasil, 19/03/2002, http://memoria.ebc.com.br/agenciabrasil/node/631536 6 Chile Foreign Investment Committee, “Chile invites Brazilian businesspeople to step up investment in the country”, 4th November 2014. http://www.ciechile.gob.cl/en/espanolchile-invita-a-empresarios-brasilenos-a-intensificar-las-inversiones-en-el-pais/. 7 The wide range of concepts used to better understand the complex character of current external affairs has increased to the extent that some authors also point out concepts such as ‘parliamentary diplomacy’. Parliamentary diplomacy explains the international activities

24

aforementioned concepts help understand the broader context in which Brazil-Chile ties exist. Although diplomacy maintains certain aspects of secrecy and discretion international relations become public in the sense that foreign policy also needs citizen support.8 Sharing common ground in public diplomacy and nation branding are core components of an analysis of international relations since the two concepts focus on aspects beyond traditional diplomacy. 9 However, public diplomacy and nation branding have different roots. Public diplomacy comes from international relations and describes the influence of public attitudes and engagement on the forming and execution of foreign policies. It also incorporates interaction between private groups and interests in one country or another. Finally, it encompasses the impacts of foreign affairs on domestic policy and intercultural communication.10 Although nation branding emerges as a new concept, it relates to image promotion and national identity. Nation branding incorporates political, sociological, cultural, historical and marketing approaches despite the fact that it is much more than marketing.11 According to this approach and by including public diplomacy and nation branding into the analysis, the role played by a larger number of actors in contemporary Brazilian-Chilean relations can be undertaken by Members of Parliament with the aim of increasing mutual understanding between states and improving the scrutiny between countries and the democratic legitimacy of intergovernmental institutions. See Frans W. Weisglas and Gonnie de Boer (2007), “Parliamentary Diplomacy”, The Hague Journal of Diplomacy, vol. 2, issue 1, pp. 93-99. 8 See Nick Parfait Momengoh (2013), Secret diplomacy: The practice of back channel diplomacy by liberal democratic states for the degree of Doctor of Philosophy in Global Affairs, State University of New Jersey. 9 Mexico faced significant problems with its public diplomacy, given that certain cultural aspects turned into negative public diplomatic topic. Instead of being associated with cultural diversity, regional leadership and long-term economic development, the country projected as negative international image with high levels of violence. Nicholas J. Cull (2013), “El futuro de la diplomacia pública: implicaciones para México”, Revista Mexicana de Política Exterior, p. 21. 10 Public-private partnerships focus on attracting private financing for public projects. Roger Wettenhall (2003), “The rhetoric and reality of public-private partnerships”, Public Organisation Review, vol. 3, issue 1, pp. 77-107. 11 According to this approach, graphics such as slogans, logos, music and lyrics play an important role in the development of the country’s projection of its nation brand. See Daniel de Castro Linhares and Isaak Newton Soares (2012), “Marca País: o logo como um recurso mercadológico dos países latino Americanos”, Revista Unicuritiba. revista. unicuritiba.edu.br/index.php/percurso/article.

25

considered. In the case of Brazil, the influence of public diplomacy, nation branding and presidential diplomacy in the country’s foreign policy strategy was even more remarkable during the administration of President Luiz Inácio Lula da Silva (2003-2010). Chile has rebranded itself over the years mainly for commercial reasons, with President Ricardo Lagos (2000-2006) and President Michelle Bachelet (2006-2010 and 2014-2018) playing more active roles than the Conservative Sebastián Piñera (2010-2014) in the country’s approach to foreign policy. The two countries have different reasons for developing public diplomacy and nation branding communications, thereby identifying the distinguishing circumstances in which Brazil and Chile build their ties. Chile is frequently remembered as a country with a successful nation brand. The fact that commodity prices started to fall in 2014 was one of the reasons the Brazilian economy faced its most severe recession since the Wall Street Crash of 1929. The fall in commodity prices was not the only reason for the depression, given the governmental scandal concerning Petrobras (the Brazilian state-controlled oil company) during President Rousseff’s mandate (Chade, 2016). Thus Brazil needed to rebrand itself as an emerging global power. Chile, however, grew 3% as copper exporter in 2015.12 Brazil-Chile relations are based on a long-term bilateral approach since both countries have shown an interest in cooperating in the fields of publicprivate partnerships, science, infrastructure, trade, investments and multilateral foreign policy. Public diplomacy, nation branding and presidential diplomacy show that their bilateral relations encompass complementary economies, decentralised relations with local governments, civil society participation and the defence of similar values, such as human rights. 1.1 The Emergence of Public Diplomacy Public diplomacy goes beyond traditional diplomacy since it encompasses a wide range of areas that interact with foreign policy strategy. While 12

Latin America as a whole will grow by 2%. According to economists, Chile operates a counter-cyclical, fiscal policy, saving during good times and spending during bad. The Economist. “Dependency on commodities”, 10-16 January 2015, pp. 8-9.

26

traditional diplomacy considers governments as the only central actors in foreign affairs, public diplomacy recognises the increasing importance of decentralised actors in international relations. Decentralisation not only refers to international relations, but also government decentralization, which has become an important tool to deal with current issues. As White points out, “the main objective of decentralisation is to create the most efficient and accountable form of government possible. Decentralisation is often introduced to offset a problem that has caused dissatisfaction with a centralised system” (White, 2011: 9). Diplomacy has become more flexible, creative and democratic in Brazil since the late 1990s. Although Brazilian foreign policy is centralised in nature, cities, states and the legislative power have increased their participation in the debate on international affairs. The decentralised aspect of foreign policy encompasses the relationship between the Executive and Legislative powers, the role played by the president, the Ministry of Foreign Affairs and the participation of states and cities in international relations (Figueira, 2009: 13-14). In similar circumstances, Chile’s centralised government does not mean a lack of decentralisation initiatives in foreign policy, as illustrated by the Chilean Border Committee that, since the 1990s, has fostered decentralised relations with Argentina. As in Brazil, the Chilean decentralisation process also encouraged relevant debate over administrative and judicial proceedings in order to facilitate local participation in foreign affairs. During the government of President Lagos, Chile aimed to strengthen its relationship with Latin America, so the government encouraged the participation of decentralised actors in projects such as the bioceanic corridor, intervention in the peace process of neighbouring countries and the strengthening of the cross-border network observed in Chapter 3.13 The main goal of public diplomacy is to integrate and make the growing role played by the new actors who interact in different aspects of foreign policy visible.14 According to this approach, civil society, the business 13

See Comisión Asesora Presidencial en Descentralización y Desarrollo Regional. “Propuesta de Política de Estado y Agenda para la Descentralización y el Desarrollo Territorial de Chile”, 7 October 2014. https://prensa.presidencia.cl/lfi-content/otras/ informes-comisiones/InformeDescentralizacion.pdf. 14 International relations encompass interaction between different actors. The Bretton Woods Conference, in 1944, regulated the modern global system of the international economy with two main aims: advancing the reduction of tariffs and other barriers to

27

sector and individuals have become an important part of foreign affairs taking into account the emerging interdependence between different sectors in different countries. Indeed, emerging actors support foreign policy strategy, therefore serving to legitimise long-term diplomatic targets.15 Public diplomacy is more than simply increasing the participation of new actors in foreign policy; it includes communication with regional governments, NGOs, minority groups, private sectors and all the other groups that exert influence over foreign policy planning. New concepts in international relations emerge due to the need to deal with different phenomena and face contemporary dilemmas. Changing from the nationstate as the predominant actors in foreign affairs demands a new mechanism to help understand international relations. It should be remembered that, in the past, the modern state was historically part of the transformation of the world’s processes (Caselha, 2014: 642). Public diplomacy deals with a complex variety of actors, along with communication channels, to transmit the diplomatic message between diplomats, foreign correspondents, and the public. In this respect, civil society has had a large impact on contemporary foreign policy, hence the transnational flow of information and ideas that constitutes an important part of international links. According to Sfeir-Younis, civil society has a large impact on contemporary foreign policy, since it tends to observe global concerns, such as environmental issues, crime, human rights and trade. The existence of an organised and effective civil society is the greatest social phenomenon of the latter part of the twentieth century and this new millennium (Sfeir-Younis, 2004: 29). As Hurrell points out, today’s foreign policy engages new issues, areas, actors and public-private partnerships to promote opportunities for dialogue international trade and creating a global economic framework to minimise economic conflicts among nations. The conference demonstrated how economy and politics can closely interact, considering the importance of trade in foreign affairs. Trade exerts an overwhelming influence on their relationship between states hence trade is a crucial component to Brazil-Chile bilateral links. Peter Malanczuk, Modern Introduction to International Law, seventh revised edition. New York: Routledge, p. 222. 15 The international organizations, non-governmental organizations and multinational companies are some of the actors that came to divide states in the international arena. Marques, Guilherme Bez (2008), “Velhos e novos atores: as relações internacionais de Vestfália ao século XXI”, Ius Gentium: teoria e comércio no Direito Internacional, no 1, jul. http://www.iusgentium.ufsc.br/revista/artigo01.pdf.

28

and channels to tackle matters of global importance. International organisations, non-governmental organisations and multinational companies are some of the actors that came to divide states in the international arena (Hurrell, 2006: 10-11). Traditional diplomacy has not diminished its role in the world order, even though today’s complex international agenda has deepened the interdependence of different sectors when dealing with diverse issues (Von Bülow, 2010). However, the issue of public diplomacy deserves proper attention, given that foreign policy maintains its secretive nature. This does not mean that there is a lack of secrecy within diplomacy, since the way foreign policy is conducted still maintains a high level of discretion. Being discreet is as core element when negotiating international affairs. Nevertheless, according to Szondi the international relations context in the early 2000s and the fact that diplomacy at a certain point became public should be considered.16 On one hand, many actors in civil society paid special attention to how foreign policy was conducted. On the other, politicians discovered that the foreign policies they materialised brought them popularity. The personal aspect is a fundamental element of presidential diplomacy as will be seen. For instance, President Lula’s foreign policy focused on closer dialogue with civil society by introducing international affairs into his official speeches. In addition to this, the Lula administration prioritised strengthening ties with Latin America, building up ties in particular in private-public partnerships with the region’s countries (Almeida, 2003: 87). Obviously, strengthening the links between foreign policy and domestic politics played an essential role in promoting Brazil’s insertion into the international arena, with the country initiating a series of diplomatic initiatives in that respect. For example, President Lula’s at the beginning of the G3 (consisting of Brazil, India and South Africa) and the G20 summits occurred at ministerial meeting of the World Trade Organisation (WTO). Moreover, his strategy to transform the BRIC concept into a diplomatic 16

Each country conducts some kind of public diplomacy, while nation brand initiatives are less common. Nation branding is considered an instrument of public diplomacy. Gyorgy Szondi (2008), “Public diplomacy and nation branding: conceptual similarities and differences”, papers discussing in diplomacy, Netherlands Institute of International Relations ‘Clingendael’, p. 29. Jian Wang (2006), “Managing national reputation and international relations in the global era: Public diplomacy revisited”, Public Relations Review, vol. 32, Issue 2, pp. 91-96.

29

endeavour reshaped the domestic political debate. According to Pim, interaction between foreign policy and domestic politics was increasingly important in President Lula’s administration. In this respect, the mass media, businessmen, union leaders and the industrial and agricultural sectors mobilised around Lula’s government’s foreign policy. In its foreign policy strategy, Lula’s administration had all kinds of tools and forms of multilateral initiatives, bilateral relations and informal cooperation mechanisms to achieve diplomatic priorities (Pim, 2009: 18-19). President Lula’s administration was much more active than that of his successor, Dilma Rousseff. Nevertheless, President Rousseff maintained the main aims of Lula’s foreign policy, although her government practiced a much more discreet and reserved kind of diplomacy. For obvious reasons, Lula’s political abilities opened many doors in the international scenario and, to some extent, facilitated President Rousseff’s international insertion. As Visentini points out however, she concentrated her efforts on improving the old Brazilian infrastructure. In addition, Rousseff was more concerned about economic affairs and carrying out the PAC (Accelerated Growth Programme) the programme of public infrastructure works begun by Lula. In addition, President Rousseff placed greater emphasis on human rights issues. For instance, during the Arab Spring, Brazil was cautious of supporting Arab regimes. This stance contrasted with President Lula’s active foreign policy in the Middle East, intervening in the IsraeliPalestinian conflict (Visentini, 2014: 71). The origins of this new public diplomacy lie partly in experience itself, as well as the current debate on the need for more public diplomacy.17 In Brazil, the Ministry of Foreign Affairs (Itamaraty) considers public diplomacy an important bridge between the government and civil society to promote transparent national public policies and turn them into something 17

In the mid-1960s, the term public diplomacy was first used by a former American diplomat and Dean of the Fletcher School of Law and Diplomacy, Edmund Gullion. In the following decades its practice became related to the United States. The US public campaign embraces the communication of the American way of life to foreign politics. US public diplomacy depends on political and cultural congruency between the US and the target nation, as well as on the strategy, power and motivations of foreign elites to promote positive news about the US in their media. Robert M. Entman (2008), “Theorising mediate public diplomacy: The US Case”, The International Journal of Press Politics, vol. 13, n o 2, pp. 87-102.

30

more democratic for citizens.18 Brazilian public diplomacy receives proposals from civil society to be included in foreign policy in order to carry out national aims. In these attempts to bring foreign policy closer to civil society, the adoption of the new Brazilian Access to Information Law favoured the perception that diplomacy is, to a certain extent, open to society’s participation.19 The support of technological tools such as the internet and social media foster the more active participation of civil society in international affairs and the global reach of the actions carried out by the Ministry of Foreign Affairs. The active role played by the Brazilian Ministry of Foreign Affairs in digital media ensures a more effective communication with citizens.20 International agendas have become more dynamic and should not be restricted to relations between state actors. Public diplomacy not only considers the importance of soft power in international affairs, but also communication channels that lead to a growing interdependence between actors.21 As Schneider argues, “the exchange of ideas, information, art and other aspects of culture among nations ant their peoples to foster mutual understanding, forms an important component of the broader endeavour of public diplomacy, which basically comprises all that a nation does to explain itself to the world” (Schneider, 2005: 147). However, public diplomacy is more than just selling policy, culture and values: it implies a vast field including mass media communication, the intervention of public 18

Ministério das Relações Exteriores, “Diplomacia Pública”. http://www.itamaraty.gov. br/index.php?lang=pt-BR. 19 The New Brazilian Access to Information Law, approved by the Senate and ratified by president Dilma Roussef in November 2011 came into force on 16th May 2012. It provides greater transparency and involvement regarding the access to information already guarantee by the Constitution since 1988. However, the law also provides sanctions for those who deny access to information. “Brazil: new Access to Information Law becomes effective today”, Article 19, 16th May 2012. https://www.article19.org/resources.php/resource/ 3208/en/brazil:-new-access-to-information-law-becomes-effective-today. 20 See “Diplomacia Pública, Acesso à Informação”, Ministério das Relações Exteriores, 18th July 2015. http://www.itamaraty.gov.br/index.php?option=com_content&view= article&id=106:diplomacia-publica&catid=44&Itemid=135&lang=pt-BR 21 In Mercado Comun del Sur (Mercosur) and the Unión de las Naciones Sul Americanas (UNASUR) the increasing participation of civil society remained a crucial factor to further integration. Since the beginning of the 1990s, the mobilization of civil organisations has increased its role in the regional integration process. Friedrich Budini (2015), “Política externa e participação social no Mercosul”, Carta Capital. http://www.cartacapital.com.br/ blogs/blog-do-grri/politica-externa-e-participacao-social-no-mercosul-9519.html

31

opinion in foreign affairs and increased interaction between state actors and non-official groups.22 The openness and communication with the public also gives them a say in the decision-making process, thus it has empowered civil society’s participation in the foreign policy debate. According to Copper, contemporary diplomacy means “openness and transnational cooperation” (Copper, 2003: 76 quoted by Melissen, 2005: 5). Such openness and multilevel cooperation implies more collaborative diplomatic relations with diverse actors. In this scenario, public diplomacy has turned into an indispensable component of a collaborative model of diplomacy. Noninstitutional actors also play an important role, considering the participation of media, political parties, organised interest groups and the Legislative and Executive powers in foreign affairs (Cann, 2012: 31). The Brazil-Chile relationship cannot be fully understood without taking into consideration its public diplomacy components, given the multi-level bilateral nature of their relations. For example, the two countries work together closely on multiple levels, sharing, for example, important technological cooperation agreements: the Basic Agreement on Scientific, Technical and Technological Cooperation (16th July 1990); the Complementary Agreement to the Basis of Scientific, Technical and Technological Cooperation (15th September 1998); and the Cooperation Agreement in the Field for the Peaceful Use of Nuclear Energy (20th March 2002).23 According to Cabral and Weinstock, bilateral technical cooperation has become a significant tool to strengthen ties, since it means the transfer of ideas, knowledge, skills and technology to promote development. It is normally carried out through providing training, expertise and consultancies (Cabral and Weinstock, 2010). The proliferation of actors gaining the capacity to intervene in foreign policy topics favours multi-level cooperation in international affairs. Due to their increasing importance in transnational discourse from the late 1990s onwards, non-state actors have become crucial participants in 22

Only a systematic multidisciplinary effort can lead to a coherent theory of public diplomacy. Eytan Gilboa (2008), “Searching for a theory of public diplomacy”, The ANNALS of the American Academy of Political and Social Science, vol. 616, March 2008, pp. 55-77. 23 “Agreements and Treaties”, Embajada de Chile en Brazil. http://chileabroad.gov. cl/brasil/en/relacion-bilateral/acuerdos-y-tratados-bilaterales/.

32

Brazil-Chile relations. The participation of non-state actors in the international scenario has increased in the last few years. In this regard regional and local governments, transnational corporations and communication technologies have become important actors in foreign affairs.24 The concept of public diplomacy took shape in Brazilian diplomacy through a set of activities targeted at promoting dialogue with civil society. According to Souza, public diplomacy is about building relations, communication, credibility and trust (Souza, 2010). Since 2012, Brazil’s public diplomacy has aimed to establish a new means of dialogue between official actors and civil society in order to legitimise the country’s foreign policy agenda.25 Despite the fact that public diplomacy has so far been understood almost exclusively in terms of Brazilian state-centric diplomacy, the business sector has also played an important role in BrazilChile bilateral links. In addition to this, the actions of all the political actors involved in bilateral relations, such as local governments, public-private partnerships and the reformulation of the state’s role should be taken into account, since they influence international affairs. In this respect, as la Porte points out, public diplomacy is more than the activity carried out by the state, so non-official actors’ participation should be considered. 26 The increasing role played by public diplomacy has also led to an important debate in Chile, since the emergence of new communication techniques has changed the restricted approach of traditional diplomacy. 27 During Piñera’s administration (2010-2014), the Chilean Minister of 24

See “La visión de la ONU sobre los actores no estatales en las relaciones internacionales”, Paradiplomacia-governos locais, 4th February 2011. http://www. paradiplomacia. org/noticias.php?lang=po&seccion=6&no ta=22 25 See Marco Antonio Nakata, “Diplomacia Pública”, Redes E-Gov. http://www.redesegov.com.br/wp-content/uploads/2014/05/04-Apresenta%C3%A7%C3%A3o-DiplomaciaPublica-2014-Marco-Nakata-MRE-Itamaraty.pdf. The Preparatory Committee Summit of Rio+20 from 29th-30th May illustrates civil society’s participation in Brazilian public diplomacy. “Texto de apoio para a consulta pública”, Rio+20 Conferência das Nações Unidas sobre Desenvolvimento Sustentável. http://hotsite.mma.gov.br/rio20/consultapublica-4/texto-de-apoio-para-a-consulta-publica/. 26 Teresa la Porte (2012), “The legitimacy and effectiveness of non-state actors and the public diplomacy concept”, Public Diplomacy Theory and Conceptual Issues. ISA Annual Convention, 1st-4th April, San Diego. http://files.isanet.org/ConferenceArchive/ 58816b94a39845d9a5b618ae52e7c80c.pdf. 27 Claudio Garrido Melo (2007), “Diplomacia Publica y Propaganda”, Diplomacia, no 113, October-December. Santiago de Chile: Academia Diplomatica, pp. 7-17.

33

Foreign Affairs, Alfredo Moreno launched a blog in August 2011 in order to promote public diplomacy and creates a bridge between civil society and the Ministry of Foreign Affairs. In this way, public diplomacy became a crucial mechanism for fostering the interaction of citizens and civil society institutions with the Chilean Chancellery.28 As Cook highlights, an important point illustrating the participation of actors beyond the Executive power is the role played by Parliament in international affairs since the 1990s, constituting a fundamental component of Chile’s approach to foreign policy (Cook, 2012: 262). Indeed, the increased participation of the Executive power through trainee diplomats who have to establish links with the private sector and non-governmental organisations contributes to developing foreign policy strategy.29 In this way, the participation of the Executive and the Legislative branches together with civil society has, since the 1990s, become a new reality in Brazil-Chile bilateral relations. The main difference between traditional diplomacy and public diplomacy is that the former is related to the relationship between the representatives of states or other international actors and the latter involve the general public in foreign societies and highlights the importance of non-official groups, organisations and individuals (Melissen, 2005: 11). Public diplomacy does not mean that diplomats have no direct role beyond diplomatic affairs; in fact they should work at maintain their relations with the existing elites and the training programme aimed at civil servants, police, the military and the judiciary. 30 However, they need to realise that these activities, although necessary, are not enough on their own and that diplomats and other government officials should promote a broader coalition of non28

The aim of the Chilean Ministry of Foreign Affairs is to encourage citizens to participate in the foreign policy process. “Ministro de RR.EE. de Chile inaugura de sitio web de diplomacia pública”, Ministerio de Relaciones Exteriores, Chile Abroad, Embassies, Consulates and Multilateral Missions of Chile. http://chileabroad.gov.cl/blog/noticias/ 2011/08/23/ministro-de-rr-ee-de-chile-inaugura-sitio-web-de-diplomacia-publica/. 29 More information about the Chilean case in John Hemery (2005), “Training for public diplomacy: an evolutionary perspective” in Jan Melissen, The new public diplomacy: soft power in international relations. London: Palgrave Macmillan. 30 Moreover, public diplomacy means that the state engages in image projection, communication and building relationships with domestic and foreign audiences. Antônio Ferreira de Lima Júnior (2015), “O papel da diplomacia pública nas relações internacionais contemporâneas”, Redefinindo a diplomacia num mundo em transformação, 5 o National Meeting from 29th-31st July 2015. Associação Brasileira de Relações Internacionais (ABRI). www.encontronacional2015.abri.org.br/arquivo/downloadpublic.

34

governmental agents (Riordan, 2005: 186). As Melissen points out, “the new public diplomacy will be an increasingly standard component of overall diplomatic practice and is more than a form of propaganda conducted by diplomats” (Melissen, 2005: 11). Public diplomacy embraces public affairs, the participation of new actors and the reformulation of the nation brand in order to attract investments.31 The interaction of emerging actors in BrazilChile bilateral relations will be analysed in more detail in the following sections and in Chapter 3. As Riordan argues, “recent years have seen the emergence of a new international security agenda, including non-traditional issues such as environmental degradation, the spread of epidemic diseases, financial instability, organised crime, migration, growing foreign direct investment, resource and energy issues” (Riordan, 2005: 186-187). These issues are all interrelated since they are transnational problems and demand a collective approach. The threats that these issues pose to society cannot be managed without collaborating with a wide range of partners from different nationalities, cultures and political and economic backgrounds.32 Despite the differences between traditional and public diplomacy, both should be developed according to mid-term objectives and long-term aims. As Melissen states, “public diplomacy builds on trust and credibility and it often works best with a long horizon” (Melissen, 2005: 15). It can target the field of political dialogue, trade, foreign investment and the establishment of a connection with civil society without the need for a gatekeeper’s influence and beyond that, it also has hard power goals such as alliance management, conflict prevention or military intervention. As long as public diplomacy ensures a coherent environment for foreign policy to be carried out in, Brazil-Chile long-term bilateral ties should be studied from this perspective.33 31

As public diplomacy assumes a more prominent role in the diplomatic affairs of nations, it is increasingly being used in the international relations debate. Kathy R. Fitzpatrick (2007), “Advancing the new public diplomacy: a public relations perspective”, The Hague Journal of Diplomacy, vol. 2, Issue 3, pp. 187-211. 32 For further information on this topic see Kal Raustiala (2002), “The architecture of international cooperation: transgovernmental networks and the future of international law”, Virginia Journal of International Law, vol. 43, Los Angeles: UCLA School of Law. http://www2.law.ucla.edu/raustiala/publications/Architecture%20of%20International%20C ooperation.pdf. 33 The countries of the ABC Pact (an alliance between Argentina, Brazil and Chile) seem to

35

1.1.1 Public diplomacy and propaganda: impacts on traditional diplomacy According to Clerc and Glover, concepts such as propaganda, nation branding and foreign cultural relations require more attention in the study of the so-called new public diplomacy. Likewise, public diplomacy, propaganda and nation branding are also about communicating information and ideas to foreign audiences. The goal is to change their attitudes towards the original country, as well as reinforce existing beliefs (Clerc and Glover, 2015: 19). In practical terms, public diplomacy has more to do with the perception of ‘engagement’ than simply the dimension of communication targets.34 Public diplomacy is about building relationships with diverse sectors, enabling various actors to participate in the international affairs’s agenda. As Wang argues, any scenario of developing relations between states demands cross-border cooperation between the public and private sectors (Wang, 2006: 43-45).35 Consequently, public diplomacy performs a gap-filling role since it involves a two-way communication channel. 36 be different from the rest of Latin America due to their rapid economic development, democratic regimes and stable political institutions. Jorge Balán (2014), “The Southern Cone of the Americas: higher education at a crossroads”, International Briefs for Higher Education Leaders, no 4. Boston, p. 12. Apart from their historical backgrounds, Brazil has attracted a lot of attention as an emerging economy and Chile continues to lead the region in economic freedom and growth. The relationship between the two states should be studied in a broader context. Míriam Leitão (2014), “A economia do Chile”, O Globo, Caderno Economia, 13th March 2014, p. 12. 34 Public diplomacy demands that policy-makers and diplomats work together with a wider range of actors beyond governments to move towards a more open diplomacy. Jim Murphy (2008), “Engagement”, Public Diplomacy in a Globalised World. London: Foreign and Commonwealth Office, pp. 6-15. 35 More information on the increasing role of business in public diplomacy in Jay Wang (2006), “Public diplomacy and global business”, Journal of Business Strategy, vol. 7, Issue 3, pp. 41-49. The increasing role of transnational networks should be taken into account in Brazil-Chile bilateral relations, Marisa von Bülow (2010), “Civil society, organisations and their pathways to transnationality”, Building transnational networks: civil society networks and the politics of trade in the Americas. New York: Cambridge University Press, p. 5. 36 The US Information Agency defined public diplomacy as promoting the national interest and the national security of the United States through understanding, informing, and influencing foreign publics and broadening dialogue between American citizens and institutions and their counterpartes abroad. Stephen Johnson and Helle Dale (2003), “How to reinvigorate US public diplomacy”, The Heritage Foundation Backgrounder, no 1645. Washington D.C., 23 April. http://www.heritage.org/issues/public-diplomacy.

36

In contrast to public diplomacy, propaganda has, in some respects, negative connotations, although it should be stressed that few would consider public campaigns by West European countries aimed at building up their civil society as propaganda. 37 According to Welch, “propaganda is the deliberate attempt to influence the opinions of an audience through the transmission of ideas and values for the specific purpose, consciously designed to serve the interest of the propagandists and their political master, either directly or indirectly” (Welch, 2005: 16-17). Propaganda tends to send out a single message in a one-way direction without expecting an answer.38 However, emerging new medias have changed the unique perception of media as a single unit.39 The previously mentioned definition of propaganda is hard to distinguish

37

There is an unfair dismissal with regard to propaganda, meaning that the term criterias need analysis. Douglas Walton (1997), “What is propaganda, and what exactly is wrong with it”, Public Affairs Quarterly, vol. 11, Number 4, pp. 383-413. 38 The term propaganda has a universally negative connotation. Propaganda is more an exercise of deception than persuasion. Propaganda intends to manipulate others’ beliefs. In contrast, public diplomacy involves attempts to influence the foreign audience without the use of force. The mechanism of public diplomacy used to influence foreign target audience are media diplomacy, public information, political action and cultural programmes. Eric Braham (2006), “Propaganda, beyond intractability”, August. http://www. beyondintractability.org/essay/propaganda. 39 Today, new digital technologies, particularly new communication networks connected to the internet, are important models of cultural production. These new media tools are flexible enough to serve the general models of information. The so-called ‘new media culture’ describes the kind of changes that occur in cultural and social environments after the expansion of digital technologies. This idea incorporates groups of people and practices connected to the media and the political power of networks and networking. Slavomir Krekovic (2003), “New media culture, internet as a tool of cultural transformation in Central and Eastern Europe”, IWM Junior Visiting Fellows’ Conferences, vol. XIV, nr. 6. p. 6. http://www.iwm.at/wp-content/uploads/jc-14-06.pdf. The media has been considered an important actor in diplomacy, since the interest of citizens in this has increased in the last few years. Given that misperceptions and distorted images have led to conflicts of interests between states, the media and international affairs, these are key elements in foreign audience’s perceptions. The Arab Awakening in 2011 was an important example of the power of the real media, since the importance of the uprising extended beyond the Arab states and affected the rest of the global community. This means that policymakers and diplomats cannot be mere spectators. However, the crucial point is the incompatibility between speed and diplomatic action. Diplomaticy became obsolete for dealing with new media such as Twitter and Facebook. See Philip Seib (2012), Real-time diplomacy: Politics and Power in the Social Media Era. New York: Palgrave Macmillan.

37

from some of the definitions of public diplomacy. 40 Either the former or the later refers to modern communication with the public, encompassing different target groups and focusing on increasing the support and participation of non-state actors in how foreign policy is carried out. As Melissen points out, “public diplomacy is similar to propaganda in that it tries to persuade people what to think, but it is fundamentally different from it in the sense that public diplomacy also listens to what people have to say”. The main difference between the two lies in the pattern of communication; modern public diplomacy is considered a ‘two-way street’, getting over the point that it is persuasion by means of dialogue based on a liberal notion of communication with foreign publics (Melissen, 2005: 18). In this sense, a category such as propaganda has its limitations when capturing the range of aspects that guide the relationship between diplomats and civil society.41 Shaping new public diplomacy is much more complex than the idea of one-way messaging, as ‘propaganda’ proposes. Accordingly, agents of the state have to build ties with society in order to defend national interests. However, the rise of new media changes the idea of conventional media as the only instrument that gives direct information. As Ayad points out, “the public audience is relying less and less on traditional information sources. Journalists and experts are no longer the only reliable sources of information. New technology has brought new sources of communication” (Ayad, 2012: 26). Expanding new forms of communication allow individuals to be much better informed than in previous years, increasing interaction and conversation about international issues. The diversification of new medias contributes towards empowering civil society and exerting a significant 40

See Ben D. Mor (2007), “The rhetoric of public diplomacy and propaganda wars: a view from self-representation theory”, European Journal of Political Research, vol. 46, Issue 5, pp. 661-683. 41 From a communications perspective, several key features make propaganda the tool of choice in certain contexts and public diplomacy in others. Propaganda deliberately manipulates the communication through a variety of techniques so that some aspects are hidden from the audience and the audience feels compelled to accept the message. Public diplomacy is open public communication in a global communication arena. To gain trust, public diplomacy must be absolutely credible for the government to stand any chance of success. R. S. Zaharna (2004), “From propaganda to public diplomacy in the information age” in Nancy Snow and Yahya Kamalipour (eds) War, Media and Propaganda: A global perspective. New York: Rowman & Littlefield, p. 5.

38

influence on public diplomacy strategy.42 Whilst the state remains the primary source of power and law in the international system, emerging actors promote international cooperation between different sectors.43 Bearing this mind, it is important to remember that public diplomacy involves about a highly complex apparatus to deal with foreign affairs’ recent demands. 44 The public diplomatic approach encompasses a credible nation branding enforced by coherent propaganda, and dynamic presidential diplomacy.

1.1.2 Paradiplomacy and public diplomacy The presence of emerging actors in international relations explains the need for a new approach to face the challenge of foreign affairs. In the twentyfirst century, governments are dealing with global challenges such as environmental issues, humanitarian catastrophes, security threats and transnational crime among others and as a result, conventional models are not efficient enough to deal with the problems in the new world order. The growing role played by non-state actors in rule-making and implementation needs a more dynamic approach. 45 42

On 20 June 2013, more than one million Brazilians protested against poor public services, corruption, the cost of living, extravagant spending on the World Cup and much more. “Brazil’s protests: the cries are answered”, The Economist, 29th June 2013, p. 58. In Chile, protests resumed on 4th August 2011, when tens of thousands of students marched in major cities in favour of free education. “Education in Chile: we want the world”, The Economist, 13 August 2011, p. 52. 43 In Realism, the international system is defined by anarchy. This means the absence of a central authority as well as the idea that states are sovereign and autonomous of each other. See Pecequilo, Cristina Soreanu (2004), Introdução às relações internacionais: temas, atores e visões. Petrópolis: Vozes, pp. 115-117. 44 Colombia’s domestic situation involving drug trafficking and criminal activity requires the government to manage foreign affairs perfectly. The negative image of Colombia associated with cocaine production and armed conflict demanded a new public diplomacy strategy to tackle the country’s negative image. A negative perception abroad decreases foreign direct investment (FDI) and tourism and damages the nation’s international image. See Jennifer Florez Torres (2010), “La diplomacia pública en una perspectiva comparada: una estrategia de la política exterior y su implementación en la política colombiana”, Pensamiento Jurídico, no 30, January-April. Bogotá: Stilo Impresores, pp. 263-293. 45 See Thomas Risse (2011), “Governance in areas of limited statehood” in Risse, Thomas, Governance in areas without a state: policies and politics in areas of limited statehood.

39

Important decisions are not only made by central governments; subnational governments also play a significant role in today’s international relations. At present, international activity needs to relate domestic and international forces and the interactions between the two.46 The increasing emergence of paradiplomacy lies in the new demands of foreign policy worldwide.47 An important question when analysing the paradiplomacy phenomenon concerns understanding why sub-national entities go abroad. With this in mind, paradiplomacy can be considered as the direct international activity carried out by sub-national entities in order to support, complement or correct central official diplomacy. Sub-national actors have several reasons - whether economic, political or cultural - to operate on the international arena. There are numerous reasons for developing para-diplomatic ties, given the specific features of a certain region, province or city, to establish international links. The level of decentralisation, the relationship between the central government and the decentralised entity and geographical position play an important role in paradiplomacy. However, as Serra argues, these are not fundamental components for developing para-diplomatic relations, since this has to do New York: Columbia University Press. 46 The changing role of diplomacy in the twenty-first century has been notorious, since it has gone from a peaceful method of maintaining inter-state relations to being an instrument of communication in a globalised context. Traditional diplomacy has only normally been practiced by diplomats and statecrafts today there is a growing participation of other actors, such as international organisations, transnational companies, the media and NGOs, shifting the focus of international relations. Wilfried Bolewski (2007), Diplomacy and International Law in globalised relations. Germany: Springer. The growing role of subnational and formal actors imposed a new language on foreign policy to help understand the complex scenario in which foreign affairs are carried out. Francisco Aldecoa and Michael Keating (1999), Paradiplomacy in action: the foreign relations of subnational governments. London: Frank Cass Publishers. 47 Globalisation and the rise of transnational regimes, particularly regional trading areas, have diminished the distinction between state and subnational governments. Paradiplomacy is opening international affairs to other actors, where states are no longer considered exclusive actors. Michael Keating, “Regions and international affairs: motives, opportunites and strategies” in Aldecoa, Francisco and Keating Michael, Paradiplomacy in action: the foreign relations of subnational governments. New York: Routledge. p. 6. For instance, Chile and Argentina developed a subnational relationship in the early 1990s through the socalled ‘Comités de Frontera’ and ‘Comités de Integración’ along the 5.500 Kilometres of their shared borders. Loreto Schnake (2010), “Paradiplomacía en Chile: el caso de la region metropolitana”, Friedrich Eberto Stiftung. http://library.fes.de/pdf-files/bueros/chile/ 08521. pdf.

40

with the local governments’ aims of establishing links beyond their borders (Serra, 2009: 73-74). No matter exactly what their motives, their reasons are similar: to seek support in the international arena for their demands. The idea of becoming more active internationally is not something exclusive to certain regions, since the current foreign affairs context demands new organisational ways of dealing with these issues.48 In this study, paradiplomacy has nothing to do with separatism, nationalist movements or political reasoning (the idea that regions seek legitimacy and recognition abroad). Instead, it has to do with digital media, since creating direct communicational links is congruent with public diplomacy, nation branding and presidential diplomacy. This means the idea of multi-level cooperation to complement traditional diplomacy and strengthen international links.49 Although Brazil and Chile do not share common borders, both countries have decentralised relations. For instance, the Brazilian northeast state of Ceará has developed an important relationship with Chile. 50 Paradiplomacy is particularly relevant to understanding the capacity of sub-state entities’ participation, irrespective of their metropolitan state, in 48

In the mid-1980s, Mexico initiated a process of political liberalisation and democratic transition which favoured the trend towards political decentralisation. The decentralisation of the federal government led to ties being strengthened in the areas of economic promotion and tourism. Rafael Velázquez Flores (2015), “La paradiplomacia mexicana: las relaciones exteriores de las entidades federativas”, Revista de Relaciones Internacionales de la Universidad Autónoma de México, no 96. pp. 123-149. One example of this is the summer programme created by the government of Mexico specifically through the Ministry of Social Development and the Mexican Institute of Youth. The programme involves Mexican young people going to Colombia to participate in workshops on preventing of pregnancy. The aim is for Mexican students to have a chance to change the problems in Colombia. Jennifer Jacqueline Galeana Zavala (2014), “The Latin America paradiplomacy model makes sense for US-Russia relations”, Russia Direct, 26th July 2015. http://www.russiadirect.org/opinion/latin-american-paradiplomacy-model-makes-sense-us-russia-relations. 49 Growing interdependence as part of the globalisation process led to emerging concepts such as paradiplomacy. An increasing paradiplomatic role in foreign affairs can also be noted in the Triple Frontier (Brazil, Paraguay and Argentina), which explores the relationship between the three based on conceptual debate, whether this contributes to strengthening cooperation or encouraging dissonance between the states. Cardin, Eric Gustavo. “Globalização e desenvolvimento regional na Tríplice Fronteira”. In: Ciências Sociais Unisinos, vol. 45, n.1, pp. 162-170. São Leopoldo: Editora Unisinos, 2009. 50 See Governo do Estado do Ceará, “Governador se reúne com embaixador do Chile”. 1st November 2013. http://www.ceara.gov.br/sala-de-imprensa/noticias/9356-governador-sereune-com-embaixador-do-chile.

41

international affairs. 51 This is also called ‘federal foreign policy’, inasmuch non-central states seek out their own specific international interests.52 Paradiplomacy makes it clear that autonomous entities can participate in the international arena by establishing their participation scope.53 It is important to highlight that autonomous entities do not engage in traditional foreign policy.54 Rather, as Ribeiro argues they have limited autonomy and excessive bureaucracy when managing their policies in the international system (Ribeiro, 2009: 124). This means that they are sufficiently competent to make decisions independently, even within the existing constitutional framework of their state. On the whole, foreign ministries cannot be considered the exclusive domain of foreign policy. The emergence of sub-national entities in international affairs is partly linked to the nation-state crisis and the process 51

However, paradiplomacy does not mean that subnational entities differ from the central government. Paradiplomacy represents the force within a state from its lowest level, which plays a relevant role in shaping foreign and domestic policy. In contrast to emerging actors on the international scene, subnational entities are the only actors with a state-like nature. Alexander S. Kuznetsov (2015), Theory and practice of paradiplomacy: subnational govenments in international affairs. New York: Routledge, p. 3. 52 Subnational governments incorporate strategies that are far-removed from the exclusive domain of central governments. Local government empowerment is a significant tool for subnational entities to achieve their development goals. Reinaldo Dias (2015), “Um tema emergente nas Relações Internacionais: A paradiplomacia das cidades e municípios”, Âmbito Jurídico, 27th July 2015. http://www.ambito-juridico.com.br/site/index.php ?n_link=revista_artigos_leitura&artigo_id=8156. 53 Paradiplomacy is also linked to the idea of ‘branding’ and how to attract international resources. The Brazilian city of Santos (where the Port of Santos is located) has focused on attracting tourism. The government of São Paulo - through the Department of International Affairs - organised the University Forum of Paradiplomacy. Fábio Pereira Ribeiro (2014), “Paradiplomacia: Enfoque estratégico para Estados e Municípios”, Revista Exame, Edição 1093, 28/05/2014. São Paulo: Editora Abril, p. 23. 54 International relations in the state of São Paulo were in line with the Brazilian Constitution and the federal model. The government of São Paulo encourages cooperation in areas such as technology, the environment, public security, investments, education and agriculture. São Paulo has not only expanded its cooperation with Latin American countries, but also with multilateral organisations such as the World Bank, the United Nations and the Inter-American Development Bank. “Relações Internacionais”, Governo do Estado de São Paulo. http://www.saopauloglobal.com/rel_inter.aspx. See an analysis of the engagement of the state of São Paulo in international affairs in the area of the environment from the 1970s onwards in Joana Setzer (2013), Environmental paradiplomacy: the engagement of the Brazilian state of São Paulo in international environmental relations. PhD thesis London School of Economics and Political Science. London, June 2013.

42

of economic globalisation. According to Paquin and Lachapelle, there is a clear practical reason to the increase in the participation of sub-national governments on the international scene, given their aim of attracting foreign direct investment and encouraging exports (Paquin and Lachapelle, 2005: 5). Given glosalisation and intensified regional integration, sub-state entities have started to develop their own foreign policies, most significantly in the areas of economic and trade policy, the environment, agriculture and tourism as well as traditional domestic policy areas such as justice and domestic affairs.55 To achieve any progress in the mid-term, there needs to be proper mechanisms for consultation and coordination between autonomous entities and central governments on matters of international affairs. When referring to the participation of these entities in the international arena, this does not contravene domestic foreign policy aims in most cases. Often complementing as well as benefitting them instead.56 As explained when analysing the role played by public diplomacy in contemporary international affairs, it is important to stress that foreign policy is no longer the exclusive domain of foreign ministries.57 On the 55

In the Mexican state of Chiapas initiatives are carried out by local governments seeking sustainability and adaptation to the climate, creating proposals in this respect. Environmental paradiplomacy has to do with the action of sub-national entities related to external actions such as the green economy, environmental governance and climate change. Horacio Rodríguez Vázquez (2013), “Hacia la construcción de una agenda de paradiplomacia ambiental en la frontera sur de México”, Explanans, vol. 2, no 1, JanuaryJune 2013, pp. 13-34. 56 The paradiplomacy trend is facilitated, in the case of federations, by the autonomy granted by the central government, in contrast to what occurs in unitary states. For instance, immigration problems demand a dynamic approach from non-central governments to deal with central governments. In extremely rare cases, sub-national entities go against the federal government. This kind of relation is called ‘protodiplomacy’ and has been studied in the case of Spain. More information about its diverse aspects can be found in Mariana Andrade e Barros (2010), “Outlooks for the legal framing of paradiplomacy: the case of Brazil”, Federal Governance, vol. 7, n o 3. Ottawa: Forum of Federations, pp. 39-49. 57 It is important to stress that public diplomacy and paradiplomacy are related to democratic governments. However, there is the institutionalised paradiplomacy of countries such as Argentina, Germany and Spain and that of other countries, in which paradiplomacy does not have a formal character, such as the United States, Canada and Australia. The tendency in international affairs for the growing participation of non-state entities has exerted its influence on the process of Africa’s political decentralisation. Some paradiplomacy activities have been initiated in Africa from the 1980s onwards, due to the end of bipolarity and the apartheid regime, for example. Camila Andrade (2015), “Há

43

contrary, international relations are now part of a significant number of individual sub-state entities. Like public diplomacy, paradiplomacy also indicates that states remain at the forefront of conducting their foreign policies. That said, it is the sovereign state that decides how much of its power is shared (Wolff, 2009: 1-3). From a Brazilian perspective, the so-called paradiplomacy of federal entities has been vigorous in the last few years.58 This has meant the introduction of a certain social federalism in which the decentralised political authority acts as closely according to real and socially constituted interests as possible. This new dimension of international relations has its origins in the changes that occurred at local federal levels. 59 In response to the creation of an original phenomenon concerning foreign policy-making and the country’s trade, decision-making processes involved the increasing internal mobilisation of federal entities (Saraiva, 2006: 430-34). As Saraiva points out, the international secretariats of the states of the Federation of Brazil are organised so as to consolidate the strategic and tactical choice of sub-national units in their own international missions. According to this scholar, governors often travel with more objectivity and are better prepared to negotiate commercial interests than the members of the central government. Despite the international legal restrictions that paradiplomacia na África”, Relações Internacionais, Diplomacia, 26 March 2015. http://relacoesinternacionais.com.br/2015/03/26/ha-paradiplomacia-na-africa/. 58 Although paradiplomacy began during the administration of President Cardoso, it was during the term of President Lula that it achieved certain relevance in foreign policy. Subnational entities gained legitimacy during his administration, given that he promoted dialogue between sub-national enties and the Ministry of Foreign Affairs. Furthermore, he carried out important changes to the bueraucracy of the Ministry of Foreign Affairs, which facilitated its relationship with non-central actors. Cássia Maria Siqueira Marques da Costa (2012), “As movimentações recentes da dimensão subnacional da política externa brasileira”, Seminário Nacional de Pós-graduação de Relações Internacionais, Institution of International Relations, University of São Paulo. Brasília, FINATEC, 12th-13 July 2012. 59 The Brazilian states of Rio Grande do Sul, Parana and Santa Catarina institutionalised their interregional agreements with the north-eastern provinces of Argentina in 1998. The agreement was institutionalised by the Protocolo Regional Fronteirizo No 23. See Eduardo Iglesias et al (2009), “Republic of Argentina” in Hans Michelmann, Foreign Relations in Federal Countries, p. 26. The Constitution of the Brazilian state of Rio Grande do Sul aims to strengthen Latin American integration. “Preâmbulo”, Constituição do Rio Grande do Sul. http://www2.al.rs.gov.br/dal/LinkClick.aspx?fileticket=WQdIfqNoXO4%3D&tabid=3683 &mid=5359.

44

constrain their internal legal actions, the states of the federation, in particular, have been shown to be creative and active. 60 For instance, the northeast of Brazil has gradually emerged as part of the foreign trade agenda. Traditionally a peripheral region in terms of exports, the north-east has demonstrated its ability to mobilise resources towards interaction with national and international fields in the last few years. The State of Bahia has innovated by expanding international cooperation with countries like Chile. In the case of Bahia this cooperation is carried out through Promo (The International Business Centre of Bahia) as a key agent in the mobilisation effort. However, the most dynamic federal unit in the Brazilian north-east has been the state of Ceará, which has a specialist advisor for international affairs. Besides having diverse partners such as the United States, Europe and Asia, Ceará also has cooperation agreements with countries like Cuba, Mexico and Chile. Despite legal constraints, Ceará has begun to have a significant role in international trade.61 Brazil’s constitutional system gives municipalities and federate-states a series of complementary and exclusive responsibilities. The constitution does not prohibit the development of international ties. Nevertheless, as will be explored in more detail in Chapter 3 that deals with Brazil-Chile bilateral relations, Article 21 of the Federal Constitution points out that it falls to the Union, which means the federate states, to maintain relations with other states, as well as transborder relations. In this respect, the constitutional amendment (Project 475/2005) deserves special attention in order to understand the possible legal ramifications (Milani and Ribeiro, 2011: 25). Despite legal obstacles, the new global order defines new ways to manage of internationalisation processes, which cannot be dealt with without a local 60

In Brazil, paradiplomacy is carried out through agreements between the judicial branch and other countries, for instance, Ecuador and Paraguay with regard to the use of electronic voting machines. The negotiation process for the use of these machines led to an international agreement. However, the agreements negotiated in the context of paradiplomacy tend to be drawn up by the judiciary instead of the Ministry of Foreign Affairs. Marcelo D. Varella (2012), Direito Internacional Público. São Paulo: Saraiva, p. 48. 61 In accordance with the trend of gradual internationalization from the 1990s onwards, the state of Ceará has shown greater export growth than Brazil as a whole. More information in Governo do Estado do Ceará, Empresas http://www.ceara.gov.br/empresas. Ceará em números http://www.ceara.gov.br/portal_govce/ceara/ceara-em-numeros.

45

approach. Inevitably, paradiplomacy takes the same route as the approach involving emerging organisational ways of supporting traditional diplomacy. Not all local governments approach international relations in the same way. Both Brazil and Chile enforced para-diplomatic links in order to attract investments, attracting international companies and seeking new markets for their exports. Promoting tourism is another important reason for fostering para-diplomatic ties as a kind of income and as an effective instrument to encourage networking among different sectors. It can be seen how nation branding, public diplomacy and paradiplomacy are all interrelated, since they are important mechanism for encouraging tourism. These new forms of cooperation also have a positive effect on bilateral relations, as do the economic and political opportunities that emerge among local governments. Therefore, paradiplomacy has to do with a multifaceted approach insofar as it is not simply focused on economic gains. It serves to complement the key concept of public diplomacy, considering the multifaceted approach of the two theories. Although the Chilean Constitution gives the central state the power to sign treaties and conduct foreign affairs, para-diplomatic activities are not a new phenomenon. In fact, this phenomenon has existed for more than a decade both in regional governments, the so-called ‘Intendencias’, communal governments and municipalities. Despite some legal limitations, Branco highlights the fact that Chilean participation in the international arena has increased in recent years (Branco, 2009: 82).62 Paradiplomacy contributes to promoting political and economic interests and nation branding, since non-official actors also gain a relevant say in international affairs. Brazilian oil exploitation on platforms that drill for light oil with a high commercial value is relevant example of compatibility between nation branding and paradiplomacy. The Metropolitan regions of Baixada Santista in the state of São Paulo projects their nation branding as associated with pre-salt discoveries in a similar way to Brazil’s ethanol 62

Emerging international actors include subnational entities, such as regional governments and local municipalities. This international phenomenon has developed significantly in Chile, Mexico and Argentina, see Omar Taupier (2010), “Integración desde lo micro: paradiplomacia y comunicación en el escenario latinoamericano, Revista Académica de la Federación Latinoamericana de Comunicación Social, no 79. Federación Latinoamericana de Facultades de Comunicación Social (FELAFACS).

46

projection.63 As Szondi highlights, the multiple dimensions of public diplomacy built around strategies of promotion and persuasion justify it being understood as a nation branding strategy (Szondi, 2008: 6). Therefore, economic considerations play a relevant role in paradiplomacy, given the fact that non-official entities demand that they become global subnational players. However, paradiplomacy also has other aspects, such as culture, exchange programmes, tourism and foreign direct investment. Paradiplomacy and the concepts mentioned in this study can help explain the evolution of foreign policy in a broader analysis context, along with the increase of new actors in the international arena. The paradiplomacy approach draws to the dynamic of the Brazil-Chile bilateral approach and how their specific interaction is understood. 1.2 Brazil-Chile Relations and the Emerging Field of Nation Branding The way countries see each other is overwhelmingly important not only in formal foreign affairs but also in decentralised diplomacy. Nation branding is directly related to public and presidential diplomacy. It can be observed that the former exerts an influence on various bodies, in which a remarkable brand fosters interaction between different actors, given the attention that this garners from other countries. As Kotler and Getner points out, globalization has compelled states to project a national image in order to attract foreign investments, tourism, trade and so forth. The country’s nation branding affects outside attitudes towards the state’s products and services, turning the concept into a relevant tool for promoting a distinct self-image (Kotler and Getner, 2002: 251-252). The right and ability to develop a consistent nation branding shows a clear strategy of launching consistent international competitive advantages, laying the groundwork for long-term, trustworthy partnerships. In the coming years, it is likely that the axis of the global economy will shift from developed countries to emerging nations.64 63

Fábio Pereira Ribeiro (2014), “Paradiplomacia: enfoque estratégico para Estados e municípios”, Exame. http://exame.abril.com.br/rede-de-blogs/brasil-no-mundo/2014/05/28/ paradiplomacia-enfoque-estrategico-para-estados-e-municipios/. 64 Nation branding has become a relevant concept in Latin America foreign affairs. For a better view of naton branding process in other Latin American countries, see, Lina María Echeverri Cañas and Christian A. Estay-Niculcar (2013), “The role of tourism in the country brand consolidation of Argentina”, Visión de Futuro, año 10, vol. 17, n o 2.

47

This fact demonstrates the importance of Brazil and Chile’s nation branding projection in international relations. According to Kim, belief in a common culture, history, territory, language and religion is an essential tool for building national image. The cultural wealth of nations has become relevant in the new economy (Kim, 2012: 4). For obvious reasons, nations are not static entities but, are born, transformed and retransformed according to the dynamics of internal and external scenarios. The study of Brazil-Chile bilateral ties raises the question of the influence of the national image on how foreign policy is carried out.65 According to Dinnie (2012), nation branding makes a difference in terms of international acceptance since it goes beyond exporting products and has become an important way of communicating with the rest of the world (Dinnie, 2012: 14). The concept of nation branding helps to build stable relations between states, since it helps countries get to know each other more easily. Nation branding projects a country’s image to instinctively cause reaction among the citizens of another country. Whilst nation branding focuses on the country’s most dynamic features of the country, the inhabitant’ perception of national image can differ from the nation branding projected abroad. This means that projecting a nation branding can differs from domestic perceptions. In this chapter, the significant ways in which Brazilian and Chilean citizens query each other will be described in order to explore the growing role played by nation branding in bilateral links, since Brazilian citizens’ perception over Chile can differ from the Chileans own views on their country. Although nation branding also encompasses cultural characteristics and affects the way the country is perceived abroad, inhabitants’ perceptions generally tend to be concise and related with memories of the past. Nation branding goes hand in hand with the idea of increasing international prestige, while citizens’ views have to do with remembering historical Misiones: Facultad de Ciencias Económicas, Universidad Nacional de Misiones. 65 On the regional level, Brazil has emerged as Latin America’s standout global power. Brazil’s national image and public diplomacy demands special attention. This authority is evident in Brazil’s key role in the creation of the Union of South American Nations (UNASUR) in 2008. Aleksandra Ristovic (2013), “Brazil’s soft power and Dilma’s dilemma”. PDin Monitor. Washington D.C.: USC Center on Public Diplomacy at the Annenberg School. See: http://uscpublicdiplomacy.org/index.php/pdin_monitor/article/ brazils_soft_power_and_ dilmas_dilemma/.

48

events. As Werther points out, consolidated nation images are difficult to change. For instance an old nation like Great Britain with an established image could not easily change its image overnight.66 Instead of invoking multi-sector aspects to target ambitious nation branding, inhabitants’ perceptions embrace personal experiences and influential events in the foreign country.67 Nation branding and public diplomacy are much more complete mechanisms for understanding Brazil-Chile ties because the relationship between the two states involves a transnational process that traditional diplomacy does not encompass. Given that diplomacy affects people’s lives in many ways, the growing interest in foreign affairs has narrowed the gap between people’s impression of the country and nation branding.68 Regarding Brazilian-Chilean relations, their divergent national images come from the different historical backgrounds that led their engagement with one another.69 The Brazil-Chile national images are connected to the 66

See Charlotte Werther (2011), “Rebranding Britain: Cool Britannia, the Millennium Dome and the 2012 Olympics”. http://ojs.ub.gu.se/ojs/index.php/modernasprak/article/ viewFile/664/616. 67 Among the Latin American countries, Brazil was chosen the country in the region with the best nation branding and with the best image in BRIC, according to the latest Nation Branding Index in July 2015. Brazil is considered an accredited representative country in international affairs. “Brasil é o país mais admirado da América Latina”, Notícias, 30th July 2015. http://www.administradores.com.br/noticias/economia-e-financas/brasil-e-o-paismais-admirado-da-america-latina/49185/. 68 Examples of the positive role of civil society in domestic and international affairs include, fostering gender equality, demanding respect for indigenous people and civil society involvement in fighting corruption. Alfredo Sfeir-Younis (2004), “The role of civil society in foreign policy: A new conceptual framework”, Seton Hall Journal of Diplomacy and International Diplomacy. http://blogs.shu.edu/diplomacy/files/archives/03_sfeir _younis.pdf. Brazilian civil society representatives work to establish a permanent forum to discuss topics related to international relations. In July 2013, the Reflection Group on International Relations which grouped together social movements, NGOs, foundations and academic institutions held the Ten Years of Foreign Policy 2003-2013 Conference. The aim was to create a permanent forum to promote dialogue between civil society and the Ministry of Foren Affairs and the General Secretary. “Fórum Permanente de Consulta com a sociedade civil sobre política externa”, Secretaria-Geral Presidência da República. http://www.secretariageral.gov.br/atuacao/internacional/politica-externa-e-participacaocidada/forum-politica-externa. 69 An important fact that must be borne in mind is the different historical backgrounds of the two countries with authoritarian pasts. In this sense, Silva and Cleuren’s analysis is fundamental to understanding the different political scenarios in Brazil and Chile and their rupture with the authoritarian regime. In this respect, efforts to directly integrate the

49

perceptions of the intellectual elite, who make the development of a consolidated mutual knowledge about each country possible. Despite their differences, the two countries share important historical features that are relevant elements for strengthening bilateral relations. First and foremost, academics and practitioners in the area of international relations agree that history has played an important role in determining the foreign policies of both states (Mullins, 2006: 9-10). Moreover, the idea of branding a nation acts as a powerful political mobiliser to explain the relative coherence that can be observed in the Brazil-Chile relationship. In Brazil, the monarchy was the basis for building the national image in the nineteenth century. The perception of Brazil was of a large population of Portuguese speakers who remained united, unlike Hispanic America. At that time, being Brazilian meant being different to the Hispanic world. In this sense, the unique linguistic and sociological features of national image were recreated on a continental scale. With the advent of the republic, Lafer points out that many Brazilians realised that being Brazilian also meant being Latin American (Lafer, 2009: 35-36). From this time onwards, South America began to play a major role in the construction of Brazilian image, with foreign policy working on establishing relations of relative equality between the states.70 This view does not emerge clearly in the nineteenth century, when the main vector of foreign policy was the consolidation of the nation. However, located on the geographical, political and economic periphery of Europe, Brazil has never felt comfortable lagging behind a world order in which the functioning of international politics was based on the balance of great powers. As Rubens Ricupero indicates, this subsystem - with its own dynamics - coexisted with the correlation of state forces between states mainly manifested in the political, military, economic and technological fields among others (Lafer, 2009: 65-67). Brazil’s foreign policy played a population were different in the two contexts. See Patricio Silva and Herwig Cleuren. “Assessing participatory democracy in Brazil and Chile: an introduction”, in Patricio Silva and Herwig Cleuren (Eds) (2009), Widening democracy: Citizens and Participatory Schemes in Brazil and Chile. Leiden: Brill, pp. 4-5. 70 For additional reading, see Lilia Moritz Schwarkz (2006), “A mestizo and tropical country: the creation of the official image of independent Brazil”, Revista Europea de Estudios Latinoamericanos y del Caribe. Amsterdam: CEDLA. http://www.cedla.uva.nl/ 50_publications/pdf/revista/80RevistaEuropea/ 80MoritzSchwarcz-ISSN-0924-0608.pdf

50

key role even before the Declaration of Independence and ahead of its time, Brazil’s diplomacy was an important element for promoting the country’s international insertion.71 The study of Brazil-Chile bilateral relations should take into account both the aspects of the links of traditional diplomacy and the innovative characteristics of its public diplomacy. For instance, the perception that foreign affairs are not only carried out by central actors, but also by decentralised entities has important consequences for international relations. Brazil’s ongoing concerns about how it was projected internationally are symbolised by the importance of international law in the country, alongside its commitment to world legal order. The Brazilian Federal Constitution of 1988 brought relevant changes with regards the country’s international insertion. Article 4 points out the principle of the prevalence of human rights. For instance, the Convention on the Rights of People with Disabilities illustrated Brazil’s active role in being committed to international law.72 In contrast to other Latin American states, Brazil and Chile underwent a stable nation-state building process during the nineteenth century, with the two countries having better administrative coordination than their regional counterparts. It should be taken into account that Chile is a much more developed country with regards the concept of nation branding than its Brazilian counterpart. Chile’s projection of a nation branding extends to the point of civil society mobilisation considering the so-called ‘ChileGlobal’. ‘ChileGlobal’ embraces a network of business leaders, professionals and students who reside abroad and are interested in joining to together to contribute and benefit from the development of Chile.73 The construction of the Brazilian nation was carried out by diplomatic action before independence, with the same diplomatic strategy maintained during the 71

Its vague and extensive border has concerned Brazil since colonial times. In the period between Brazil’s discovery in 1500 and the foundation of the city of Belém at the mouth of the Amazon River in 1616, the Luso-Brazilians conquered the long coastline. Bradford Burns (1967), “Tradition and variation in Brazilian foreign policy”, Journal of InterAmerican Studies, vol. 9, no 2, pp. 195-212. http://disciplinas.stoa.usp.br/ pluginfile. php/115699/mod_resource/content/1/Bradford%20Burns.pdf.http://disciplinas.stoa.usp.br/p luginfile.php/115699/mod_resource/content/1/Bradford%20Burns.pdf. 72 See J. Gomes Canotilho et al. (2013), Comentários à Constituição Federal do Brasil. São Paulo: Editora Saraiva. 73 See ChileGlobal, Red de Talentos. http://www.chileglobal.net/que-es-chileglobal/.

51

period of the empire and the Old Republic (Silva, 2012: 71). Therefore, the perception of the two as stable countries is in their historical roots. With regards to Chile, the idea of an ‘exception’ contains a key component to the country’s nation building. Until recent years, this Chilean characteristic has hindered its participation in regional projects. This is, in part, a result of its history and the way in which its past has been interpreted. Indeed, Chile’s geographical position also contributed to its strong element of isolation. As Mullins emphasises, “its position behind the formidable Andes and beneath the harsh deserts of the Atacama has led to a sense of isolation from the rest of the continent. Chileans came to see themselves as an oasis of calm in a turbulent region. The local saying, ‘Una buena casa en un mal barrio’ (a good house in a bad neighbourhood) expressed this sentiment (Mullins, 2006: 13-14). The importance of retransforming the nation branding is clearly illustrated in Brazil’s ethanol strategy. As Smith and Taylor points out, Brazil’s position as an emerging power goes hand in hand with projecting the country’s self-sufficient energy status (Smith and Taylor, 2008: 115). This explains why the government of President Lula adopted the slogan “Brazil, Fifth World Power” in 2009, which reflects the country’s extraordinary energy resources, ranking it in the same category as the United States, the European Union, China and India. The country’s selfsufficiency in oil and gas tends to strengthen its energy brand. Being assigned the category of major exporter of energy due to recent offshore discoveries shifted the scenario in Brazil’s favour.74 Furthermore, it also has solar and wind power in unlimited quantities that have not yet been developed, as well as significant deposits of uranium as fuel for nuclear power plants.75 74

The discovery of offshore oil deposits, called pré-sal. Pre-salt oil was discovered in July 2005 by Petrobras engineers studying the Parati block in the Santos basin. The discovery of the Tupi field the following year confirmed the signs that they were standing before a new oil frontier, hidden under the sea and bellow a layer of rock and salt off the Brazilian coast. At the time, the discovery was announced by President Luiz Inácio Lula da Silva as “a passport to the future”. “Oil and gas, more than two minutes”. Exame, number 5, December 2013. São Paulo: Editora Abril, 2013. p. 38. See Lindbergh Farias (2011), Royalties do Petróleo: as regras do jogo. Rio de Janeiro: Agir. 75 Having comprehensive information about the importance of Brazilian uranium deposits is fundamental to understanding its diversified energy matrix. Increased interest in nuclear power, as well as the possibility of energy cooperation, is an important tool for achieving

52

The previous sections have stressed the key roles of public diplomacy and nation branding in Brazil-Chile bilateral relations. As already described, nation branding must fit a country’s current context in order to establish a well-consolidated national brand. Brazil is the world’s ninth ranking producer of oil, not considering recent offshore discoveries that will take the country into the top five of world producers (Rohter, 2012: 171-174). Chapter 5 discusses the increasing importance of energy in foreign affairs in more detail, particularly as a mechanism for strengthening Brazil-Chile ties. Energy is not only a crucial element for the economy but also, for foreign policy, which relies on the domestic energy scenario.76 The growing incursion of energy in international affairs demands a new approach to studying Brazil-Chile bilateral relations, since the energy topic exerts an overwhelming influence over foreign policy strategy. It should be highlighted that not only have national images been progressively transformed but also the way international relations are carried out, involving the participation of increasingly important new actors. This means that the old-fashioned, traditional diplomacy turns into something more dynamic, which includes a variety of new actors to face the complex demands of globalisation. The contemporary issues faced by the global order demand new ways of conducting international affairs. In this scenario, Brazil-Chile engagement urges the reformulation of foreign policy’s approach to global and regional issues. As Varella points out, according to international law’s principle of respect for human rights, Brazil in-depth dialogue between states. Brazil has metasomatite uranium deposits, developed upon different base rocks. “World distribution of uranium deposits (UDEPO) with uranium deposit classification”. Nuclear fuel cycle and materials section. October 2009, IAEA, TECDOC 1629. Vienna: International Atomic Energy Agency (IAEA), 2009. p. 15. One of the largest known metasomatite deposits is found in the Lagoa Real District in Brazil. However, the deposits in Itatiaia, Brazil have specific characteristics. “Technical meeting on metasomatite uranium occurrences and deposits”. International Atomic Energy Agency (IAEA). 17th-19th June 2013. Vienna: International Atomic Energy Agency (IAEA), 2013, p. 1. 76 In the Latin American context, the energy issue is an important element in both domestic policy and foreign affairs, since it encompasses both the political and economic sectors. Moreover, the increasing participation of the task related to energy in political debate cannot be undermined in the analysis of international relations. Mexico’s constitutional energy reform illustrates this point, as President Peña expects the reform will bring energy security and improve the economy. “Reforms in Mexico: oil’s well that ends well”. The Economist, no 8866, vol. 409, December, p. 44.

53

and Chile share the same foreign policy strategy relating to the defence of these (Varella, 2012: 26). Brazil-Chile bilateral links should involve decentralised actors to help understand the ties between the two states. Therefore, public diplomacy is a crucial element when studying Brazil-Chile bilateral relations, given its multifaceted approach.

1.2.1 The emergence of nation branding An understanding of public diplomacy requires a brief study of how countries brand their own nations. As the analysis of the following section demonstrates, branding a nation includes great efforts to export the country’s cultural trademark. Moreover, it combines corporate branding techniques and applies them to different countries. In recent years, countries have invested in forming their own national image, which has required centralised coordination efforts. Nation branding now, however, is different from the national image techniques used in the past, since it needs to project essential values to differentiate its products from those of its competitors in order to gain a competitive advantage. As Melissen argues, “public diplomacy is initiated by practitioners, whereas branding is about the mobilization of all of a nation’s forces that can contribute to the promotion of its image abroad” (Melissen, 2005: 19). Although there are some conceptual differences between nation branding and public diplomacy, in practice both discourses should be aligned, inasmuch as both attempt to differentiate the country’s image in a globalised world dominated by modern countries, which tend to look more like one another. According to this approach, a nation branding project aims to promote key issues that should be taken into consideration abroad. Nation branding aims to distinguish unique features from any others. In contrast, public diplomacy seeks to generate interaction between different sectors with mutual understanding as the target. Public diplomacy and nation branding are core concepts to understanding Brazil-Chile bilateral relations. The participation of civil society has gained importance in foreign affairs and nation branding has emerged as a crucial element in foreign policy. As Anholt indicates, for countries like Brazil, achieving a wellconsolidated nation brand gives them better chance of joining the tewenty54

first century group of first world countries (Anholt, 1998: 401-402). Despite their similarities, public diplomats know about the limited aims and modest nature of most diplomacy campaigns, which are usually based on the common sense assumption that they do not determine foreign perceptions. At the same time, they cannot only be connected to hard diplomacy, since soft diplomacy also has an overwhelming importance for foreign policy aims.77 The current international scenario demands that the role played by diplomats or so-called public diplomats and the idea of multilateral diplomacy be reformulated. As Spies argues, “taking into account the prevalence of multilateral diplomacy at the start of the twentyfirst century, profiling of multilateral diplomats per se is important because it sheds light on the contemporary evolution of diplomacy” (Spies, 2013: 213). In contrast, the main feature of branding campaigns is their holistic approach. The creation of a nation branding mobilises strategic marketing practices as well as clarity of vision from an over-competitive world (Melissen, 2005: 20). The application of branding techniques and tools serve as a core element for projecting the nation’s image abroad in a positive way. Like the public diplomacy process, branding a nation requires multi-sector collaboration in order to sustain differentiation (Steinberger, 2009: 168). Branding a nation mostly meet the demands of transition countries with an international image that is still weak or among small nations, as in the case of Chile.78 Crucially, branding a nation emphasizes the country’s features and reflects its aspirations, but cannot transform existing social realities. Otherwise, the nation’s brand would not be truthful and consequently not achieve credibility. Efforts to build a country’s image 77

“What is mean by the word ‘diplomatic’? In addition to traditional diplomacy focused on foreign ministries, does the word also include the ‘soft’ tools of international dispute settlement”? Lucy Reed. “Observations on the relationship between diplomatic and judicial means of dispute settlement”. Laurence Boisson de Chazournes, Marcelo G. Kohen and Jorge E. Vinuales. Diplomatic and judicial means of dispute settlement. Leiden: Martinus Nijhoff Publishers, 2013, p. 291. 78 Neoliberal ideology has set down important roots in Chile, transforming the nation brand into a more dynamic one. Neoliberalism allowed Chile to export itself in many ways, particularly by promoting the country’s aggressive participation in international trade. Cristina Prieto (2011), Branding the Chilean nation: socio-cultural change, national identity and international image’, PhD, Leiden University, p. 101.

55

should be focused on presenting its most unique features, which distinguish the country from others, relying on the aims of each state.79 The function of ‘selling’ the country’s attributes should be carefully planned in order to avoid any dubious interpretation of the nation’s defining characteristics. Nation branding and public diplomacy are in fact complementary ingredients of foreign public policy. Both have similar aims regarding the foreign public, considering that both have the foreigner’s perception as their starting point.80 Indeed, both tend to be more successful when they are examined as long-term approaches, despite being dominated by daily issues. The two concepts demand a multi-dimensional approach and cannot be carried out without multi-sector partnerships. 81 Both ideas involve the double perception of engagement either inside the country - to bring together a range of perspectives - or to coordinate the formulation of the image abroad. Public diplomacy and nation branding are vital components for Brazilian and Chilean international affairs, considering the fact that former needs to project itself as an emerging power and the later has been on the sidelines of global decisions. According to Özcan, nation branding and public diplomacy’s ultimate targets are the nation’s image. However, public diplomacy has a strong connection with traditional diplomacy, since both concepts are directly related to the Ministry of 79

An interesting example of the promotion of a country’s image is Germany, which launched the competition “How to promote Germany” in 1995. The project involve the German companies, Lufthansa, BMW, Siemens and Bosh. Rosa Nurtazina et al. (2014), “Definition, structure and core functions of the state image”, International Journal of Social, Behavioural, Educational, Economic and Management Engineering, vol. 8, no 2, p. 486. http://waset.org/publications/9997471/definition-structure-and-core-functions-of-the-stateimage. 80 Canada is an important example of the combination of public diplomacy and nation branding. The Canadian government uses the nation brand to attract exchange students. The government has ranked Canada as having several advantages, such as high quality education and multiculturalism in order to project its twenty-first century public diplomacy. Ray Freddy Lara Pacheco and María Fernanda Flores Álvarez (2012), “Marca país y diplomacia pública, el caso de ‘imagine: education in/au Canada’ y la atracción de estudiantes de intercambio”, Revista Mexicana de Estudios Canadienses, no 23. Culiacán: ABECAN, pp. 69-85. 81 Public diplomacy does not mean state-state relations, but state relations with foreign civil society in order to offer better mechanism for understanding foreign countries. The importance of the concept has grown in recent years. See Carla Fernanda Avendaño Maneli (2014), Estrategia de marca país Argentina (2003-2007): Nueva diplomacia pública para la reinserción internacional durante la presidencia de Néstor Kirchner. Córdoba: Publicia.

56

Foreign Affairs, whilst nation branding targets the masses and is directly connected to the economy, trade, investments and tourism. The former is much more related to international relations, while the later adopt a marketing approach (Özcan, 2013). Although for different reasons, the two countries demand well-consolidated nation branding projections and public diplomacy initiatives.82 However, public diplomacy and nation branding have several differences when shaping the two concepts is concerned and these should be pointed out, since both ideas lay the groundwork for understanding Brazil-Chile dynamic ties. While nation branding deals with a more uniform concept, public diplomacy can be influenced by the history and culture of the particular country and relates to interdependence. For this study, the government will be considered as the official face and most important force in public diplomacy, thus being the fundamental actor in foreign affairs, notwithstanding indirect government participation and the engagement of non-state actors functions as complementary elements within the analysis of the Brazil-Chile bilateral relationship. In this way, the government should be considered an important mechanism for analysing relations between the two states. In recent years, the Ministry of Foreign Affairs has been the main articulator of foreign policy in Brazil and Chile and therefore needs to be studied alongside the ideas of public diplomacy. As Meireles argues, the demand for the greater participation of various political actors in Brazil in the formulation of the country’s foreign policy has shown the importance of the public diplomacy initiative.83 In practical terms, government administration connects the concepts of public diplomacy, presidential 82

Public diplomacy and nation branding focus on foreign public opinion and the perception of the country’s image abroad. In this sense, foreign policy attempts to exert an influence on foreign public opinion. Juan Luis Manfredi Sánchez (2011), “Hacia una teoría comunicativa de la diplomacia pública”, Communication & Society, vol. 24, n o 2. Navarra. http://www.unav.es/fcom/communication-society/es/articulo.php?art_id=394. 83 See Thiago de Oliveira Meireles (2015), “Ministério das Relações Exteriores: Insulamento burocrático, pressões institucionais, novos atores e diplomacia pública”, V Seminário em Pós-Graduação em Ciência Política, São Paulo: USP. Although Chile has a well-consolidated nation brand, the historical conflict with Bolivia that gave the latter its landlocked status demands a different regional approach. Paz Zárate (2014), “BoliviaChile: sensatez y sentimientos”, El País, Internacional, Tribuna, 11th July 2014. http://internacional.elpais.com/internacional/2014/07/11/actualidad/1405085434_850059.ht ml.

57

diplomacy and nation branding due to the growing interaction between different actors in today’s foreign affairs. Moreover, as opposed to nation-branding’s aims, public diplomacy does not aspire to project the national image, but rather its goal is to promote and maintain smooth international relations. Public diplomacy encompasses a broader concept and multidimensional coordination in order to communicate its targets to foreign publics.84 In this way, the concept represents a way of studying Brazil-Chile links, since it encompasses a range of areas beyond the traditional diplomacy perspective. While nation branding contains one-way communication with the communicator controlling the message, public diplomacy presumes a two-way communication, encouraging dialogue between the different actors.85 The goal of the public diplomacy approach is to avoid conflicts and foster cooperation and constant dialogue to increase interaction when meeting foreign policy targets. In this corporate world characterised by multiple actors and the increasing role of non-governmental organisations, public diplomacy makes an effort to strengthen the country’s relationships with non-official target groups abroad. As Falker highlights, despite an increase in the diversity of the non-state actors involved in foreign affairs, actors do not exert a similar influence on the international scene. Significant differences exist, particularly between economic and social actors. As a result of their financial and organisational resources, corporations are ranked and have a privileged position in the transnational world. (Falker, 2008: 8-10). The emergence of several patterns of interaction among governments, businesses and civil society changes the traditional scenario, in which foreign affairs

84

The debate on the decline of Spain as a nation brand led the government to establish the Public Diplomacy Advisory Comission in order to deal with the financial crisis. William Crislett (2012), “El declive de la marca España”, El País, Opinión, 6th May 2012. http://elpais.com/elpais/2012/05/04/ opinion/ 1336151389_072846.html. 85 Public diplomacy has an important impact on contemporary international affairs to the extent that most governments practice at least one communicational aspect of public diplomacy. The USA defines public diplomacy as the action of the government to generate support for the country’s national security. The administration of President Bill Clinton has established the Advisory Commission on Public Diplomacy aiming to reorganize the public diplomacy of the USA for the twenty-first century. Victor Oviamionayi Iyamu (2004), “Diplomacia pública en la bibliografia actual”, Ámbitos, no 11-12. Sevilla, pp. 215-236.

58

were carried out by a central administration.86 The participation of official and nonstate actors in shaping foreign policy strategy is linked to the expansion of globalisation and the need to confront transnational matters. Observing Brazil-Chile from a public diplomacy perspective contributes to filling the gap, analysing bilateral ties from an exclusively state-centric standpoint. As Risse-Kappen argues, as long as countries maintain stable and smooth international relations with others, collaboration and coordination are easier to manage in bilateral events. The ability to shape constant relationships between states should be adopted in order to avoid conflicts and foster a deeper interaction between official and non-state actors (Risse-Kappen, 1995: 7). As Baylis points out, the term international relations does not mean that these relations are exclusively of the state. The relations between cities, international organisations and NGOs should be taken into account in international affairs. As far as the idea of ‘engagement’ is concerned, states should coordinate their efforts to solve the transnational issues that urge bilateral or international governance. 87 In the Latin American context, public diplomacy facilitates discussions on regional issues, given that the growth of transnational subjects demands closer dialogue between states. Since Brazil is seeking to achieve the status of a great power and draws attention to its role as regional leader, the country has taken important steps in its public diplomacy efforts. However as will be seen in Chapter 3, presidential diplomacy also plays an important role in foreign affairs because it influences crucial decisions. As Malamud points out, pursuing public diplomacy also relies on the charisma of the president, given the fundamental aspect of presidential diplomacy in Latin American. Presidential diplomacy - defined as presidential summits - is insufficient for 86

“Public opinion, the media, single population groups, political parties, NGOs, influential individuals, and others express expectations of what a state’s foreign policy should be in a certain case, of what should or should not be done, and of the objectives that should be pursued or avoided. As public opinion, in democratically run societies, has a significant effect on the popularity of the government, on political parties and, consequently, on their electoral fates, it cannot be ignored by those who make foreign policy decisions; to a limited extent, they must let themselves be guided by it”. Ernest Petric, “Decision making in foreign policy”. Foreign policy: from conception to diplomatic practice. Leiden: Martinus Nijhoff Publishers, 2013, p. 85. 87 See John Baylis (2014), The globalisation of world politics: An introduction to international relations. Oxford: Oxford University Press.

59

understanding the idea’s importance. Presidential diplomacy goes beyond presidential meetings, since institutional intervention also plays an important role in foreign affairs (Malamud, 2005: 138). As Schmidt (2010) highlights, partnerships are norm-based instruments implemented in order to pursue the effects of multilateralism. Strategic partnerships need to be based on the balance of mutual advantages and commitment to both partners. The three expressions of foreign policy public diplomacy, nation branding and presidential diplomacy - should work in unison to tackle international issues and unified foreign policy targets. In order to defend their aims in a globalised world, countries should have permanent partners in other nations with cooperation links in diverse areas.88 Diplomacy cannot merely be oriented towards one-way communication with government representatives, but rather public diplomacy practitioners should get used to dealing with different forms of transnational relations (Wilson, 1996: 78). Developing long-term links not only includes official groups, but also decentralised actors, whose participation in international relations has increased. Public diplomacy and nation branding are interrelated to the extent that crossing the fine line between the two concepts requires caution, as previously aforementioned. It is possible to identify different degrees of integration between public diplomacy and nation branding, since both expressions of foreign policy serve to mobilise diverse sectors towards a more cohesive representation of national interests.89 In contrast, presidential diplomacy refers to the more active role played by some presidents when conducting their countries’ foreign policy. Therefore, presidential diplomacy means that presidents tend to adopt a more vigorous stance within foreign policy affairs.90 Interestingly enough, both public diplomacy 88

See Anne Schmidt (2010), “Strategic partnership: A contested policy concept”. German Institute for International and Security Affairs. http://www.swp-berlin.org/fileadmin/ contents/products/arbeitspapiere/FG%201%20discussion %20paper_Anne%20Schmidt.pdf. 89 Public diplomacy embraces multiple levels with subnational participation being essential to mutual understanding and relationship. See Jian Wang (2006), “Localising public diplomacy: The role of subnational actors in nation branding”, Place Branding, vol. 2, n o 1. Palgrave Macmillan, pp. 32-42. 90 The Brazilian Minister of Foreign Affairs, Antonio Patriota, resigned in 2011, after acknowledging that one of his diplomats had helped a Bolivian senator who had been accused of corruption to travel to Brasília. This episode illustrates the active role played by President Dilma Rousseff since Patriota was the first cabinet member from the Ministry of

60

and presidential diplomacy encourage the participation of civil society in issues that go beyond national boundaries. At present, new emerging actors create new patterns of behaviour and norms for relationships within foreign affairs, meaning that Brazil-Chile ties should be studied from a multifaceted perspective.

1.2.2 A nation branding perspective The idea of perpetuating the nation-state as a necessary framework for national image insertion is not entirely new. Nation branding enforces the state’s power as a legitimate entity in the context of foreign affairs. 91 As mentioned at the beginning of this chapter, nationally-imagined identity consists of a number of features: language, cultural homogeneity, religion and migration, which means the unique identification with certain myths that lead to collective identification. As Anholt points out, the projection of a national image to communicate a particular vision has changed in recent years and as a result private interests have been involved as necessary tools for widening mobility in recent geopolitics. A country’s brand has an impact on virtually every aspect of its international engagement; however the country’s image can lag behind and be disconnected from reality, although the branding process also demands that non-commercial aspects shape the nation branding (Anholt, 2005). Some experts such as Fan and Villanueva argue that nation branding is congruent with the concept of soft power, in contrast to the hard power of military or economic assets.92 Soft power or co-optive power is related to Foreign Affairs to resign. Claudia Safatle (2013), “Antonio Patriota é demitido do Ministério das Relações Exteriores”, Valor Econômico, 26th August 2013, p. 26. 91 All Latin American countries have dedicated time and effort to launching nation branding campaigns. Since 2014, Ecuador has used the slogan ‘Lo mejor de Ecuador, un país que ama la vida’. “Ecuador ama la vida”, http://ecuadoramalavida.com.ec/. Colombia created the slogan “La respuesta es Colombia” in 2011. http://www.colombia.co/la-marca. In 2012, Peru launched the “Todos hacemos Perú” campaign. http://nacional.peru.info/es/ home/Inicio?area=. The aim of all the Latin American states with their nation branding campaigns is to attract foreign investment, promote tourism, encourage exports and project their values in the international arena. 92 As long as nation branding and soft power are concepts that concern national influence on world stage, they share important similarities. See Ying Fan (2008), “Soft power: power

61

the power of persuasion and ideas, serving to complement the goals of public diplomacy. Soft power and nation branding are inspired by the same economic development, culture, persuasive strategy and ideology (Pecequilo, 2004: 58-59). Like soft power, nation branding aims to spread and promote national values, given their importance in building strategic foreign policy targets. Both concepts serve as a form of national discourse to ensure the spread of a positive image abroad. Along with presidential diplomacy, nation branding is the most visible practice among the three previously analysed expressions of foreign policy. This concept attracts mainstream media attention and is also recursive, through the use of the iconography of logos, symbols and slogans (Aronczyk, 2008: 45). It should have a component of domestic support and therefore the ability to convince different sectors of society, particularly the elite whose best interests the government promotes. Furthermore, as long as nation branding features are consolidated nationally, the country needs to project national image abroad, oriented towards principles of competition and innovation. The country must demonstrate its ability to generate wealth, income, employment and political stability, relying on the brand it wants to generate.93. The concept of a nation becoming a brand has managed to gain endorsement. In the context of globalisation, a good nation branding can help with many national goals as it can lead to an increase in trade, investment and tourism (Cromwell, 2016). Since every country has a cultural trademark, the nation branding programme usually emphasises a of attraction or confusion”, Place Branding and Public Diplomacy, no 4. New York: Palgrave Macmillan, pp. 147-158. The field of cultural diplomacy embraces nation branding and soft power and the idea of soft power is importantly exhibited internationally. The case of Mexico with ‘Mexico: splendour of Thirty Centuries’ and Sweden’s nation branding illustrate this point. Cesar Rivas Villanueva (2007), Representing Cultural Diplomacy: soft power, cosmopolitan constructivism and nation branding in Mexico and Sweden. Växjö Universiteit. Doctoral thesis. http://swepub.kb.se/bib/swepub: oai:DiVA.org:vxu-1683?tab2=abs&language=en. 93 Branding is a neoliberal tool that generates value by making affective attachments commodities and it has become a crucial element in international affairs. One important aspect of nation branding is that it mediates the relationship between what is national and what is global. Nation branding transforms national identity, given the transfer of national ideas into the language of commerce. Nadia Kaneva (2012), “Nation branding in PostCommunist Europe: Identities, markets and democracy”, Branding Post-Communist nations: marketing national identities in the new Europe. New York: Routledge, p. 16.

62

visual symbol - like Joan Miró’s sun for Spain – that can be adopted by every organisation taking part in the programme to be used as a tool for endorsement. However, the symbol alone is not enough; countries must also differentiate themselves as consumer brands. In the field of tourism, they should emphasise their art, culture, history, food, landscape, architecture and other specific characteristics, using through sophisticated imaginary. Due to increasing interdependence in the international arena, countries should promote themselves in order to attract direct foreign investment. This kind of investment policy is usually influenced by local legislation, regional funding, tax breaks, the educational level of employees, transport infrastructure, central and local government attitudes and so on (Anholt, 2005: 175). Despite some similarities between the concept of nation branding and stereotypes, the huge differences between them must also be emphasised. According to Von Hippel, Sekaquaptewa and Vargas, “stereotypes are consensual beliefs held by members of one group about the characteristics of members of another group” (Von Hippel, Sekaquaptewa and Vargas, 1995: 178). As Hermann observes, the convenience of this definition is that “stereotypes make it easier for us to prejudge another’s theoretical interest and research based on a few words of conversation, an indication of where and with whom an individual received his or her training or by reading the abstract of an article” (Hermann, 2002: 21). Furthermore, like nation branding, stereotypes generally reflect real differences between groups in other words, “they have a grain of truth” (Jussim, 1991; Judd and Park 1993: 21). Like nation branding, stereotypes become selective, focusing on the most distinctive characteristics and therefore providing the most notable differentiation between groups.94 In contrast to the construction of a nation branding, stereotypes embrace how outsiders are perceived by a foreign country, not always pointing out the other group’s most favourable characteristics.95 Indeed, stereotypes are 94

See Michael Chattalas et al. (2008), “The impact of national stereotypes on the country of origin effect: a conceptual framework”, International Marketing Review, vol. 25, issue 1, pp. 54-74. 95 The challenge for Latin American country brands is to overcome the general misconceptions connected with this stereotypical idea. Additional reading Country Branding Index Latinoamérica (2013). http://www.futurebrand.com/images/uploads/ studies/cbi/CBI_Latinoamerica_2013.pdf.

63

much more easily maintained than changed, since their features are almost self-perpetuating. At a certain point, stereotypes compete with nation branding, taking into account the fact that the former constitute part of unconscious thought and exert an influence on the nation’s image. Unfortunately, stereotypes and their potential negative features are the first idea for their foreign counterparts.96 The characteristics that groups were given led to even greater misconceptions and put the whole process of foreign policy in jeopardy. In this sense, the process of building a nation branding is twofold: it has to surpass stereotypes by working on the positive and negative directions that the country takes and projecting a nation branding must have practical implications in order to meet its specific interests. Nation branding exerts an important influence on Brazil-Chile cooperation initiatives, given the fact that it can alter the stereotypical perceptions in which national image is articulated and understood. In the following chapters, it will be seen that, in many respects, Chile is as an example for Brazil to follow. According to Barros for instance, the Brazilian National Education Council and the Ministry of Education proposed new educational standards similar to the new parameters created by Chile. In 2012, Chile created these, as well as an examination, to assess the quality of new-qualified teachers. According to this method, Chile identified the best teachers as part of a consistent educational policy (Barros, 2013: 55). Branding a nation is an effective way to assign the country a desirable identity helping to develop closer bilateral ties insofar as it highlights the country’s most positive and distinguishable features.97 Like public diplomacy strategy, nation branding is also concerned with long-term aims and always plays an important role in foreign affairs, considering that, as 96

Results show that performance satisfaction increased when Chinese exporters used branding strategy, although reinforcing existing perception is easier than changing them. See Lance Eliot Brouthers and Kefeng Xu (2002), “Product stereotypes, strategy and performance and satisfaction: The case of Chinese exporters”, Journal of International Business Studies, vol. 33, no 4. Palgrave Macmillan, pp. 657-677. 97 In 2005 the Inter-American Development Bank granted the loan to finance the Dominican Republic’s nation branding programme. The multifaceted nature of nation branding demanded a public-private partnership as part of the strategy of the Dominican Republic’s strategy. Andrés van de Horst Álvarez (2005), “La marca país: Objetivo estratégico de competitividad y posicionamento global”. http://www.competitividad.org. do/wp-content/uploads/2009/09/a-competir-marca-pais.pdf.

64

previously mentioned, it is the functional equivalent of ‘national image’.98 The construction and promotion of a nation branding is a concerted and systematic effort to act and communicate in a responsible and effective manner, otherwise an attempt to create a nation branding only helps a country create a stereotype. In this situation, a certain country can unconsciously create difficulties for the demand of ‘non-typical’ commodities. As Georgescu and Botescu observes, in the case of Germany a country usually related to engineering products it is very difficult for fashion-related commodities to insert themselves into the market (Georgescu and Botescu, 2004: 39). For instance, a company like Hugo Boss has tried to dissociate itself from its German origins and emphasise its European roots. As Olins reminds us, “if the nation’s leading brands are based around too narrow a sphere of activity, those flagship brands in the sector may flourish, but the other brands in different sectors may find live more difficult” (Olins, 2005: 173). There is a permanent need for recreating the nation branding in an attractive way in the global arena. The branding process needs to shape the national client and orient the image towards the nation’s aim, which is a complex process. Increasing the participation of nation branding projection in foreign affairs demands particular attention being paid to the topic in Brazil-Chile bilateral context. Regardless of the fact that Brazil and Chile have different goals with regards to nation branding, the concept plays a central role when exploring their bilateral relationship. 99 The following sections will describe in more detail the construction of Brazil as a global brand and Chile’s focus on nation branding to attract foreign investment. 98

The fact that Brazil has held two importants world sporting events the 2014 FIFA World Cup and the 2016 Olympics in the city of Rio de Janeiro has given the country international visibility. This so-called sports diplomacy appears to be increasing particularly in emerging countries, with emerging economies using sports diplomacy to achieve foreign policy goals. In the past, only developed countries have been given the chance to host big sporting events. Andreia Soares e Castro (2013), “2014 FIFA World Cup and 2016 Olympic Games: Brazil’s strategy to win hearts and minds through sports and football”, Public Diplomacy Magazine. New Jersey: USC Center on Public Diplomacy, p. 31. 99 With respect to nation brand ranking, “Os países com a melhor reputação do mundo: Brasil em 21o”, Revista Exame, 14th September 2014. São Paulo: Editora Abril. For commentary on the nature of nation branding and Chilean nation brand status, see Claudia Labarca (2008), “La confianza y la reputación como variables del desarrollo económico y la imagen país”, Cuadernos de Información, no 23. Chile: Pontificia Universidad Católica de Chile, pp. 72-81.

65

1.2.3 Brazil’s global rebranded image Carmen Miranda, the ‘Brazilian Bombshell’ to some and the ‘Chiquita Banana Girl’ to others, was a famous singer, actor and dancer and the symbol of Brazil in Hollywood in the 1940s and 1950s, portraying Brazil’s image worldwide. Her elaborate banana headdress became her Hollywood trademark. She sang in Portuguese, often accompanied by gestures that were clearly caricatured as a hallmark of the exotic Latina singer. Carmen Miranda became the highest-paid female performer in the United Sates during World War II, as well as a significant element of Brazil’s image abroad. A more accurate association connects her stereotypical image to the Brazilian Carnival and the Brazil brand has deep historical roots in carnival, sensuality and soccer, right up today. 100 Brazil’s stereotypical image of the late fifties when the country won its first World Cup in Sweden in 1958 and became a great footballing nation has continued to exert an influence until present time. At that time, Brazil presented its soccer stars, Garrincha and Pelé, to the world and was enormously proud of its footballing performance. 101 The football nation was the first of Brazil’s images to be internationalised. However, modern Brazil cannot only be recognised according to old-fashioned ‘footbaal nation’ cliché. Brazil’s rapid ascent to international visibility by holding two important global events, the World Cup in 2014 and the Olympics in Rio de

100

From 1932 until the end of the decade, Carmen Miranda was the most famous female performer in South America. Scott L. Baugh (2012), Latin American cinema: An encyclopedia of movies, stars, concepts and trends. California: ABC-CLIO LCC. pp. 171173. More information about the duet between Miranda and Dorival Caymmi (the Brazilian songwriter, singer, actor and painter) in 1939 with elements of Bahian folklore in nonstereotypical terms in Darién J. Davis (2012), “Racial parity and national humor: Carmen Miranda’s sambas performances” in William H. Beezley and Linda A. Curcio-Nagy, Latin American popular culture since independence. Maryland: Rowman Littlefield Publishers, pp. 176-192. 101 See Roger Kittleson (2014), The country of football: Soccer and the making of modern Brazil. California: The University of California Press. Football has been overwhelmingly important to the construction of national identity. Deibson Fernando da Silva and Francisco Xavier dos Santos (2013), “Por que o Brasil é o país do futebol?”, Revista Carioca de Educação Física, no 8. Rio de Janeiro, pp. 2-9.

66

Janeiro in 2016, has changed the country’s image.102 Brazil’s announcement that it had discovered vast pre-salt oil fields in 2007 promises to more than quadruple its production, boosting both oil and gas production.103 Alongside a booming oil market, the country’s position as the world’s largest sugarcane ethanol producer turned Brazil into an important energy power.104 Brazil’s international position also changed as a member of important multilateral international bodies such as BRICS (Brazil, Russia, India, China and South Africa), G20, IBAS (India, Brazil and South Africa) and BASIC (Brazil, South Africa, India and China).105 Brazil’s global policy strategy changed the Bretton Woods system defined the country as a 102

Holding the 2014 World Cup and the 2016 Olympic Games for most Brazilians is the ultimate expression of the nation’s elevation onto the world stage. Brazil’s successful holding of the World Cup shows that the country is more than capable of delivering a similar experience when the country hosts the Olympics in 2016. Brazil will become the first South American country to host the Olympics. Aaron Stern (2014), “IOC official: Brazil’s World Cup points to success for Rio 2016”, NBC Olympic Talk, 9th July 2014. http://olympictalk.nbcsports.com/2014/07/09/ioc-official-brazils-world-cup-points-tosuccess-for-rio-2016/. 103 From 2010 to 2014, annual average daily pre-salt production grew almost twelve-fold. “Pre-salt”, Petrobras. http://www.petrobras.com.br/en/our-activities/performance-areas/oiland-gas-exploration-and-production/pre-salt/. The study on the impact on the New Regulatory Regime for Pre-Salt Layer Oil is now under discussion in the Brazilian National Congress. The discussion refers to the revenues and taxation of activities related to the exploration and production of oil and natural gas. Emmanuel Marques Silva and Ayrton de Souza Porto Filho (2012), “Camada pré-sal: um estudo sobre a alteração nos critérios de distribuição dos royalties do petróleo”, Gestão Contemporânea, vol. 2, no 1. Porto Alegre: FAPAS, p. 17. 104 Brazil as a world producer of energy raises important questions, such as balancing government intervention with market forces and lowering costs to allow for market entry into an industry that is in its infancy. João Martines Filho et al (2006), “Bioenergy and the rise of sugarcane-based ethanol in Brazil”, Choices, vol. 2, no 21. http://www. choicesmagazine.org/2006-2/tilling/2006-2-10.htm. Brazil is the second largest producer of ethanol, second only to the United States, where the raw material comes from corn. Leidiane Coelho Carvalho et al (2013), “Cana-de-açucar e álcool combustível: Histórico, sustentabilidade e segurança energética”, Enciclopédia Biosfera, vol. 9, no 16. Goiania, p. 530. 105 The G20 was established in 1999 during a summit of G7 finance ministers and heads of central banks in the form of informal dialogue in the framework of the Bretton Woods institutional system, in order to broaden dialogue on economic and financial policy issues with countries also considered important to every country achieving stable and sustainable global growth. The main issue was to solve the Asian financial crisis. However, this group should not be confused with the G20 of developing countries, which was formed in 2003 during the WTO Fifth Ministerial Summit.

67

proactive emerging power.106 Brazil has strengthened its international position in the last few years and new mechanisms must be created in order to project the country’s current international status.107 Regardless of the country’s strong image associated with football and carnival, Brazil’s aim is to rebrand itself to sell its image abroad to foreign investors. BRICS has contributed to the rebranding of Brazil’s image as a crucial part of its international insertion. Since the BRICS joined together, the desire to change the world system in order to reflect the diversity of world power has become a fundamental element of Brazil’s foreign policy. 108 According to Tarter da Rosa, BRICS is consistent with the Brazilian diplomacy goals of multilateralism, since its aim is to reform global multilateral institutions (Tarter da Rosa, 2014: 29). Therefore, it confers contemporary nation branding features on Brazilian foreign policy aims. As Niesing highlights, Brazil had to work on the positive side of its stereotypes and broaden the country’s values abroad. Brazil sells an inviting, young and attractive image, which helps sell any kind of product (Niesing, 2013: 82-83). The combination of the attributes of a diverse country led to the origin of the ‘Made in Brazil’ brand worldwide. Brazil ranks as the eighth largest textile maker and, as one of the world’s greatest sources of food supplies, auto-parts, biofuels, pulp and paper, mineral resources and steel, has one of the world’s five largest petrochemical centres and builds private jets as well as some military aircraft. Between food supplies and aircraft exports, aircrafts were Brazil’s top exports between 106

For more information about Brazil’s shifting foreign policy during the administration of President Lula, see Britta Rennkamp (2011), “Desenvolvimento em primeiro lugar no G20 e nos BRICS?”, in Reflexões da política externa do Brasil e da sociedade civil, p. 160. 107 Among the BRICS members, Brazil under the administration of President Lula has emerged as the most internationalised economy, either as a recipient of foreign enterprises or direct foreign investments or due to the outward expansion of Brazilian companies and investments. Lula has achieved strong coalitions among emerging states and has changed geopolitical asymmetry towards north-emerging countries dialogue. See Amado Luiz Cervo and Antônio Carlos Lessa (2010), “An assessment of the Lula era”, Revista Brasileira de Política Internacional, vol. 53. Brasília. http://www.scielo.br/scielo.php?pid=S0034-7329 2010000300001&script=sci_arttext. 108 Among the BRICS members, Brazil has the most abundant water, solar energy and presalt resources and a growing agro-energy sector. Alberto Pfeifer (2012), “O Brasil, os BRICS e a agenda internacional”. Mesa redonda: O Brasil, os BRICS e a agenda internacional/Apresentação do Embaixador Vicente de Sá Pimentel. Brasília: FUNAG, p. 82.

68

1999 and 2001 and the Brazilian brand Embraer grew in the field of commercial aviation, military aviation and business jets. Embraer sells, distributes and produces abroad, with regional offices in the United States, Europe, China and Singapore.109 The commercial aviation has also grown strongly in the last few decades, with the airline TAM emerging as a result of increasing domestic demand. The TAM brand has been the leader in the Brazilian aviation market with frequent flights and new international routes.110 In doing so, TAM developed a strategic partnership with the Chilean airline LAN, creating the LATAM Airline Group. This association has joined together the two most important brands in Brazil and Chile in order to connect South America with the world. This ambitious Brazil-Chile partnership in the commercial aviation sector has widespread presence in Colombia, Peru, Argentina, Brazil, Chile, Ecuador and Paraguay. 111 The respectable amount of investment in the creation of the LATAM association is an interesting example of mutual respect and trust between the two countries’ business sectors. Today, the Brazil brand is not only associated with the stereotypical vision of a football nation, since many Brazilian companies operate internationally in different areas, such as oil and gas, chemicals and petrochemicals, environmental engineering, sugar and ethanol, food supplies, the aircraft industry, the textile industry, fashion, banking and thermonuclear energy among others.112 Brazil’s growing geostrategic role in multilateral international forums, its potential hemispheric leadership and its economic strength have changed its international projection.113. Brazil has 109

“What about Brazilian brands?”, in Interbrand Consultancy, www.interbrandsp. com.br/tag/brasil/. With regard to tourism, Fabiana Gondim Mariutti and Janaina de Moura Engracia Giraldi, “Análise da imagem do Brasil por meio do Anholt nation branding index”, in ISNN Eletrônico. 110 TAM reduced its domestic activities by 20% because of Brazil’s difficult economic situation. Elaine Patricia Cruz (2015), “TAM airlines to reduce operations in Brazil, job cuts expected”, Agência Brasil, 20/07/2015. http://agenciabrasil.ebc.com.br/en/geral/ noticia/2015-07/tam-airline-reduce-operations-brazil-job-cuts-expected. 111 Exame.com, 21st August 2013. 112 The Brazilian petroleum industry includes the global processes of exploration, extraction, refinement, transportation, and the marketing of petroleum products. “Brazil’s oil and gas industries and associated companies”, Brazil & Gas, 2011. http:// braziloilandgas.com/brazils-oil-and-gas-industries-and-associated-companies.html. 113 BRICS has contributed to Brazil’s multilateral foreign policy as part of its strategy of

69

become a vital player in regional and global politics in numerous areas, hence the fact that its nation branding is not only connected with wellcoordinated efforts to project its image abroad, but also encompasses other diverse factors.114 The need to project a well-consolidated nation branding in an overcompetitive world requires conscious branding strategies. Not only have small countries like Chile embarked on more conscious country branding, but countries with huge dimensions such as Brazil have also required strategic brand management.115 As previously observed, countries have always branded and rebranded themselves in the course of history, today, however, projecting a nation branding demands the implementation of new marketing techniques. Nation branding is clearly situated in the field of marketing, strengthening the idea that foreign affairs are no longer the exclusive domain of traditional diplomacy. 116 Since international relations are not the exclusive domain of governmental actors, public-private partnerships should also be taken into account when exploring foreign affairs.117 Nation branding’s strategic policy encompasses public-private activities in order to achieve the country’s branding projection targets. In the international insertion. Daniel Flemes (2010), “O Brasil na inicitiava BRIC: soft balancing numa ordem global em mudança?”, Revista Brasileira de Política Internacional, vol. 1, no 53. Brasília, pp. 141-156. 114 National pride is part of the Brazilian spirit. Two slogans of two supermarket chains is ‘Proud to be Brazilian’, the same as TAM airline. Havaiana, the Brazilian flip-flop brands are decorated with the Brazilian flag. For more information about Brazil’s brand and its consumer market in contrast to that of the other BRICS countries, see Nigel Hollis (2008), The global brand: How to create and developing lasting brand value in the world market. New York: Palgrave Macmillan. 115 Chile’s nation brand strategy encompasses more sectors and includes more components than its Brazilian counterpart. Brazil needs more private sector financing in order to strength its nation brand. For more information, see Eva Niesing (2013), Latin America’s potential nation branding: a closer look at Brazil’s, Chile’s and Colombia’s practice. Hamburg: Anchor Academic Publishing, p. 132. 116 Nowadays ‘Made in’ has a greater influence on consumers, meaning that countries have a strong interest in developing nation branding strategies. For consumers, this branding matters, given that it can refer to important features, such as safety, quality and ecological standards. “Made in: The value of country of origin for future brands”, Future Brand. 2014 http://www.futurebrand.com/images/uploads/studies/cbi/ MADE_IN_ Final_HR.pdf. 117 The rapid proliferation of public-private partnership in the areas of human rights, environmental protection and global governance show the importance of the topic in international affairs. See Magdalena Bexell and Ulrika Mörth (2010), Democracy and public-private partnerships in global governance. New York: Palgrave Macmillan.

70

case of Brazil, partnerships between private consultancy agencies and federal research institutes provide the mechanisms for consistent brand implementation and management.

1.2.4 The Chile’s nation-branding politics As Anholt and van Gelder point out, the concept of nation branding is not static and evolves in the social, economic and political fields. Therefore, for a nation to become a successful brand, it is recommendable that it fits the current context of what the country proposes. Nowadays, the nation brandings have inherited the role of cultural transmitter, becoming a form of cultural exchange in a global scenario. There is no reason why the practice of nation branding should be confined to developed countries. Given that, nation branding can improve people’s lives, it should be transferred to all nations of the world (Anholt and Van Gelder, 2005: 56-58). In the previous section, it was shown how the strategy of nation branding emerges in an overall context and the benefits that it has. Now, we would like to develop several arguments to analyse the case of Chile, which is an interesting example of a country that projects a positive nation branding. In this study, we will focus on the economic aspect of Chile’s nation branding process. In the Chilean case, the Foreign Investment Committee represents the State of Chile in its dealings with investors around the world. The aim of this committee is to position Chile as an attractive destination for foreign investment and international projection. An increasingly interdependent global environment means that countries have to look outside their own borders in order to attract foreign investment. As previously mentioned, projecting a nation brand is a joint effort of both the private and public sectors. In order to attract investment the Chilean committee emphasises the most convenient advantages of Chile’s business environment.118 118

The Foreign Investment Committee projects Chile as the best evaluated economy in Latin America and one of the best evaluated among emerging economies worldwide. According to this evaluation, its hallmark stability, transparency and competitiveness and excellent business prospects position the country not only as the best destination for foreign investment in the region, but as one of the world’s leading destinations. “10 Reasons to Invest in Chile”, CIE Chile Foreign Investment Committee, http://www.ciechile.gob.cl/ en/porque-chile/

71

The strategy includes highlighting the macroeconomic fundamentals of its economy, which is accompanied by decreasing inflation, a sharp drop in public debt, stable external accounts and strong international reserves in other words, this achievement is the result of Chile’s commitment to economic liberalisation and free market policies.119 This means that Chile is highly competitiveness with lower tariffs, increasing levels of foreign trade and rapid integration into world markets. Indeed, the country projects itself as having a modern telecommunications system, a solid banking sector, high standards of public infrastructure, a functioning democracy, stable institutions, excellent quality services and availability of qualified workers, all of which function as key factors to impress foreign investors.120 The Chilean nation branding strategy has achieved excellent results, as demonstrated by the latest Business Environment Rankings published by The Economist Intelligence Unit (EIU). According to this ranking, Chile was considered the best country in Latin America to conduct business between 2010 and 2014. “This ranking is applied to the world’s 60 largest economies, which account for more than 95% of global output, trade and foreign direct investment (FDI) and measures the quality or attractiveness of the business environment and its key components. The model considers 70 factors, across 10 categories, which affect the opportunities for and hindrances to conducting business”. Chile ranked fifteenth.121 Although Chile is considered the best country in Latin America to carry out business, international technology companies still set up their firms in Asia (South Korea and Singapore) rather than in Chile. According to sociologist Eugenio Tironi, a professor at the Catholic University of Chile, despite its low levels 119

Chile has implemented the largest programme of privatisation of government ownedenterprises, and its social security system, run by privately managed individual retirement companies has attracted the attention of many observers. Barry P. Bosworth et al (1994), The Chilean economy: policy lessons and challenges. Washington D.C.: The Brookings Institution, p. 14. 120 Positioning well-coordinated nation brands matters greatly for public diplomacy. Chile is considered one of the countries that has successfully repositioned itself using coordinated marketing techniques. John Quelch and Katherine Jocz (2005), “Positioning the nationstate”, Place Branding and Public Diplomacy, vol. 1, number 3, pp. 229-237. 121 In the report published by the World Bank, Chile ranked on 37th place out of 185 countries in 2012 maintaining its climb between 2010 and 2012. “Business Environmental Ranking: 10 reasons to invest in Chile”, CIE Chile Foreign Investment Committee, http://www.ciechile.gob.cl/en/porque-chile-3/

72

of corruption compared to neighbouring countries, Chile today is not the economic Asian tiger it was expected to be ten years ago.122 Indeed, today’s unfavourable international context has limited direct foreign investment on a significant worldwide scale. Nevertheless, Chile’s economic and financial indicators did not experience significant turbulences considering its annual average GDP of 6.6%, rising to an average of 7.3% from 2009-2011. According to the Central Bank of Chile, FDI in Chile reached $ 17, 299 million in 2011, up by 12.5% on 2010 ($ 15, 373 million) and by 35.6% on the average for the previous five years. A large number of foreign investors have chosen to use the Decree Law (DL) 600 mechanism, according to which an investor signs a contract with the state of Chile for the transfer of capital or other forms of investment and receives a number of guarantees and rights, observed in more detail in Chapter 3 on Brazil-Chile bilateral links.123 While the mining sector accounted for over half of FDI, the sector’s importance has gradually decreased in the last few years. The mining sector went down by an average of 15% in 1999-2001, even though it continued to account for a significant number of FDI indicators. The recent decrease in mining investments has been attributed to large investments in the electricity, gas and water sectors, as well as in transport and communications. 124 The current scenario is the result of the privatisations of these sectors, combined with the intense competition that followed the deregulation of mobile and long-distance telephone services. These two sectors accounted for an average of 24% of total FDI between 2000 and 2005. However, according to what is set out by the Foreign Investment Committee, multiregional investments correspond mainly to projects in energy, telecommunications and the financial services sectors.125 122

Folha de São Paulo, 15th July 2007. Since 1974 the majority of foreign investors have used this mechanism. “DL 600, CIE Chile Foreign Investment Committee, http://www.ciechile.gob.cl/en/dl-600/que-es-eldl600/ 124 Chile has the third highest copper mining costs in the world, after Canada and Australia. One of the reasons for this is the high cost of power in the country. Energy accounts for up to 15% of the costs at some of the state’s copper producers. Greta Bourke, “Chile’s mining industry embraces change to improve community relations”, Business Insight in Latin America, 21st November 2013. 125 More information in the “Impact of the FDI on the Chilean economy”, CIE Chile Foreign Investment Committee, http://www.ciechile.gob.cl/en/inversion-en-chile/impacto123

73

Chile’s mercantile foreign policy has been a key factor for national development, since it has orchestrated its rapid integration into the world economy. For obvious reasons, the internationalisation of the Chilean economy, through the creation of a network of agreements and alliances to ensure and adequate presence of its products and services in the world’s markets, has promoted continued foreign investment into Chile. These elements are important contributors to Chile’s economic growth and help raise FDI. As will be observed in the following section, Chile’s adherence to the principles of open-regionalism considers trade agreements as the mechanism for expansion and as a policy for promoting international peace, the protection of human rights and democratic stability as core components of its foreign policy targets.

1.2.5 Chile’s nation branding and historical backgrounds As already mentioned at the beginning of this section, a nation must fit the current context in which it emerges to become a successful brand. In the Chilean case, this means that it should have an attractive, liberalised business environment, as proposed by The Foreign Investment Committee. If Chilean financial internationalization is studied over the course of history, the reasons that have made this country so attractive to foreign business can be understood. In the aftermath of Salvador Allende’s administration in 1973, the country was submerged in a scenario of hyperinflation, a complete loss of both external and internal confidence, and severe balance of payments difficulties, generated by the oil crisis and a downturn in copper prices (Griffth-Jones 1981: 224). This crisis contributed directly to the military coup of 1973. The military government led by Augusto Pinochet, decided to liberalise the Chilean economy. However, the government’s financial market policy was not restricted to the domestic market. Government restrictions on foreign investment in 1974 led to Chile’s investments laws being the most liberal in Latin America (Haggard and Maxfield, 1996: 224-225). According to Silva, these early domestic reforms strengthened the participation of a set of financial actors at the expense of the more traditional import-substitution de-la-ied-en-la-economia-chilena/

74

sectors (Silva 1991, 1993: 225). Since these new actors were more engaged in financial activities, they achieved greater access to international financial one. As a result, the portion of the economy in charge of financial market reforms was linked to internationalised segments of private groups (Haggard and Maxfield, 1996: 225). Despite the government’s experiment with an orthodox stabilisation programme in 1974-1975, this approach failed to reduce inflation. Therefore, the Pinochet regime replaced the stabilisation programme with a new economic team the “Chicago boys”, who emphasised a new exchange rate. The new team lived up to expectations regarding government policy and increased foreign and domestic creditor confidence. 126 However, as Corbo, Foxley, Hastings and Ramos observe, “the crisis that followed in the wake of this global monetarist experiment has been dealt with extensively elsewhere” (Corbo 1983; Foxley 1983; Hasting 1993; Ramos 1986: 226). As a result, a more pragmatic team, whose focus was on broader private sector links came to power in the early 1980s. Under the new team, export performance improved and people started talking about the “Chilean miracle”. Despite its pragmatism, the team remained committed to liberal policies and also preserved the fundamental posture of the government towards capital account openness (Haggard and Maxfield: 1996: 226). The positive business environment is, moreover, a reflection of certain public policies implemented in Chile since 1990 in specific areas such as political stability, modernisation of the state, social cohesion, and economic freedom as previously mentioned. 127 Since 1990 when democracy was restored, Chile has enjoyed a period of political stability. 128 This constant 126

In significant South American states, like Brazil, Chile, Argentina and Uruguay, technocrats played a crucial role in economic management under military rule. As time went by, the Chilean Chicago Boys expanded their influence to all areas of society, including education, health, housing and the pension system among others. These neoliberal technocrats turned themselves into the main intellectual leaders of the military regime, justifying their political authoritarianism through economic liberalism. Patricio Silva. En el nombre de la razón: Tecnócratas y política en Chile. Santiago de Chile: Ediciones Universidad Diego Portales, , 2010, p. 161. 127 An important aspect to attracting Foreign Direct Investment (FDI) is the efficiency of domestic firms. See David Greenaway and Richard Kneller (2207), “Firm heterogeneity exporting and foreign direct investment”, The Economic Journal, vol. 117, pp. 134-161. 128 Chile’s elected government in the 1990s, focused on expanding social safety. There was a consensus that the military economic policies should be expanded, along with social policies. More information in Eduardo Aninat (2005), “Options and outcome of Chile’s

75

emphasis on democratic tradition as a strategy of Chilean foreign policy has contributed to its achieving a greater degree of international prestige and legitimacy (Morandé, 2003: 258). In Chile, political and economic rights have been guaranteed by an independent judicial system, which attempts to expedite access to justice and reduce trial times. In order to modernise the state, measures were taken in early 2003 to increase the efficiency of public administration and improve government quality and transparency. Such measures were taken to encourage performance-based incentives and reduce the number of appointees in public posts. As a result, “top posts in public administration are being filled competitively within the framework of a new system headed by the Civil Service Directorate”. In the social field, the government’s investment in social activity and high economic growth had considerably advanced effects. In 1990, 39% of Chileans lived below the poverty line, but by 2003 this percentage had dropped to 18%. In an additional attempt to improve social welfare services, the government of President Ricardo Lagos set up an unemployment insurance programme, introduced educational reforms and overhauled the health system. According to him, “these programmes are designed not only to improve productivity and increase Chile’s competitiveness but primarily to ensure that all the country’s citizens share in the benefits of economic growth” (Chilean Foreign Investment Committee). Thus, Chile’s image on the international stage has been shaped by domestic strategies such as economic liberalisation in order to attract FDI, socio-political development that has emphasised human rights and improved educational standards and the aim to increasing national autonomy in the international arena.129 In contrast to Chile, Brazil has to promote a more active economic integration strategy to achieve better insertion into the

education reforms 1990-2000”, in Timothy Besley and Roberto Zagha, Development challenges in the 1990s: leading policymakers speak from experience. New York: Oxford University Press, pp. 301-319. 129 Foreign Direct Investment (FDI) is not a new phenomenon in the international community and has also played an important role in European colonialism. Nevertheless the way of carrying out FDI has changed over the course of history. FDI has become a relevant element in international relations and deserves attention. Further reading in Martin Griffiths and Terry O’ Callaghan (2002), International Relations: The Key Concepts. New York: Routledge.

76

global economy. 130 A gradual increase in the Brazilian capacity to enforce the competitive policies conducted by Camex and BNDES and the creation of an agency to promote FDI can be seen and will be explored in the following sections. The internationalisation of the world economy seems to have had a profound effect on domestic politics worldwide. As the world economy changes, pressure to project the nations in a positive way in the international arena increases.131 Therefore, the significance of nation branding as a tool has increased. Despite the fact that not everybody does so profitably or makes it work effectively, there is no doubt that a few countries have got it right, as seen in the case of Chile, where an attractive national image is invaluable asset, mainly in terms of the FDI that it attracts.132 In this manner, nation branding is part of the Chilean national promotional programme, which tries to differentiate itself through its stable, transparent and well-organised business environment.133 The Brazilian and Chilean nation branding approaches offer an interesting perspective on how to understand why both countries opted to prioritise certain sectors of the domestic economy to the detriment of less competitive internal sectors. Nation branding provides the relevant tools for 130

See Fabio Giambiagi and André Villela (2005), Economia brasileira contemporânea. Rio de Janeiro: Elsevier. 131 Since the 1970s, as Chile, Vietnam, India, China, South Africa and Mexico have decided to reduce trade barriers and government intervention in the economy and have opted to privatised state-owned enterprises. However, internationalization has caused different outcomes in each country, given their different realities. Helen V. Milner and Robert O. Keohane (1999), “Internationalization and domestic politics, an introduction”, in Helen V. Milner and Robert O. Keohane (eds), Internationalization and domestic politics. Cambridge: Cambridge University Press, pp. 3-34. 132 Despite Chile’s long-term strategy of presenting itself as a serious and organised country, two unpredictable episodes occurred the giant earthquake in February 2010 and the collapse of a mine in August 2010. These episodes showed two important features of the country resilience and resourcefulness in the face of adversity. “Chile’s country brand: Coming clean”. The Economist, 10th September 2010. http://www.economist.com/ blogs/americasview/2010/09/chiles_country_brand. 133 Nation branding campaigns have become more important in Latin America to the extent that countries such as Chile and Uruguay have promoted exchange programmes to project their nation branding strategies. In this regard, the Chile Image Foundation and the administrators of the ‘Uruguay Natural’ brand organised a summit to discuss activities in which they could cooperate. “Marca país Uruguay recibe a Fundación Imagen de Chile en Montevideo”, Uruguay Natural, 28th July 2015. http://marcapaisuruguay.gub.uy/marcapais-uruguay-recibe-a-fundacion-imagen-de-chile-en-montevideo/.

77

observing whether the country has achieved its image goals through nation branding mechanisms, whereby strategic communication fulfilled specific aims.134 The fact that Brazil emerged as a global brand was the result of opening up the economy to foreign investors and encouraging new industries to relocate to its territory. 135 In the case of Chile, revitalising its brand was one of the demands of transitioning from a historically dictatorial period.136 In contrast to Brazil, Chile’s nation branding seeks to let people know about the country in order to project a modern image to new audiences. Brazil and Chile are interesting examples of well-coordinated nation branding policies as well as the influence of the concept on bilateral ties. Along with nation branding, public diplomacy engages various actors relevant to the carrying out of foreign policy aims. 1.3 The Dimensions of Brazil and Chile’s Mutual Perceptions In general security issues do not dominate the Latin American study of international affairs, although they are crucial to strategically understanding bilateral relationships in the region. 137 This means that the relationship 134

Marketing goes about identifying potential customers (direct investors, for instance) and the focusing on those clients can be more effective when communicating the importance of benefits to the target group. Sam Vaknin (2010), Branding and place marketing. https://archive.org/stream/NationBrandingAndPlaceMarketing/Nation-Branding-and-PlaceMarketing_djvu.txt. 135 The 2014 World Cup and the 2016 Olympics show that it is a good time for brands to explore opportunities in the Brazilian market. As demonstrated by Chilean investors in Brazil, these should understand the key socio-economic factors and cultural trends affecting brands within Brazil. Daniel Buarque, “Brazil now: A look at key trends and factors for international brands”, Hall & Partners, 4th July 2014. https://www.warc.com/Blogs/ Brazil_Now_A_look_at_key_trends_and_factors_for_international_brands.blog?ID=1873. 136 The last Country Brand Index for Latin America ranked Chile as the fourth most valuable country brand in the region after Brazil, Argentina and Costa Rica. “Country Brand Index Latinoamérica 2013”, Future Brand. http://www.futurebrand.com/foresight/ cbi/country-brand-index-latin-america. This ranking took five criteria into account: the values system, quality of life, business aptitude, heritage and culture, and tourism. “Chile es la cuarta marca país más valiosa de Latinoamérica”, El Mercurio Media Center, 23rd September 2013. http://www.elmercuriomediacenter.cl/chile-es-la-cuarta-marca-pais-masvaliosa-de-latinoamerica/. 137 Differences in commitment to governing borderlands and borders between adjacent states as in the case of the United States-Mexico, Mexico-Guatemala and Brazil-Paraguay led to the risk of securitising interstate relations. Harold Trinkunas and Anne Clunan (2016), “Alternative governance in Latin America”, in David R. Mares and Arie M.

78

between states can occur either through the absence of war or through the presence of mutual trust. Therefore, the language of security still defines bilateral links in Latin America and contributes to geopolitical analysis, for example of Brazil-Argentina relations at the time of the Itaipú-Corpus dispute.138 The relationship can also shown an outcome in terms of ‘unstable peace’, in which a display of force is not uncommon during the negotiation process. Brazil and Argentina, for example have had this type of relationship since their independence period.139 Chile and Argentina shared a so-called ‘fragile peace’, in which pending territory disputes survived for most of the twentieth century (Oelsner, 2007: 269). The concept of ‘mutual confidence’ is crucial to understanding the Brazil-Chile relationship. According to Oelsner, “the level of mutual confidence indicates the solidity of the peace upon which the relationship rests” (Oelsner, 2007: 274). This level of mutual confidence can be understood by means of compatible political regimes, interdependence, the absence of conflicts and common institutions.140 Mutual confidence between Kacowicz, Latin America security. New York: Routledge, p. 103. 138 The oil prices shock in 1973 was largely influenced by Brazilian foreign policy. This crisis shifted the focus of its foreign policy in some way and altered the country’s insertion into the international scene. The aim of emerging as a global power changed into a more pragmatic approach towards South America leadership. Brazilian President Geisel faced the international economic crisis by increasing industrialization and exports. Brazil needed to increase its energy supplies in order to achieve these goals. However, Argentina underestimated the impact of the energy crisis in Brazil and understood the energy issue as a geostrategic one. The need for a quick solution to water resources brought at dispute regarding the Corpus/Itaipú Dams. See Gian Luca Gardino (2011), “Diplomatic investigations and historical analysis”, The origins of Mercosur: Democracy and regionalization in South America. New York: Palgrave Macmillan, p. 26. 139 However, the cooperation between Argentina, Brazil and Chile in security policies over the last decade demonstrates a high level of confidence. See Daniel Flemes (2005), “Notas teóricas sobre a formação de uma comunidade de segurança entre a Argentina, o Brasil e o Chile”, Revista de Sociologia e Política, no 24, Curitiba. http://www.scielo.br/scielo. php?script=sci_arttext&pid=S0104-44782005000100014. Brazil, Argentina and Chile were the only countries in Latin American with sufficient naval strength. Michael L. Krenn (1996), Perspectives on Latin America and the Caribbean: The Chains of interdependence, U.S. policy toward Central America 1945-1954. New York: M.E. Sharpe, p. 24. 140 Initiatives carried out in the multilateral field, such as Brazil-Chile cooperation in the United Nations peacekeeping operation in Haiti (MINUSTAH), strengthened bilateral links since the two nations share similar international values. Anfredo Rehren (2004), “Medidas de confianza mutual entre Chile y Perú”, Revista de Ciencia Política, vol. 24, no 2. Santiago.

79

the two states has been demonstrated since the ABC Pact and they share democratic values, peaceful processes and great interdependence, as illustrated by bilateral cooperation efforts. The perception of mutual confidence between Brazil and Chile helps us to understand their bilateral relationship in line with reality. The lack of misconceptions in Brazil-Chile relations may account for the strengthening of their long-term bilateral ties. This misperception encompasses the discrepancies among the actors’ interests and goals. Observing the incompatibility between interests and goals demonstrates the difficulty of establishing bilateral relations (Vertzberger, 1990: 35-36). This misconception contributes to defining cooperative scenario in the bilateral approach to link trade, business interests, policy and multilateral foreign policy goals.141 Mutual confidence and nation branding concepts are important tools for understanding how Brazil-Chile cooperation occurs. Nation branding concerns strategic communication between nation-states that seek different goals in order to promote the country’s distinguishing features worldwide. As the global scenario becomes more competitive, states embark on a more conscious kind of country branding. Beyond attracting foreign investments, nation branding projects the country’s image to a foreign audience, including the civil society of other countries.142 The dynamic field of nation branding accommodates different forms of approach, since the idea demands growing integration and cooperation between different sectors.143 141

Brazil’s approach to its emerging role in world politics implies efficiency in military security. Military security encompasses objective (the states’ military capacity) and subjective (mutual perception between countries) aspects. The perception of an external threat has gained importance in Brazilian foreign policy, given the country’s international insertion. Today, the military dimension has led to a multiplicity of actors, from the super power of the United States to emerging military power such as China and regional powers such as Brazil (See Carlos Echeverría Jesús (2015), Relaciones internacionales III, paz, seguridad y defensa en la sociedad internacional. Madrid: Universidad Nacional de Educación a Distancia. 142 The importance of nation branding has increased worldwide. For further reading, see Gilmore F. (2002), “A country-can it be repositioned?-Spain-the success story of country branding”, The Journal of Brand Management, vol. 9, no 4, pp. 281-293. 143 Chile has created many marketing campaigns to project its nation brand. President Piñera declared 2013 the ‘Year of Innovation’ and initiated a number of programmes to foster entrepreneurship. A new brand ‘Imagina Chile’, was created, involving a national campaign to promote an exciting future for Chile. Imagina Chile. http://www.

80

In doing so, it is also interesting to observe Chile and Brazil’s opinion of each other and to what extent these opinions fit into each country’s domestic context. A survey is one way to further research Brazil and Chile’s mutual image of each other. Examining Brazil and Chile’s views of each other using a survey allows for a broad range of interpretations when exploring discussion of the nation brand. Clearly, in matters relating to a country’s brand, nationhood subjective forces are clearly at work (Mullins, 2006: 28). However, there is no way to measure such opinions in an accurate manner. Thus, in an attempt to examine the Chilean and Brazilian views of each other, the question now is to what extent do the views and opinions of Brazilians correspond to Chilean social economic reality? Is this view a result of the information provided by the mass media, which sometimes offers a more stereotypical view of countries in general or does it really detect a recent increase in interest in Latin America, especially in Chile? Is the Brazilians’ nation image of Chile, which makes a distinction between us and them deeply rooted in a stereotypical model, or are Brazilians well informed about Chile? When coming up with the survey’s six questions, each with five possible answers an attempt was made to analyse whether the Brazilians’ level of knowledge about Chile corresponds to its political economic reality. When referring to foreign policy, it should be highlighted that despite the progressive interest of the population in foreign affairs, interest on this topic still tends to be low compared to other more immediate issues.144 Nevertheless, there has been an increase in people’s interests in foreign policy in recent years. It should be pointed out that this growing interest does not surpass the importance of domestic politics. In general, public opinion tends to undermine how foreign policy directly affects citizens’ liquidagency.com/eu/studies/imagina-chile. Brazil’s rise to being the world’s preeminent bioenergy producer led it to project energy as its main nation branding strategy. See João Martines Filho et al. (2006), “Bioenergy and the rise of sugarcane-based ethanol in Brazil”, Choices, the magazine of food, farm and resource issues, pp. 91-96. 144 The growing role of civil society in international negotiations in the 1990s encouraged new operating procedures. In Brazil, the increasing participation of civil society in the international agenda began late in the 1980s. However, domestic issues overlapped into the international agenda. See Denilde Oliveira Holzhacker (2006), Atitudes e percepções das elites e da população sobre a política externa brasileira nos anos 90. University of São Paulo, Departament of Political Science, thesis for the post-graduate programme in Political Science. São Paulo.

81

daily life and so. In this way, public opinion tends to prioritise economic and financial issues to the detriment of foreign affairs. It is important to observe that public diplomacy has to with international relations, whilst nation branding is situated in the field of marketing. The field of nation branding encompasses a combination of government and private measures to project the distinctive characteristics of the nation’s image. The option of collecting information from Brazilian university students instead of people from different educational levels sought to provide a better way of analysing Chile’s political and economic context. Since university students answered the survey, it was assumed that their knowledge was obtained from various sources of information and was not restricted to the unilateral one-way message provided by private media. Therefore, there are not wrong answers in the survey, although one answer may be more appropriate than another meanings that the most correct answer provides a more profound explanation of the question. Their level of knowledge can be differentiated depending on the answers given. The total number of Brazilians who answered the survey was 112: 53 international relations students from a private Brazilian university (Universidade Cândido Mendes), 43 arts letters from a federal public university (Universidade Federal Fluminense) and 16 Masters or PhD students from a public health research institution (Instituto Oswaldo Cruz). Instead of focusing on one institution or on students from one specific area for this research, the idea was to work with diverse groups including people from the healthcare area and Brazilian public and private institutions in an attempt to embrace more diverse views.

1.3.1 The Brazilians’ multiple perceptions of Chile Nation branding can be defined as the strategic self-representation of the country in order to attract foreign investment, trade, industries, resource allocation and tourism among others. This definition refers to various aspects of a nation, such as culture, policy, economy and trade, with a gap between what the nation branding projects and what people think of other countries. Nation branding strategy identifies a blend of coordinated

82

elements that show what differentiates the nation.145 In doing so, nation branding aims to target not only governments and business sectors, but also people’s image of a particular nation. Nation branding goes beyond the scope of attracting investment and can target multiple audiences such as civil society, inhabitants of a particular country, NGOs, provinces and municipalities, given that the concept relies on visuals and slogans. Although the nation branding can strongly be related to marketing strategies, it may be unrelated to ordinary people’s image of a particular nation. People’s opinion about other countries is also important when understanding whether the foreign state gains a high level of acceptance from the inhabitants of the target country. An attractive nation branding also receives domestic support the inhabitants of the target country. When the country has achieved this goal in most nation markets, public diplomacy communication achieves its purpose of affecting target audiences. Public diplomacy and nation branding are complementary concepts and rest on their ability to shape the opinion of foreign audience. In this context of Brazil and Chile, it should be analysed whether the multifaceted dimension of bilateral ties has been accompanied by people’s engagement in the international relations of both countries. Indeed, the role of non-state actors in public diplomacy is on the increase, demanding a dynamic approach to the exploration of the Brazil-Chile relationship from the 1990s onwards. 146 Given that Brazilians are a heterogeneous group, answers to the survey illustrated their different levels of knowledge regarding Chile. Ironically, countries located in the Latin American continent appear to be uninterested in information about other nations. In general, Brazilians tend to study Europe and the United States much more than the region’s history. As a result, Brazilians’ knowledge of Chile is much more related to their self145

Nation branding is no restrained to attracting investment or the concept of being a synonym for propaganda. For further reading, see Nadia Kaneva (2011), “Nation branding: towards an agenda for critical research”, International Journal of Communication, no 5, pp. 117-141. 146 The existence of non-state actors is obvious throughout history; however widening and deepening the level of cooperation in the international community has shifted the opportunities for non-state actors in international relations. See Trevin Stratton (2008), “Power failure: the diffusion of state power in international relations”, Infinity Journal, vol. I, no 1. Also see, David S.A. Guttormsen and Carina van de Wetering (2013), “Non-state actors in world politics and international relations research”, Political Perspectives, vol. 6, issue 1, pp. 1-5.

83

interest in the country’s history and social-economic reality than the consequence of formal education. Examining the survey’s answers, the majority of these Brazilians have some idea about the Chilean economy, although they still confuse Chile with other Latin America countries in terms of politics. To this extent they mainly treat Latin America as a single area, thus they are not concerned about the fact that Chile has the most stable political system and the most consolidated democratic system in Latin America. Among the 112 Brazilians who answered the survey in March 2010, most knew that Chile’s main export is copper. Messages in the Brazilian media about the copper ‘boom’ and how the Chilean government has profited from it in recent years may have exerted an influence on people’s image of the country. People chose wine as Chile’s second main export probably decided for that option taking into account the increase in the import of Chilean wine to the Brazilian market.147 In the context of Mercosur, the majority (38) had a correct idea of Chile’s policy towards this entity.148 This means that the majority have paid attention to Chile’s strategic foreign policy, ignoring the core reason why that policy was adopted. Therefore, it can be supposed that they do not consider certain kinds of events, for instance the United States-Chile Free Trade Agreement that officially took effect on January 1st, 2004. Chile did not agree to join Mercosur as a permanent member, given that the two possibilities available went in opposite directions. Chile’s nation branding of transparent fiscal policies has achieved its goals regarding the Brazilian audience, inasmuch as many of the Brazilians in the group agreed that Chile 147

Chile started with a strategy of penetrating international markets with average quality wines sold at a low price. Jonathan Brooks and Sabrina Lucatelli (2004), “International competitiveness of the A-B-C agro-food sector”, in Organisation for Economic Cooperation and Development (OECD), Trade and competitiveness in Argentina, Brazil and Chile: Not as easy as A-B-C. New York: OECD. p. 188. In 2014, Brazilian demand for Chilean red wine increased by 22% and for white wine 25%. “Chile pretende aprovechar aumento en demanda de alimentos nacionales desde Brasil”, Diario Comex, 7th November 2014. http://www.diariocomex.cl/21506/chile-pretende-aprovechar-aumento-demanda-ali men tos- nacionales-desde-brasil. 148 The high external Mercosur tariffs in contrast to Chile’s lower effective average tariff does not make the arrangement beneficial to the latter. Glenn W. Harrison et al (2001), “Chile’s regional arrangements and the free trade agreement of the Americas”, Policy Research Working Paper. The World Bank Development Research Group. Washington D.C., p. 24.

84

is a positive example of transparent fiscal and monetary policy and one that Brazil should follow. The group of students from the Faculty of International Relations deserves special attention, since they should supposedly have a better understanding of Chile’s current and historical backgrounds. They defined Chile using words such as ‘neoliberalism’, ‘isolation’, ‘seriousness’ and ‘stability’, which means they related Chile’s image to its present circumstances. In contrast, people from the healthcare area, defined Chile using words related to personalities and historical facts, such as ‘Allende’, ‘Andes’, ‘Pablo Neruda’ and ‘Pinochet’, together with those from the Oswaldo Cruz Foundation with masters and PhD degrees older and share a higher level of education. Although the international relations students were expected to have better understanding of Chilean history and its present context, this group did not have much more knowledge when compared to the healthcare area. People from the healthcare area also demonstrated knowledge of Chile’s most famous author to the detriment of the international relations’ group. Given that public diplomacy and nation branding involve the government communicating with foreign publics, the audience’s opinion demonstrates that certain countries have earned recognition when turning this into the nation’s image. 149 Analysing the Brazilians’ opinion of Chile helps understand whether nation brand strategy has achieved its expected goals.150 Most of the people who answered the survey shared the opinion that Chile is a country with ‘transparent fiscal policies and high-level economic 149

The importance of public diplomacy in official foreign policy strategy is on the rise, to the extent that Brazil’s Ministry of Foreign Affairs (Itamaraty) conducted missions focused on trade and investments between Brazil and Chile. On 6th May 2014, the Brazilian Foreign Minister Luiz Alberto Figueiredo Machado paid a working visit to Santiago for a meeting with the Chancellor Heraldo Muñoz. Luiz Alberto Figueiredo was also invited by President Michelle Bachelet to participate in ‘The Atlantic-Pacific Dialogue and Opportunities for Trade and Investment in Latin America’ within the context of the Business Advisory Council for Asia Pacific Economic Cooperation (APEC). “Visita do Ministro das Relações Exteriores a Santiago do Chile” (2014), Diplomacia Pública, http://diplomaciapublica.itamaraty.gov.br/31-brasil-chile. 150 As Simon Anholt points out, “Nation branding seems to be something that touches citizens in a very profound way”. “Countries must earn better images through Smart Policy”, Interviewed on 6th November 2007, Council of Foreign Relations. http://www.cfr.org/polls-and-opinion-analysis/anholt-countries-must-earn-better-images throughsmart-policy/p14719.

85

development’. In doing so, Chile’s nation branding policy highlights its seriousness and reliability and meets its strategic marketing targets. This predictability, in comparison with unstable Latin American states, helps distinguish it as a country that respects institutions and the law.

1.3.2 Chileans’ views on Brazil Chile’s privileged position, driving high economic performance and without serious social struggles, facilitates a marketing technique approach that projects the idea of a country that works properly. As Chile consolidates nation branding as an important and growing political instrument, the concept has achieved importance dimensions within the country’s foreign policy targets. In the case of Brazil, the country’s international growth opened up the economy to foreign investors and somehow shifted the context of nation branding building. Brazil enjoys strong and distinctive image along the years. A rebranded Brazil encompasses a combination of factors: recent discoveries of large offshore pre-salt oil deposits; its ranking as the world’s largest sugarcane ethanol producer and a pioneer in using ethanol as motor fuel and its role as host of the 2014 World Cup and the 2016 Olympic Games in Rio de Janeiro. Moreover Brazil’s aircraft industry, fashion brands and wonderful nature reflect the attributes of a diverse young country. 151 As a country with huge dimensions and a widespread international projection, Brazil is a wellkonown brand per se. Instead of only being recognised as the country of carnivals, beautiful beaches, unsophisticated techonology and primary goods, Brazil has strengthened its international position this century and rebranded itself globally. Surveying Chilean students at the faculty of International 151

Among the Latin American countries, Chile has the most favourable image of Brazil. Chile is the country where the largest share of those people interviewed has a positive view of Brazil, 74%. Sergio Lamucci (2014), “Brasil tem imagem positiva em boa parte do mundo, diz pesquisa Pew”, Valor Econômico, 11/06/2014. The Brazilian cities of São Paulo and Rio de Janeiro are considered extremely attractive for business. However, Brazil’s size and potential demands differentiate ways of promoting its image on the international market. Therefore, initiatives such as BestBrazil focus on showcasing its financial markets to foreign investors and are important tools for projecting its nation brand. BRAIN (Brasil Investimentos & Negócios, “Imagem do País”. http://www. brainbrasil.org.br/imagem-pais.

86

Relations about Brazil’s image was a significant step towards observing its international projection in the region. Since nation branding provides a modern discourse and slogan to project the country abroad, it can see whether Chileans’ opinions are related to Brazil’s contemporary image or, stereotypes. It must be emphasized that, among the Chilean students only 19 from the Faculty of International Relations at the University of in Santiago were surveyed in September 2010. This low number of interviews certainly does not allow us to categorically establish what Chileans think about Brazil. However, it does provide some useful insights about Chile’s perception of Brazil. According to Von Hippel et al., “stereotypes are consensual beliefs held by members of one group about the characteristics of members of another group” (Von Hippel, Sekaquaptewa and Vargas, 1995: 178). Instead of highlighting Brazil as an emerging global power and identifying the country according to its current international status, the country’s definition related to stereotypes. In this sense, for the Chilean students Brazil’s image is created using past memories and perceptions such as ‘carnaval’ (carnival), ‘fútbol’ (football), ‘alegría’ (cheerfulness) and ‘samba’. However, the group defined Brazil using words such as ‘potencia’ (a great power), ‘potencia latinoamericana’ (a Latin American power), ‘país más importante de Latinoamerica’ (the most important country in Latin America) and ‘hegemonia en Latinoamerica’ (hegemony in Latin America). Another important point is the question that explores the serious possibility of developing strong bilateral links between Chile and Brazil. 152 According to the Chileans’, Chile’s foreign policy does not maintain strong relations with countries in the region’s countries, although there is the possibility of strong bilateral relations for economic interests and due to the need for strategic alliances in the continent. As argued, both countries have historically satisfactory foreign relations. Although the Chileans’ image of Brazil is more related to stereotype, some of the students demonstrated a better understanding of the country’s current emerging international 152

Chile is the traditional partner of Brazil. In 2013, bilateral trade reached US$ 8.8 billion. There are zero tariffs for 98% of bilateral trade a better index than that between members of the Pacific Alliance. Ministério das Relações Exteriores, “Brasil & Chile: parceria tradicional e abertura para o comércio”, Diplomacia Pública, 11/03/2014. http:// diplomaciapublica.itamaraty.gov.br/31-brasil-chile/61-brasil-chile-parceria-tradicional-eabertura-para-o-comercio.

87

projection of power. The perception that Brazil and Chile can strengthen their economic links is an interesting one when analysing Brazil-Chile bilateral relations. The opinions of the Chilean students go in hand in hand with the concept of public diplomacy, since the Brazil-Chile relationship not only involves the relationship between the governments’, but also the participation of actors in foreign affairs who are not state-centric which is on the increase. As government visibility, the growing participation of non-state actors emerges, encouraging stronger economic links and new mechanisms for conducting foreign policy. Foreign affairs encompass public-private partnerships and foreign direct investment, trade and energy resources make an important part of international relations. Moreover, it is difficult to distinguish the political perspective from economic aims when observing the context of foreign affairs. The government, political conditions and the economy are important components of foreign policy strategy and therefore the combination of these elements should not be undermined when exploring Brazil-Chile bilateral ties. Although only a few Chilean students answered the survey, they gave important answers that show that Brazil’s image is strongly related to stereotypes. At the same time, few students offered information on the current status of Brazil’s projection in the region, given that information on current geopolitical circumstances would provide a broader viewpoint regarding the country’s image beyond stereotypes. For some students, the important role Brazil has played in the process of Latin American integration was recognised, alongside the perception of the country as a world power. The importance of exploring the economic potential of Brazil-Chile links is a key point to understanding the mechanisms of bilateral ties as some students highlighted.

1.3.3 The Chile-Brazil multifaceted approach Public diplomacy and nation branding involve connecting different sectors by targeting the audience of a particular country and opening a broader analysis of the Brazil-Chile relationship. Contemporary diplomacy cannot be restricted to state actors and gives a voice to credible non-state actors in order 88

to achieve foreign policy goals. 153 The growing interdependence between international actors demands multifaceted approach to understanding the importance of the country’s links with non-public actors.154 The economy, trade, foreign investment, security, infrastructure, phytosanitary barriers and energy and industrial fields exert an overwhelming influence on Brazil-Chile bilateral relations and the combination of these elements must be considered when exploring the links between the two countries. Chile’s notorious progress based on its adoption of the neoliberal economic model and its transparent fiscal policies defines a more economy oriented diplomacy. 155 Chile’s position as the top producer of copper, and nitrate and as producer of agricultural, fishing and forest products, alongside its high level of foreign trade and reputation for strong financial institutions, has led to an economy oriented foreign policy. 156 In the case of Brazil, foreign policy involves a lot of state and non-state actors in policy-making, to the extent that the country’s foreign affairs cannot be explored from a unique traditional diplomacy perspective. Brazil took on a more dynamic approach to foreign policy, which corresponds to the country’s projection as an emerging great power. The nature of the two countries’ foreign policies demands a broader approach in order to understand pragmatic bilateral links. The growing importance of Chile’s nation branding in foreign policy signifies a shift in political paradigms beyond traditional diplomacy, with the cultivation of public opinion by the government in other countries assuming a more important role. Chile’s market-based view of the world goes hand in hand with its projection of a nation brand. Sharing common parameters with regards to democratic values, Brazil and Chile’s current foreign policies 153

See Geoffrey Allen Pigman (2010), Contemporary diplomacy. Cambridge: Polity Press. Additional information in Thomas Risse-Kappen (1995), Bringing transnational relations back in non-state actors, domestic structures and international institutions. Cambridge: Cambridge University Press. 155 More information about other Latin American countries with the neoliberal model in Amado Luiz Cervo (2000), “Sob o signo neoliberal: as relações internacionais da América Latina”, Revista Brasileira de Política Internacional, vol. 43, no 2. Brasília: Instituto Brasileiro de Relações Internacionais. http://www.scielo.br/ scielo.php?script=sci_arttext &pid=S0034-73292000000200001. 156 The Chilean outward-oriented and pro-private sector’s economic focus is institutionalised in the constitution. As long as the country is a democracy, any change to these would have to be made through constitutional reforms. David R. Mares and Francisco Rojas Aravena (2001), The United States and Chile: coming in from the cold. New York: Routledge, p. 49. 154

89

demand a dynamic approach, which includes interdependence between state and non-state actors. In the light of nation branding and public diplomacy, the Brazilian Ministry of Foreign Affairs (the well-known Itamaraty) promotes broader communication channels to foster dialogue with civil society. The Itamaraty’s use of modern mechanisms to strengthen dialogue with non-official actors such as businessmen, academics, journalists, trade unionists, parliamentarians and representatives of social movements defines a new paradigm in Brazil’s foreign policy approach. Building new mechanisms to encourage communication in a two-way dialogue means that there has been a change in Itamaraty’s policy towards more transparent foreign policy goals as part of Brazil’s international insertion strategy. Strengthening the channels of interaction between official actors and non-state actors is crucial to promote the participation of civil society in topics of the foreign policy agenda that, in the past were restrained to the diplomatic field. Current foreign policy rests on the ability to model the viewpoints of different actors towards coherent foreign policy targets.157 Public diplomacy allows for the participation of more credible actors, who are also important to achieving a broader understanding of foreign affairs. Civil society’s growing interest in foreign policy topics is a core element of the development of democracy. Public diplomacy refers to more appropriate tools to explore foreign affairs and official and non-official actors are equally important to better communicating and engaging with citizens. The increasing importance of non-state actors is not an isolated phenomenon and Chile has also recognised the more active role played by unofficial actors in foreign policy. Chile’s discussion on how to create better mechanisms to encourage the participation of civil society, NGOs, academics and trade unionists goes hand in hand with the principles of public diplomacy.158 With the emergence of international non-official actors, it is possible to identify different levels of integration between them, which enables a constant dialogue to take place and can result in stronger cooperation links. The mercantile nature of Chile’s foreign policy strategy is connected to the country’s strategy of prioritising relations with the United States and 157

The events instigated by the Itamaraty from 26th February until 2 April 2014 alongside the creation of the so-called ‘White Book of Brazilian Foreign Policy’ aimed to define courses of action and stimulate public debate on the work done. Blog Diplomacia Pública, Ministry of Foreign Affairs. 158 El Mercurio, 23 March 2014, p. 11.

90

Pacific Coast countries. Chile’s foreign policy rests with the President of the Republic. The constitution assigns him responsibility for maintaining political relations with foreign powers and international organisations as well as conducting negotiations. The President also has the power to complete, sign and ratify treaties deemed in the interests of the country, which must be submitted for congressional approval. 159 Although the foreign policy of President Sebastián Piñera (2010-2014) focused on the Pacific Alliance Agreement, Chile’s image vis-à-vis Brazilian media was still that of wellorganised, transparent and pragmatic country. The Brazilian Foreign Minister, Luiz Alberto Figueiredo declared that integration between the Pacific Alliance and Mercosur would be possible by accelerating the tariff reduction processes.160 While non-state actors penetrate the sphere of international relations, the concepts of public diplomacy and nation branding provide a broader base for understanding contemporary diplomacy. Raising new topics on the international agenda produces a much more complex scenario in which to analyse international relations than previous government-oriented foreign policy. In this sense, contemporary foreign policy cannot be perceived as the exclusive domain of state-to-state diplomacy; diplomacy nowadays has evolved, with multiple actors encouraging the more active participation of citizens in foreign affairs. Brazil and Chile recognised the importance of civil society participation in foreign policy and public diplomacy, nation branding and presidential diplomacy provide the core component for observing the influence of state-centric and non-state actors in the two countries’ bilateral links. Nevertheless, the concept of public diplomacy is new to the Latin American scenario and the contextualisation of public diplomacy relies on specific historical and cultural circumstances and differs in each country. Brazilian public diplomacy seeks to discuss Brazilian foreign policy - as well 159

The Chilean Foreign Ministry is a second level decision makers, responsible for the planning, direction, coordination, implementation and dissemination of the foreign policy decided upon by the President. Among its mains goals are the coordination of ministries and government agencies on issues that affect the implementation of foreign policy. 1980 Political Constitution of the Republic of Chile. Article 32, 15o. 160 Mercosur has already agreed with the four original members of the Pacific Alliance Chile, Peru, Colombia and Mexico - to reduce tariffs on a wide range of products and services. Electronic Journal, MercoPress.South Atlantic News Agency, 8 February 2014.

91

as topics on the international agenda - with civil society. As foreign policy becomes more democratic and encourages the participation of civil society, emerging communication channels strengthen the links between state and non-state actors. Brazil’s international insertion as an emerging global power demands closer links to civil society in order to gain support for the country’s ambitious goals. Internal support provides a perception of the importance of international topics to domestic development. Understanding how the international agenda affects domestic politics favours civil society support in order to achieve foreign policy aims. A clear shift can be detected from public diplomacy compared to the former traditional analysis of diplomacy, whereby states and governments were major actors in foreign affairs. Since Brazil-Chile bilateral relations encompass infrastructure cooperation, partnerships in the field of security, mutual support in the multilateral field, partnerships in the areas of academia, technology and education, agreements to avoid double taxation, informal networks and so forth, bilateral ties do not directly involve governmental actors and the role of non-state actors increases. As the role of the government becomes less important, the increasing number of non-official actors demands a new approach to contemporary foreign policy. Public diplomacy, nation branding and presidential diplomacy provide a departure point for exploring the Brazil-Chile relationship from the 1990s onwards.

92

Chapter 2 The Historical Dimension of Brazilian-Chilean Relations International relations, diplomacy and foreign policy affairs generally have strong historical roots. It is well-known that modern diplomatic institutions keep systematic records on how bilateral relations between countries have evolved every time. Therefore, the history of these relations should certainly be taken into consideration when formulating present-day foreign policy. Moreover, history has paved the way for understanding the roots of the Brazil-Chile relationship and how the concepts of public diplomacy, nation branding and presidential diplomacy function as core components when explaining the Brazil-Chile multifaceted diplomatic approach. Historical backgrounds help explain the development of bilateral relations, since the two countries have specific historical roots to the detriment of other Latin American countries. The states of Brazil and Chile share a historical civic culture that underpins agreements rather than a conflictive relationship; both faced a smooth civil-military transition to democracy and had to handle the delicate questions arising from the abuse of human rights during their military governments. Despite the existence of a democratic regime, the military retains significant power in Brazil and Chile. In Brazil, it retains the right to veto key legislation, with the most important decisions being made by bureaucrats in economic and planning ministries.1 Chile’s democratic regime has also had to coexist with some legal remnants from the time of the military dictatorship. This is illustrated by the facts that Pinochet was able to maintain his position as commander-in-chief until March 1998 and the military has maintained its extensive influence in foreign policy. 2 1

However, Brazil’s Truth Commission was created by Law 12.258/2011 and was passed on the 16th May 2012 as part of the Transitional Justice process, whose idea was to confront past abuses, outlining strategies such as the rights and interests of the victims, survivors and their families. Brazil’s Truth Commission aims to investigate human rights violation between 1946 and 1988. http://www.cnv.gov.br/index.php/institucional-acesso-informa cao/a-cnv. 2 Chilean President Michelle Bachelet (2014-2018) presented an amendment for changes to

93

As mentioned in the previous chapter, the beginning of the twentieth century brought the ABC Pact, in which Brazil sought to foster cooperation with Argentina and Chile, the other main Southern Cone countries. The ABC Pact demonstrates the long-term importance of Chile as a key country in establishing the geopolitical balance of the region. The ABC Pact was an attempt by Brazil, Argentina and Chile to counterbalance the United States’ power in the region. According to Santos, the ABC Pact had an important impact on Argentina-Brazil bilateral relations in the second term of Brazilian President Getúlio Vargas (1951-1954). The Brazil-Argentina relationship should be understood through how they complemented each other economically and in their regional political strategy, instead of exploring bilateral rivalry (Santos, 2014: 40-41). Between 1907 and 1915, the idea was to establish a Treaty of Cordial Intelligence between the three states in order to carry out the Brazilian Baron of Rio Branco’s foreign policy. As Bueno points out, not only was the Brazilian initiative important in that period, but Chile and Argentina also worked on a common project, the Puga-Borné-Anadón (1907) in order to encourage closer political ties. The Chilean-Argentine initiative carried out by the Chilean Minister of Foreign Affairs (Puga Borne) and the official Argentine representative in Santiago, Lorenzo Anadón, involved military cooperation goals (Bueno, 2014: 562-563). Signing the treaty in Buenos Aires in 1915, Brazil, Argentina and Chile agreed to facilitate the peaceful settlement of international disputes. The ABC Pact was the historical departure aimed at sustaining Brazil and Chile’s similar and interrelated historical backgrounds that aspired for long-term bilateral relations. Chile’s geographically isolated position behind the Andes, together with Brazil’s location facing the Atlantic Ocean gave them both a shared specific salient.3 The mutual perception of similar features is a determining factor the military justice system, including the transfer of offences involving civilian victims committed by soldiers to the ordinary justice system. “Bachelet prepara reforma a la justicia military en Chile” (2014), El Mundo, 25th May 2014. http://www.elespectador.com/ noticias/elmundo/bachelet-prepara-reforma-justicia-militar-chile-articulo-494395. 3 The fact that Brazil was a monarchy (the empire of Brazil lasted from 1822-1889) favoured the self-image of a supposed superiority in terms of civilization, similar to European monarchies and despite the country undermining itself with the backward nature of the slave regime. More information about Brazil rebuilding its self-image in Luís Cláudio Villafañe G. Santos (2005), “A América do Sul no discurso diplomático brasileiro”, Brazilian Magazine of International Politics, vol. 48, no 2. http://www.

94

when promoting closer ties and mutual respect. Despite their similarities as two politically stable countries, Brazil and Chile’s social structure differ significantly. Whilst Chile developed a feeling of citizenship early in the nineteenth century due to the wars the country was involved in (the Chilean Confederation War from 1836-1839; a naval battle against Spain in 18641866; the War of the Pacific from 1879-1883 and the Civil War in 1891), the monarchy in Brazil was connected to a servile state.4 Chile’s early recognition of republicanism demanded the proper positioning of the nation’s image, along with the necessary differentiation from other American realms.5 In contrast, slavery in Brazil became the subject of republicanism debate late in the 1880s.6 From a political-economic viewpoint, Chile has adopted state interventionism since the 1920s, which turned into drastic regional economic reconstruction. According to Lockard, although the military seized power for short periods, Chileans generally elected democratic governments and supported several political parties. The Great Depression favoured the emergence of reformist parties and social movements gained support (Lockard, 2015: 623). However, the inedited nature of the Chicago Boys neoliberal reforms opened up the economy by encouraging the country’s competitive advantage in export markets attracting greater interest scielo.br/scielo.php?pid=S0034-73292005000200010&script=sci_arttext&tlng=es. 4 The nineteenth century is a fundamental period in Chile’s history since it was the century of independence, of the organisation of the republic, of territorial expansion and of nation building. Rafael Sagredo Baeza (2015), “The end of the Chilean history in the nineteenthcentury”, Historia, vol. 48, no 1. http://www.scielo.cl/scielo.php?script=sci_arttext&pid= S0717-1942015000100009&lng=en&nrm=iso&tlng=en. 5 Chilean civic republican traditions were regarded as an exception in the Latin American context. Carmen McEvoy (2012), “Civilización, masculinidad y superioridad racial: una aproximación al discurso republican chileno durante la Guerra del Pacífico (1879-1884)”, Revista de Sociología Política, vol. 20, no 42. 6 The Brazilian state of Pernambuco held a debate to take an initial look at antislavery politics. This demonstrates how the issues of emancipation in the 1870s and abolition in the 1880s were significant to the abolition movement. Celso Thomas Castilho (2008), Abolitionism matters: The politics of antislavery in Pernambuco, Brazil 1869-1888. Berkeley: University of California Press, p. 10. However, Liberals, Conservatives and Republicans in Porto Alegre (the state in southern Brazil) all agreed about the need to end slavery. However, the deep rooted antagonism between them made it difficult for one group to ally themselves with another. Roger A. Kittleson (2006), The practice of politics in postcolonial Brazil: Porto Alegre 1854-1895. Pittsburgh: University of Pittsburgh Press, p. 122.

95

from other Latin American states.7 Brazil’s economy from 1500 until the late 1930s relied on the production of primary products.8 Significant structural transformations were only carried out in the 1930s, thus taking the first steps towards the semiindustrialisation process. 9 Brazil’s present status as an emerging economic power has attracted international attention, given the country’s welldeveloped industries (aircraft, manufacturing, petrochemical, mining and so forth) and the fact that it is a net exporter of commodities and energy.10 Both countries are consolidated democracies and Brazil and Chile have established economic ties based on the foundations of mutual respect, allowing investment and trade.11 Since the beginning, the formation of the nation’s image has been crucial 7

Like Chile, the Brazilian Finance Minister was also a ‘Chicago Boy’ since President Dilma Rousseff named Joaquim Levy as Finance Minister in her second term. He was a leading Brazilian proponent of orthodox neoliberalism, having earned a PhD at the University of Chicago, the same institution from which Augusto Pinochet drew his principal financial and economic officials”. Bill van Auken (2014), “After Brazilian election, Dilma taps ‘Chicago Boys’ as Finance Minister, World Socialist Web Site. https://www.wsws.org/en/articles/2014/12/02/braz-d02.html. 8 In fact, Portugal was faced with the issue of finding economic gains in their territories in the Americas. This would justify the costs of defending large territories such as Brazil. Celso Furtado (1971), The Economic Growth of Brazil: A Survey from Colonial to Modern Times. Berkeley: University of California Press, p. 5. 9 From 1800 to 1913, per capita gross domestic product (GDP) grew by more than 50% in Mexico and not at all in Brazil. Stephen Haber (1997), “Introduction: Economic growth and Latin American economic historiography”, in Stephen Haber, How Latin America fell behind: Essays on the economic histories of Brazil and Mexico, 1800-1914. Stanford: Stanford University Press, p. 2. 10 Brazil suffered significant changes in its industrialisation process between 1959 and 1998. These structural changes occurred due to the industrialisation of the economy and the increased concentration of income. See Manuel A. R. da Fonseca and Joaquim J. M. Guilhoto (2002), “Mudanças estruturais na economia industrial do Brasil, 1960-1995” in Werner Baer, A economia brasileira. São Paulo: Nobel, pp. 458-459. Today, the service industry is a growing sector of the Brazilian economy and the country has more opportunities for growth in tourism and the information services. Multinationals have a strong presence in advertising, computer services and management consultancy. Brazil for Foreigners, “The service industry in Brazil”. http://www.brazil-for-foreigners.com/serviceindustry-in-brazil/. 11 Since the end of the 1990s, Chile has also had important economic interdependence on Argentina. However, bilateral interdependence was much higher in the early 1970s than in the 1990s. David R. Mares (1997), “Exploring the impact of economic cooperation on political and security relations between Argentina and Chile”. http://www.stimson.org/ images/uploads/research-pdfs/mares.pdf.

96

to Brazil and Chile historical backgrounds, although the need to distinguish itself from other Latin American realms was much more prominent in Chile, since Brazil had a monarchy. As Dawson highlights, at the time of gaining independence, Chile was a relatively peripheral nation within the region. In contrast, Peru and Bolivia were two of the most important domains of the Spanish empire (Dawson, 2015: 50). Chile’s national image and projection of a nation branding goes back to the nineteenth century, due to the country’s urgent need to build a cohesive nation image.12 Although Chile has maintained many of the original characteristics of this image, its current nation branding strategy demands a modern approach.

2.1 Brazil-Chile Nation State Building The contrast between Spanish-American and Portuguese-American independence movements is important. Spanish America was devastated after about 16 years of warfare. Mining centres collapsed, trade was interrupted and agriculture damaged. The general perception that the BrazilChile independence process was achieved without significant setbacks does not match the incontestable reality (Larosa and Mejía, 2015: 74). As Pimenta highlights, from Brazil’s perspective, the prevailing idea that nothing had changed in the nineteenth century because of the continuous monarchical regime and the absence of large rebellions, needs cautious analysis. Independence should be studied in a historical context, dating back to the transfer of the Portuguese Court to Rio de Janeiro in 1808 at least. The spatial importance of independence deserves attention as long as local, 12

Since the Church remained a predominantly conservative force in society, it was an important actor in Latin American national identities. Brian H Smith (1982), The Church and Politics in Chile: Challenges to modern Catholicism. New Jersey: Princeton University Press, pp. 65-69. Prior to independence, Chile had been a remote and neglected Spanish colony. Interestingly enough, the Jesuit order expelled from the Spanish empire in 1776 was never as important a landowner in Chile as it was in Mexico, for instance. Simon Collier (1997), “Religious freedom, clericalism and anticlericalism in Chile, 1820-1920” in Richard Helmstadter Freedom and religion in the nineteenth century. Stanford: Stanford University Press, p. 303. However, as its wealth increased the Church invested in land. It also loaned money to ranch and mine owners at the standard 6% interest. John L. Rector (2005), The History of Chile. New York: Palgrave Macmillan, p. 41.

97

provincial and regional spaces play a significant role as a huge dimension of the independence process.13 From Chile’s standpoint, the perception that there were not many episodes of confusion and revolt led to misconceptions about its historical background. In Brazil, the people who wanted independence did not think about this homogeneously, since they disagreed about the political structure around which the state would be organised. In other words, neither Brazil nor Chile’s historical background should be limited to a generalised analysis, since each country had its own peculiarities as a result of its different experiences.14 To begin with, it should be considered that the timing of Brazil’s independence was different regarding Spanish America. The ten years gap made a big difference in terms of the new values introduced. The Portuguese revolution of the 1820s created a totally different context, since it belonged to a different kind of European political conjecture. Indeed, Brazil’s emancipation linked the past and the future by taking into account the arrival of the Portuguese Court as a decisive aspect of the formation of the Brazilian state and to Brazil’s historical destiny. As Cardoso argues, the opening of the ports and its significance within the context of a broader aperture and liberalisation of the Brazilian economy created new opportunities for the development of greater economic and political autonomy (Cardoso, 2009). In contrast to the Spanish independence process, which was associated with maintaining loyalty to the captive King in Spain, Portuguese constitutionalism was a reaction to a fear of renewed absolutism. In this way, constitutionalism brought the idea of progress to the new nation. The Portuguese king, who had remained in Brazil during the war returned home seeking to secure the Crown after the death of his mother, Queen D.

13

See João Paulo G. Pimenta (2009), “The independence of Brazil: a review of the recent historiographic production”, JPH, vol. 7, n 1. http://www.brown.edu/Departments/ Portuguese_Brazilian_Studies/ejph/ html/issue13/pdf/jpimenta.pdf. 14 Nation-building is a multi-step concept. It lacks a scientific foundation, but encompasses very practical steps after a violent conflict or a war has ended. Usually, nation-building has already started before the actual end of a conflict. For further discussion, see Andrea K. Riemer (2005), “The concepts of state building, nation building and society building”, AARMS, vol. 4, n o 3, pp. 367-379. Vienna: Institute for Strategy and Security Policy.

98

Maria.15 As Hespanha highlights, the Portuguese constitutionalism recognised the shifting role of sovereignity as long as the nation embrace the role to promulgate the constitution (Hespanha, 2012: 479). The return of the king to Portugal because of a liberal and constitutional revolution led to an upsurge of movements in support of the liberal Portuguese courts. As a result provisional government juntas were created in Brazil. The courts aimed to return Brazil to its colonial status in order to avoid the commercial disadvantages of the past few years. In practical terms, the fear of recolonisation led to the emergence of a new group of interests and diverging opinions either in favour of or against emancipation. In the 1820s, there was a tension between the Portuguese courts and the regente prince left Brazil (Fausto, 1999: 76-9). It must be recognised that Brazil and Chile have, since the nineteenth century, been considered examples of countries in the region with political and institutional stability. Since the beginning, Chile has shown political maturity, illustrated by the fact that it is a stable and remarkable state consolidated under the 1833 Constitution.16 According to Bulmer-Thomas, the history of Brazil-Chile after independence can be characterised by its possession of a relatively high degree of stability throughout the centuries in comparison to other Latin American states (Bulmer-Thomas, 2014: 461). Therefore, ‘stability’ is a key word to understanding why both countries have significant elements in common, even though they do not share common borders or a strong relationship. From this perspective, political stability has created mutual respect between the two countries and is an important component when building their bilateral ties.

2.1.1 Chile image background Besides stability, another significant concepts when looking at Chile are ‘singularity’ and ‘commerce’, which are essential elements for under15

See Patrick Wilcken (2010), Império à deriva: a corte portuguesa no Rio de Janeiro (1808-1828). Rio de Janeiro: Objetiva. 16 US Library of Congress. Constitutional History. Development and breakdown of democracy, 1830- 1973. Available in: http://countrystudies.us/chile/85.htm. Consulted on 1 February 2013.

99

standing the construction of the nation brand as explained in the first chapter. Therefore, the prevailing idea that Chile is a country oriented towards commerce dates back to the nineteenth century and is key to understanding our study (Lederman, 2005: 34-35). Chile’s consolidated nation brand has its roots in the country’s self-perception, which defined itself without seeking outside parameters. This means that nation building began in the nineteenth century and from this period onwards, the country considered itself a Modern Republic and the model of economic expansion and ethics.17 The general perception of internal order contributed to it considering itself a model for other countries in the region. 18 It should be considered that Chile’s image goes back to the eighteenth century. In contrast to other Latin America states, the new Bourbon administrative organisation that assumed power in 1707, aimed to centralise power in the monarchy. 19 The main goal of the dynasty was to create a bureaucratic administration and absolute government. From isolated provinces, Chile ended experiencing an increase flux of commerce due to the open of new trade routes and direct contact with Spain. Simultaneously, the boom of the mining industries was also associated with the Bourbon period. In this way, the Bourbon administration briefly caused a balance between the internal and the external sector of the economy. Rising silver production helped to finance the Crown’s military expenditures and the import of 17

Another important point to help understand Chile’s image is to observe Chile ties with its neighbours such as Peru. More information in Felipe Costa Santarosa (2012), Rivalidade e integração nas relações chileno-peruanas: implicações para a política externa brasileira na América do Sul. Brasília: Alexandre Gusmão Foundation. See Simon Collier (2003), Chile: The Making of a Republic, 1830-1865. Cambridge University Press, particularly Chapter 7, ‘Model Republic’. 18 Despite Chile’s internal particularities and isolated position, the country encountered worldwide communist and anti-communist ideologies even before the outbreak of the Russian Revolution. Ironically, Chile’s isolated nature did not distance from the international facts that exerted an important influence on the country’s domestic field. See Joaquín Fernandois (2011), Chile: crisis imperial e independencia, 1808-1830. Madrid: Fundación MAPFRE, Taurus. 19 The Bourbons adopted few colonial measures to deal the immediate problems of defence and administration. Early reforms focused on coastal defence and contraband trade problems. These adopted measures gave way after 1763. Adrian J. Pearce (2014), The origins of Bourbon reform in Spanish South America, 1700-1763. New York: Palgrave Macmillan, p. 9.

100

European products to the region increased. As a result, jobs were created in the colony, which helped to create an active market for industry and domestic agriculture. The creation of the complex and diversified internal economy paved the way for a new and complex colonial society (Bethell, 1998: 413-412). The beginning of the eighteenth century coincided with the crowning of Spain’s first Bourbon king. The new Bourbon administration that assumed power focused on structural changes to Spain’s government. In this context, the colonies also received significant attention, particularly regarding defence and the economy. During this period, the Andean region relied on precious metal to finance its overseas trade. To a large extent, the Chilean mining industry originated in this period, when the price of precious metal increased (Bethell, 1998: 413-414). However, neither the years before independence nor the period thereafter can be classified by an absence of warfare. The fact that Chile did not suffered an abrupt rupture between the colonial and the republic period played an important role in generalising the idea that it did not face significant conflicts, although the absence of consensus over the organisation of the new republic caused internal political instability. 20 In this sense, the prevailing thought was that independence was achieved by the conservative landowning oligarchy, even though what this actually meant needs cautious study. According to the traditional interpretation, independence was a result of the growing contradiction between the Creole elites because the colonial system did not allow them to expand, for obvious reasons, such as the conflicts that occurred between the Creole oligarchy and Spanish officials of the Crown, the interests of the Viceroyalty of Lima and the population of the Captaincy General. 21 Furthermore, liberalisation of Spain’s imperial policies should be taken into account during the transition to independence, since the decline of Spain as a hegemonic power to the detriment of British trade and other European nations played a key role in Chile’s 20

See Diego Barros Arana (2003), Historia General de Chile. Biblioteca Virtual Universal: Editorial do Cardo. 21 After independence, a small oligarchy of Creoles and European Spaniards consisting of about 200 families dominated the Chilean society. Timothy R. Scully (1992), Rethinking the Center: Party Politics in Nineteenth Century and Twentieth-Century Chile. Stanford: Stanford University Press, p. 21.

101

independence.22 According to this view, independence is seen as a secondary consequence of external factors such as the European war and the deposition of Ferdinand VII. The combination of these two factors led to the establishment of the local government juntas that ruled the country as an Executive branch of government. Local government juntas originated in the periphery of the viceroys, due to the fact that these viceroys aimed to keep the empire’s organisation centralised. As Sutter highlights, “the juntas represented the first statement of independence and reflected the underlying conflicts between the Colonial Metropolis and their trade dependencies, which means between Lima and Santiago”. In addition the juntas became places where local conflicts between Creoles and Spanish administration occurred. Local problems contributed to the Wars of Independence (Sutter and Sunkel, 1982: 22). Chile’s independence came through the army led by José de San Martín. The patriot victory in the Battle of Chacabuco in 1817 expelled Casimiro Marcó del Pont (the Spanish governor) and brought General Bernardo O’Higgins back to power as a Supreme Director. He declared Chile independence in February 1818. As Pamplona and Stuven point out, his position as chief director did not mean much in terms of the political system, given that, in the beginning there was not consensus on republicanism.23 Debate took place about the system that should be adopted, republicanism or monarchy. O’Higgins first aim was to win over the Spanish in the south of the territory in order to carry out expeditions to Peru. According to him, independence had to be consolidated with a strong government (Pamplona and Stuven, 2010: 85). In the beginning, O’Higgins rule (1817-1823) contributed to creating consensus among the upper class, although his authoritarianism, particularly after 1820, led to a lack of support from the upper class in the long run. This 22

In the nineteenth century, Britain had the largest empire the world, although was expensive to maintain and was based on economic sacrifice to the mother country. Matthias Morys (2014), “Cycles and depressions” in Roderick Floud et al The Cambridge economic history of modern Britain, vol. II 1870 to the present. Cambridge: Cambridge University Press, p. 283. 23 For the debate on Chile’s nation branding building, it is important to understand the country’s historical backgrounds as well as to explore the conceptual aspects of public diplomacy. See Margaret G. Hermann (2002), “One field, many perspectives: shifting from debate to dialogue”, in Donald J. Puchala (Ed.), Visions of International relations: assessing an academic field. Columbia, SC: University of South Carolina Press.

102

was the result of two aspects: aristocratic circles never recognised the supreme director with a landowner’s background as someone who could strengthen the representation of their interests and the personal nature of his administration did not favored upper class participation.24 Furthermore, O’Higgins encouraged religious tolerance, provoking discomfort among the Roman Catholic Church’s priests, despite its status as the official state religion. Chile’s republicanism arrived in not particularly stable circumstances, similar to Brazil’s parliamentary constitutional monarchy political system. Exploring the two countries’ different historical backgrounds includes important components to help understand both countries’ nation branding projections. During the six years of the O’Higgins administration, the issue over which political system should be adopted continued. In order to avoid what had occurred in other Latin American states, O’Higgins set up a preparatory conference in 1822, made up of provincial deputies, in an attempt to establish the constitution. According to White, O’Higgins’ term provides core elements to help understand Chile’s history, given that the president established a pattern of democracy that lasted until the coup that overthrew Salvador Allende in 1973 (White, 2014: 29). Adopting pragmatic evidence of the significant aspects of Chile’s became an important element in the country’s brand construction. The Chilean pragmatic approach provides an important foundation to explain BrazilChile’s stable approach. Chile’s historical backgrounds contributed to its branding as a stable pragmatic nation. For obvious reasons, pragmatism does not mean that the transition to independence is without conflicts. However, the absence of the definition of Chile as a republic combined with the establishment of a strong Executive power allowing for re-election, encouraged O’Higgins attempts at staying in power.25 He aimed to deploy dictatorship and got the support of the aristocracy in the first time. As the 24

O’Higgins was the first governor of Chile to attempt to personally to visit every part of the country. William Edmundson (2009), A history of the British presence in Chile: From Bloody Mary to Charles Darwin and the decline of British influence. New York: Palgrave Macmillan, p. 60. 25 The Creole hero Bernardo O’Higgins declared in 1818 that he could make Chile “the England of South America” and contributed to the long-permeated idea of exceptionalism in Chilean political culture. Jonathan Haslam (2005), Nixon’s administration and the death of Allende’s Chile: A case of assisted suicide. New York: Verso, p. 3.

103

result, the City Council of Santiago asked for his resignation and supported General Freire as supreme director. According to Edwards, the aristocratic ruling class overthrew O’Higgins because of the lack of constructive dialogue. Although the political system issue remained, republican roots needed to be put down in the new nation, so the Chilean aristocracy carried out a process of republicanism. Therefore, the political strength of aristocratic interests remained, in the same way as the Church maintained its privilege and power. The ruling class acquired power based on land and trade. The power and authority of the Chilean Catholic Church was closely tied to the colonial government and contribute to the legitimisation of the state.26 Interesting enough, in the early years of the regime there was a lot of evidence of O’Higgins’ suspicious links to Argentina and San Martín. His membership of the shadowy Lautaro Lodge (the semi-Masonic secret society founded by San Martín) was pointed out as the reason for the violence that befell some of his most vocal adversaries (Collier and Sater, 2004: 47). O’Higgins’ plan to devise a constitution in 1818 in order to legitimise his government failed, enabling him to stay in power. Indeed, his dictatorial behaviour favoured discontent in the provinces and the growth of opposition movements. Despite the Wars of Independence leading to Chile’s emancipation from the viceroyalty of Peru and modifying the 26

Although the struggle for independence raged, the authority of the Catholic Church was never in question. After independence, Church and State relations remained closely tied. The Constitution of 1833 established the Catholic Church as the Church of Chile and gave it exclusive jurisdiction over education and family affairs. Given that the interests of the Church and the ruling elite were so closely connected, the Catholic hierarchy generally supported the agrarian oligarchy and the Conservative party until the 1920s. In the early 1920s, the Catholic Church and the government negotiated an amicable separation of Church and State without significant resistance from the public or Church hierarchy. The separation became official in 1925, with the enactment of a new constitution. The smooth transition of the Church’s status led to its more progressive role in Chilean society. Eliminating most ecclesiastical privilege placated Leftist groups as well as preventing the growth of anticlericalism. As opposed to other Latin American states in which religion was a significant source of tension, this led to the alignment of the Catholic Church and conservative parties. Chile’s pragmatic policy led to the ruling class moving more according to considerations of power than according to religious commitment. Religion was a counter to the game, sometimes a very important counter. Simon Collier (1997), Religious freedom, clericalism, and anticlericalism in Chile, 1820-1920 in Richard Helmstadter (ed.), The making of the modern freedom: freedom and religion in the Nineteenth Century. Stanford: Stanford University Press, pp. 302-304.

104

country’s political situation, the emerging new nation was characterised by conservative settlements in the 1830s. The political-historical dynamics of the new nation-state paved the way for its unusual institutional continuity, in contrast to other Spanish America territories. As Collier and Sater state: “If Chileans form, as they do, a distinctive branch of the Spanish American family, the key to understanding their distinctiveness is, precisely, in their long isolation – mitigated to an extent by the steamship in the second half of the nineteenth century, and more so by the jet airliner in the second half of the twentieth century” (Collier and Sater, 2004: 3).

The political modernity that the republic should represent was not the result of a new emerging social class, but was carried out by traditional oligarchies. Escobedo highlights that the attitude during the early stages of independence was more aligned with anti-monarchy sentiments and the result of internationalising republican principles. In this way, the ruling class adopted the republican system as an alternative to dismantling the metropolis, even though there was no clear consensus over the adequate political approach for governing the nation at that time. The short-term goal was to expel the Spaniards and changing the political regime was necessary to consolidate the new scenario (Escobedo, 2000: 125).

2.1.2 Chile’s independence and the process of nation building As a result, the first years after independence did not see the development of new economic activities. In this scenario, industrialisation and manufacturing initiatives would come later. However, influenced by European thinking and American republicanism, liberalism was shaped by one of the liberal politicians of the moment, José Miguel Infante, focused on the idea of federalism.27 Infante’s thoughts were very much influenced by American federalism and the constitution was to be the formal mechanism to start implementing republican law. He was elected to the newly created 27

The Liberal party won the majority of provincial votes in 1829. See Diego Barros Arana (2005), Historia General de Chile, vol. 16. Santiago de Chile: Editorial Universitaria, p. 250.

105

National Congress at a time that did not favour radical changes. Problems between the National Congress and the Executive power arose to the extent that neither of Freire’s two successors as president was able to deal with the unstable political scenario.28 In this context, a new constitution was passed in 1828, which denoted a certain coherence on different aspects. In theory, the president had most of the power of the Executive branch. The Legislative branch consisted of two chambers, the Chamber of Deputies elected by the people, and the Senate directly appointed by provincial assemblies elected by citizens. Lastly, the Supreme Court supervised the judicial system. In doing so, the new constitution gave more power to the Legislative than the Executive power, to the extent that the chambers not only passed general laws and taxes, but also appointed public officials. The constitution that was passed intended to protect individual liberties against centralised authoritarianism, since it was endowed with significant prerogatives (Escobedo, 2000: 143). However, from the beginning the Chilean elite assumed moderate nationalism as the mechanism for maintaining territorial integrity and sociopolitical cohesion. The national political project in the nineteenth century could not afford to put into liberal thinking into practice, despite continued attempts by liberal opponents within the same ruling class. The Conservative coalition took power in 1830 and laid the foundation for the country’s recognised political stability. The idea of the centralised elites as part of the nation-state was not re-established prior to victory over the Peruvian-Bolivian Confederation in 1839. 29 More than being a simple question of territorial sovereignty, carrying out nation building requires 28

O’Higgins was eventually defeated by regional leader General Freire and was forced to resign and go into exile. This conflict was relevant to understanding the period of constitutional experimentation between 1823 and 1829. Javier Couso et al. (2011), Constitutional law in Chile. Alphen aan den Rijn: Kluwer Law International, p. 20. 29 Much has already been written about the important role played by Diego Portales, the Conservative leader of Valparaíso who imposed the idea of Chile as an austere nation beyond any possibility of social openness. Despite controversial opinions on Portales, there is to some degree, agreement about the importance of this public leader in unifying the country. Thus, his murder was a key component to bringing people together against the enemies of Peru and Bolivia. The cohesion that came from the fusion between pragmatic colonial Conservatives and liberal constitutionalism, combined with the passing of the 1833 Constitution, laid the groundwork for a strong national identity. The 1833 Constitution had a conservative nature and was very president-orientated. See Leslie Bethell (1993), Chile since independence. Cambridge: Cambridge University Press, pp. 4-5.

106

complex interaction between different levels of domestic processes and foreign affairs. The role of nation building becomes clear in the scenario of public diplomacy, in which interaction between public-private actors comes to redefine their participation in contemporary foreign policy goals. In the Chilean context, rural property was the key factor to understanding nation building as an elitist centralised project. The importance of rural property persists up to the present time, even though its power has declined over the years.30 Another important historical event for national identity was the Battle of Rancagua led by O’Higgins, given the fact that the defeat had important consequences that gave way to the idea of what was national. The defeat at Rancagua was significant because unified different sectors of society towards anti-Spanish sentiment. According to Chasteen, Rancagua was Chile’s first experience of the collapse of self-rule and the core element that encouraged the country’s independence in the long-run (Chasteen, 2008: 113). As already mentioned in Chapter 1, external factors paved the way for the nation building and identity cohesion that are essential to understanding Chilean foreign policy. In this same way, the nature of Chile’s social conflicts and contradictions helps us to understand the unique nature of Brazil-Chile ties as well as the fact that bilateral links go beyond statecentric relations. Therefore, public diplomacy, nation branding and presidential diplomacy are fundamental concepts that need to be observed in the two countries’ current bilateral relations. Despite different national development policies, the two countries share important state intervention in economic development strategies. The 1830s were emblematic in terms of nation building, since the last local resistance to central government was won over in the south and the country faced a period of internal stability combined with economic prosperity. As Scully points out, during the elections in 1858, political parties began to emerge in the country. In January 1858, the Conservatives and Liberals formed a non-ideological alliance with the common idea of maximising their political leverage. This was a unique experience for Chile, 30

The importance of the rural elite can be understood from a political perspective. For rural landowners, modernisation represented a threat and investment in mining and industry intensified the process. John L. Rector (2003), The History of Chile. New York: Palgrave Macmillan, p. 121.

107

in which two opposing political parties made a common effort to oppose the government’s control over the electoral process (Scully, 1992: 41). However, it took longer for the Liberals to achieve power with this only occurring in 1871 and promote constitutional reform. According to Saylor, a series of intra-elites fusions led to the Liberal-Conservative fusion from 1861 to 1891 (Saylor, 2014: 83). Chile’s response to social tensions, along with its economic prosperity, created the basis for the long-term relationship of Brazil-Chile. Moreover, Brazil and Chile have shared well-coordinated state economic development strategies throughout history as core elements of both two countries’ development policies (Taylor, 2008: 68). Public diplomacy, nation branding and presidential diplomacy involve greater interaction between various actors in order to perpetuate and project the country’s image in increasingly interdependent international relations. Exploring the historical backgrounds of both countries during the nineteenth century reveals interesting elements for the analysing of Brazil-Chile links from the 1990s onwards.

2.1.3 Brazil’s historical roots For four centuries, Brazil was steeped in colonial history. During the three first centuries, the country remained politically linked to Portugal as a colony. After the arrival of the Portuguese royal family (1808) and independence (1822), Brazil strengthened its economic and financial ties with England. From this period onwards Brazil became increasingly dependent on England (Schneider and Woolf, 2011: 441). During this long period of history, the interests of the planter class dominated national policy.31 Economic and political power was concentrated in the hands of 31

However, the perception of Brazil’s stable independence process gave way to a more sophisticated analysis. Not only is the international context taken into account, but also the particular details of each independence movement and the participation of diplomacy, the level of political ideas and economic particularities. For instance, the slavery that configured the conservative order and occupies current studies not only concentrates on slaves and freed slaves, but also on their representation in the new political order. João Paulo G. Pimenta (2009), “The independence of Brazil: a review of the recent historiographic production”, E-Journal of Portuguese History, vol. 7, number 1. http:// www.brown.edu/Departments/Portuguese_Brazilian_Studies/ejph/html/issue13/pdf/jpiment a.pdf.

108

this same landowning class. Traders were dedicated to either importsexports or the slave trade, established in the major port cities of the coast that also played an important role in determining domestic political strategy. Like its Chilean counterpart, Brazil’s rural aristocracy was the ruling class. Neither political emancipation, nor the abolition of slavery led to changes in colonial social structure. Internal revolts and rebellions did not have an effect on domestic social structure, since social revolts were isolated phenomena in terms of historic periods and geographic space. 32 Like Brazil, Chile’s trade activities were strongly linked to Britain’s commercial empire. As long as Britain’s industrialism advanced, so did demand for Chile’s mining and agricultural products. Despite investment in modern transportation facilities, the pre-capitalist ways of production did not allow access to new technology. In spite of the existence of social movements, Brazil did not face important changes concerning social inequalities. Like Chile, the country is considered stable without the unified and intense social conflicts that took place in other Latin American states. Although the Brazilian revolts showed a high level of domestic social problems, the rebellions were isolated (Skidmore, 1999: 20). The revolts mostly represented either local or regional interests without posing a real threat to the nation’s social structure. On one hand, the dominant structure of the states and state oligarchy did not support the struggle to make the case for independence. On the other, there was never any opposition to the political-administrative centralisation of the empire. The isolated revolts were invariably fought with rigour and crushed in the name of the current order and national unity. It is easy to assume that those with power and privilege were not 32

The most important revolts was that of the movement Quilombo of the Palmares movement in the state of Alagoas in the seventeenth century. The Quilombos functioned as communities of runaway blacks who had escaped their owners’ control. Other slave movements attempts at revolt occurred: the Mining Inconfidencia in Minas Gerais in 1789, the Revolt of the Tailors in Bahia in 1798, the Pernambuco revolution in 1817, the Cabanagem in Pará in 1835-1840, the Sabinada in Bahia in 1837-1838, the Balaiada in Maranhão in 1838-1841, the Ragamuffin revolution in Rio Grande do Sul in 1835-1845, the Praieira revolution in Pernambuco in 1849, the Canudos in Bahia in 1893, the revolt in Contestado on the border between Santa Catarina and Paraná in 1912-1915 and the movement of Father Cicero against the federal government in Ceará for many years from 1913 onwards. Brum, Argemiro J. “O desenvolvimento econômico brasileiro/Argemiro J. Brum. – 29.ed. – Petrópolis, RJ: Vozes, Ijuí, RS: Ed. Unijuí, 2012, pp. 115-116.

109

interested in removing the root causes that led to the outbreak of such social movements. Mostly, the elite in Brazilian society presented historical facts according to their own interests. Moreover, the international context of Brazil’s occupation did not give way to a new society seeking to create an independent state. There is no consensus among historians about workingclass participation in Brazil’s independence process. It is difficult to define the working-class in that period and the extent to which it exerted influence on the country’s independence (Malerba, 2006: 36). On the contrary, land use and occupation by Portuguese colonisers through exploration considered the colony the largest extraction company. This means that Brazil was integrated into the mercantile system, exploited by the metropolis to provide raw materials to supply fuel to European markets. As part of the Portuguese empire, Brazil had neither political nor administrative autonomy, since it was integrated into the metropolis. The colony functioned according to foreign interests as a source of primary materials. Hence, the Portuguese empire’s policy and its political administrative apparatus sought to maintain the situation of colonial dependency. Likewise the metropolis sought to curtail the development of education, culture and science, preventing or hindering the emergence of a local intellectual elite. The lack of local elite favoured the emancipation process that would come later (Brum, 2012: 115-116). In fact, the politicaladministrative structure of the colony would only emerge with the arrival of the royal family, with national policy after that being structured to meet local needs. Some researchers argue that the idea of allocating the seat and structure of the Portuguese government to the colony already existed, despite the arrival of the royal family in Brazil in 1808. Nevertheless, the importance of the royal family to cultural and artistic life in Brazil should be taken into account (Baeza, 2008: 270). The project also had English support, even though the invasion of Portugal by French troops under Napoleon’s command had accelerated the process. This fact is a key component to understanding the colony’s economic aperture and Brazil’s independence process. Brazil’s context should not be disassociated from the Latin America process. In the course of the nineteenth century, Latin America acquired machinery, railroads, electricity, steamships and so forth. However, Latin America was no better at the end of 110

the nineteenth century than it had been at the beginning of it, since prolonged and underdeveloped methods of capitalist production plunged the region into deeper dependency (Burns, 1983: 11). The measures taken by Dom João when he arrived in Brazil, particularly regarding the abolition of trade constraints for the colony through opening up the ports laid the groundwork for trade liberalisation. Some authors considered this the emblematic event that ended the colonial period, since the basic premise that trade must be restricted to the metropolis was destroyed (Lima, 1996: 136). This measure was unpopular among Portuguese traders, even if the lower tariffs were better for them. Given that Chilean independence was the result of a series of contradictions during the colonial period and that the Bourbon state in Spain collapsed, Brazil did not exert its independence until 1822.33 It should be remembered that Spanishspeaking nations broke off their relationship with Madrid on several occasions between 1810 and 1822 (Burns, 1983: 7). Trade liberalisation brought a new economic outlook to Brazil vis-à-vis the international market. The consequences of this cycle lasted until 1816, when Brazil became a united kingdom like Portugal. The new political status made it possible to diversify the input from other states, bringing lucrative gains to traders. In this respect, Brazil achieved a certain administrative local autonomy that later led to political power. The bureaucratic measures adopted during the Portuguese Court’s presence paved the way for the formation of the Brazilian ministries. 34 33

Despite Brazil and Chile’s ethnic formation, the two countries underwent a stable independence process. Republican Chile was essentially a country in which a small Creole upper class - with an aristocratic elite at its core - co-existed with the huge mass of the working class poor, who were predominantly mestizo peasants. In contrast to Brazil’s heterogeneous population, the two countries underwent a smooth transition to independence. Politically, the struggles which followed independence in Chile reflected disagreements within the upper echelons of the upper class rather than deeper conflicts in mainstream society. Simon Collier (1993), “From independence to the War of the Pacific”, in Leslie Bethell (ed), Chile since Independence. Cambridge: Cambridge University Press, pp. 1-32. 34 Political stability can be illustrated by the Brazilian tradition of lengthy constitutions. On 25th March 1824, the Political Constitution of the Empire of Brazil laid the legal groundwork for the country’s stable society. Augusto Zimmermann (2010), “Constitutions without constitutionalism: The failure of constitutionalism in Brazil”, in Mortimer Sellers and Tadeusz Tomaszewski, The rule of law in comparative perspective. New York: Springer, p. 106.

111

From Brazil’s perspective, independence was only consolidated over several years. Although there was resistance from Portuguese troops in the Cisplatine Province, these left in November 1823. As in Chile, independence was not accompanied by maintaining continuous internal social stability, although Brazil and Chile have maintained prolonged periods of this. Brazil’s independence process had its own features, as the nation emerged as separate entity and became a monarchy while the rest of the Latin American nations chose the republican system. With the arrival of the Portuguese royal family in the colony in 1808 and the subsequent transfer of the headquarters of the Portuguese monarchy, significant steps towards independence started to be taken.35 Within Brazil, the main reason for the relative continuity between the two periods was twofold: first, because of the presence of the royal family in national territory and second because of how the independence process was carried out. As Fausto says, “there still remained much discontent with the court in Rio, but it was nothing compared to the dissatisfaction in some regions of the north-east, where ideas of a republic first appeared” (Fausto, 1999: 77-78). It remains to be seen whether social stability does indeed correspond to the circumstances of independence themselves or to movements for autonomy, which rose to the surface and had deeper roots. Like the Chilean elite, their Brazilian counterparts had no interest in breaking with the old consolidated colonial system. In the first few years after independence, the monarchy became a symbol of authority and stability and a way of containing insurgent groups. Despite the consensus that Brazil achieved independence without undergoing significant upheaval, the Portuguese liberal revolution in the city of Porto in 1820 had consequences on the other side of the Atlantic. As a result of the revolution, the Portuguese formed the so-called ‘Juntas Constitucionais’ with Brazilians in several of the territory’s provinces. Given that the Portuguese defended Lisbon’s interests, there was widespread armed conflict in different regions of the country, especially in Bahia, Maranhão, Piauí and the Cisplatine Province. Consensus in Brazilian 35

The presence of the Court in Rio de Janeiro determined the conservative result, the creation of an empire and a nation under the auspices of the Portuguese monarchy itself. Kirsten Schultz (2001), Tropical Versailles: empire, monarchy, and the Portuguese royal court in Rio de Janeiro 1808-1821. London: Routledge.

112

provinces over distancing Brazil from Portugal in order for it to become politically independent was widespread (Slemian, 2007: 177). The workingclass masses played an active role in the movement in favour of independence, since Brazil had no official military personnel. However, the arrival of the Portuguese court provoked opposing reactions. On one hand, there was the sector that defended maintaining links with Portugal and turned the nation’s focus towards autonomy. On the other, there was the group that advocated in favour of total autonomy for the new nation. In this sense, the scenario is similar to that of Chile, with affluent rural and urban sectors seeking to convince the Emperor Dom Pedro to become emancipated from Portugal without a radical break, in other words without the participation of the working-class (Porta, 2004: 10-11). The Brazilian aristocratic elite aimed to protect their rural property by marginalising the working-class from the independence process (Funari and Manduca, 2009: 216). Historical circumstances offer some interesting insights into the analysis of Brazil-Chile bilateral ties, since both countries have similar options for avoiding radical changes after independence. One way of exploring public diplomacy and nation branding is through looking at the country’s position on a particular problem. Brazilian and Chilean policies during the course of the nineteenth century have demonstrated that they share important values, which in turn are important components when exploring the two countries’ links from the 1990s onwards. In Brazil, the central political debate in the first two years after independence focused on drawing up the constitution. In this respect, elections for a constituent assembly had occurred months before independence and an official summit had been held in Rio in May 1823. Constituents in 1823 were greatly influenced by the French Revolution and the independence of the North American colonies. These ideas exerted a significant influence on Brazil’s political order (Lira, 2014: 25). There was disagreement between Dom Pedro and the assembly on which powers to bestow to the Executive branch. Moreover, differing perspectives on the role of the Executive – in other words the power of the emperor - and the power of the Legislative also led to disagreements. The assemblymen thought that the emperor would not be able to combine power to dissolve the Chamber of Deputies and call new elections (Macaulay, 1986: 157). According to them, the emperor should not have the power of absolute veto, since this gave him 113

the power and right to deny the validity of whatever law the legislature might approve. In contrast, the emperor and his supporters wanted a strong Executive in order to contain democratic tendencies. This powerful Executive would help to deal with the period’s political uncertainty. As a result, this discord brought about Dom Pedro’s dissolution of the constituent assembly. In this scenario, the first Brazilian constitution came from above and was imposed by the king on the people, who represented white and mixed-blood minorities who had participated in political activities. The new constitution represented progress in terms of organising jurisdiction and allocating powers. Civil rights were not even considered in practical terms, although in theory they were guaranteed. Like Chile, Brazil was still a nation in which a great part of the free population depended on large rural landowners.36 With only minor modifications, the 1824 Constitution remained in effect until the end of the empire. It describes the political system as monarchical, hereditary and constitutional. The empire had nobility without aristocracy, which means that titles were not passed on in order to avoid a blood aristocracy. The Legislative branch consisted of the Chamber of Deputies and the Senate. Introduction of the Legislative branch meant that both houses were elected. Election to the Chamber was temporary, while election to the Senate was for life. This means that the Senate consisted of the emperor’s lifelong appointees. A key element in this political framework was the Council of State, composed of those appointed by the emperor. What was unique was the institution of the moderating power, which illustrated the powerful features of the Executive branch. As Fausto highlights, “the king would not intervene in politics and day-to-day administration, but he would have the right to moderate more serious overarching disputes, where he would determine what the nation’s will and interests were” (Fausto, 1999: 79). In practice, there was no clear definition of where the Executive power started and ended, which resulted in power being over concentrated in the hands of the emperor. The absence of mechanisms that allowed for radical breaks in Brazil and Chile have shown that both states were searching for political-social stability as a crucial part 36

Additional information in Matthew Racine (2011), The capítulos of Gabriel Soares de Sousa: court politics, Jesuits and the exploration of Brazil. Berkeley: University of California Press.

114

of their state policy. The option for social stability is significant to understanding the two states’ long-term links. Brazil-Chile political-social stability brought important consequences for the building of the two countries’ nation brand, as well as public diplomacy foreign policy insertion. 2.2 Chile Economic Evolution During the Nineteenth Century There is a consensus that the 1830s were characterised by Chile’s consolidated political stability. Although the 1833 Constitution consolidated the power of the oligarchy as political stability was achieved, other factors played an important role in creating a stable domestic scenario. The 1833 Constitution solidified the political domination of the most traditional landed upper class of colonial origin. Therefore, the Constitutions established income and property requirements that restricted voting rights, with some exceptions for relatively wealthy men (Valenzuela, 1996: 3). Beyond the political context, economic factors should also be considered in this study. During the colonial period, Chile acquired the status of a major exporter of agricultural products to Peru, developed gold and silver mining and to a lesser extent, exported copper (Chester, 2008: 10). Internal conflicts in the country caused significant debts and expenditures. The absence of a serious social revolution led to less destruction of its agricultural production capacity and mining activities. This favourable political-economic background - combined with the introduction of new copper mining techniques – led to prolonged boom period for production. An increase in mining activities led to an increase in demands for agricultural products and as a result the country underwent significant domestic economic development. As already mentioned, the domestic context cannot be separated from the international one: the Spanish colonial trade monopoly was attenuated by internal liberalisation in combination with increasing British economic and ideological influence. Only since independence has Chile aimed to integrate itself into the dynamic capitalist international economy. In doing so, trade between the colony and the metropolis, especially through Peru, was eliminated. This allowed for the establishment of direct links with international trade.37 37

In Chile’s integration into the capitalist system, it is also important to analyse its

115

English dominance during the nineteenth century led to the expansion of commodity markets as a result of population growth, methods of production and an increase in the income of an emerging middle-class of core countries. This also meant the creation of capital surplus and a working class in these nations and their involvement in exploiting the natural resources necessary to the development of central states. Chile entered the nineteenth century with a predominantly pre-capitalist social structure dominated by the landed oligarchy alongside the raising mercantile commercial class. The country also contained a mining and agro-commercial bourgeoisie (Pregger-Roman, 1991: 115). Chile’s independence mainly meant the elimination of the institutional barriers for the colony that had prevented it from joining the international development process. Trade liberalisation had two goals: to overcome the restrictive practices of Spanish trade policy and expand domestic production to foreign markets. Since 1830, Chile’s trade expansion has experienced highs and lows, with the economy mainly based on natural resources. For obvious reasons, the English economy played an important role in the process, taking into account the remarkable development of the flow of trade together with the development of communication and transport. The rapid integration of the Chilean north and south allowed access to Britain’s informal empire of trade and investment, encouraging a more rapid change to pre-capitalist production relations (ibid). A new national society had to be built in order to reflect the shifting economic context. Since politicaleconomic historical circumstances favoured a more stable internal scenario than other Latin American states, Chile’s context ensured a stable and longlasting national image. Political independence had little effect on the country’s class structure and together with the modernisation of production that accelerated contemporary nation building projection as it involves complex interactions between the role of the capitalist state and emerging actors. Its historical economic backgrounds favours understanding the country’s development of productive forces as well as the influence of global and social processes in a coherent projection of a national image. Alongside nation building, public diplomacy assumes a prominent role in foreign affairs and encompasses aspects of historical memories in an effort to distinguish the country from other states. Wilson P. Dizar Jr. (2014), “The future of public diplomacy”, in Wilson P. Dizar Jr., The story of the United States information agency, p. 219. Bolder: Lynne Rienner Publishers. See also Cristián Gazmuri (2012), Historia de Chile, 1891-1994: política, economía, sociedad, cultura, vida privada, episodios. Santiago: RIL Editores.

116

economic development, laid the groundwork for a coherent nation brand. Chile’s prevailing stable internal context has lasted for decades, whilst managing to transform the projection of the country’s modern nation image.38 Chile’s international insertion has been based on the following economic activities: mining exploitation of gold, silver and copper, subject to the ups and downs of the market and agricultural exports of wheat to Peru. The key feature to understanding the period is ‘domestic institutional restructuring’, which fostered increasing economic activities in the foreign market. Several wars provoked a rupture within the institutional framework, giving the nation the task of creating a new one. In contrast to the majority of Latin American states, Chile experienced a relatively short period of anarchy considering that, in 1833 the institutional foundations were already firmly established. Chile’s short period of anarchy led to the long-standing perception of the country as one of the most stable in the region. Different degrees of integration between nation branding and public diplomacy can be identified based on historical roots.39 The two concepts include integration and cooperation in multiple areas since nation branding and public diplomacy encompass aspects of international relations, marketing and history. Nevertheless, public diplomacy is related to different levels of integration between actors and nation branding involves much more than the idea of image cultivation, both of which have emerged from a historical approach. The importance of Chile’s political stability and the growth of traditional areas of the economy – in other words, mining and agricultural exports provide important information to understand the nature of the Brazil-Chile bilateral relationship (Collier and Sater, 2004: 60-62). This economic background set the stage for the mobilisation of different 38

More information about Chilean history and how its society was formed, in Cristián Gazmuri (2012), Historia de Chile 1891-1994: política, economía, sociedad, cultura, vida privada, episodios. Santiago de Chile: Pontifícia Universidad Católica de Chile / RIL Editores. 39 The Venezuelan humanist Andrés Bello as one of the first in Latin America to study Private International Law argued in his Principios de Derecho das Gentes (1832) book that international contracts should adopt the law of the place they were signed in, except when the obligation was to be performed in Chile, in which case the contract should adhere to Chilean law. Chile’s image as a trustworthy and stable country has important historical roots. See Nadia de Araujo (2009), Contratos internacionais: autonomia da vontade Mercosul e convenções internacionais. São Paulo: Renovar, pp. 157-158.

117

sectors towards Chile’s development strategy. Rapid production expansion accompanied by growing exports, imports and trade in 1832 led to important changes in the tax structure. The unification of customs procedures combined with discipline in organisation and management led to a sharp increase in fiscal revenues. Organising regulatory initiatives, including the repayments of debts inherited from previous periods, obtained a significant surplus. Sutter and Sunkel (1982: 26) point out that the state played a central role in Chile’s economy, in the same proportion as external factors. International trade was a major source of government tax revenue, since tax collected on exports and imports remained key to the country’s economy. The trend in Chile of moving closer to international integration had mercantile and nationalistic features. In this respect, the Decree of Trade Liberalisation of 1811, passed in 1813, opened up Chile’s major ports to trade and introduced a general tariff on imports. Moreover, prohibition and special protection played a significant role in helping important sectors avoid being affected by free importation. The decree was an emblematic measure to ensure new trends in the nation. As colonial monopolist power decreased, agricultural exports and mining power were strengthened. 40 Since the later aimed to expand its markets and lower the purchase price of imported products, opening ports and eliminating traditional import monopolies were key elements for promoting exports. The new state sought fiscal financing to honour its commitments allowing for the government to be maintained. The measures were carried out through protectionist policies such as high tariffs. The conservative ideology of mercantilism prevailed at the beginning of the republic. Therefore, the State had to take responsibility for encouraging and protecting domestic production activities and in particular manufacturing and the merchant navy. The State directed its policies towards education, science, techniques and knowledge of national natural resources. The mercantilist approach demanded state central, authoritarian and hierarchical organisation as crucial elements to sustain the 1833 40

Chile is the world’s leading mining producer not only because of its natural resources, but also because of its political and economic situation, which is stable and because of its export-oriented transport infrastructure. See José Pablo Arellano (2012), “Copper mining and its impact on Chile’s development”, @journal, no 35, vol. 16, p. 51. http://idbdocs. iadb.org/wsdocs/getdocument.aspx?docnum=37317800.

118

Constitution. Growing trade activities in Chile relating to international trade led to the emergence of a new sector as an alternative to the traditional oligarchy. The first cycle of economic expansion was characterised by the role of national business groups and their entrepreneurial spirit. In this context, some families enhanced their good fortune through mining, trade and finances. The economic cycle refers to the period of expansion of certain products, benefiting international economic centres at that time. The dynamics of international centres exert an influence on different parts of the world attracting economic forces, capital and workforce, causing changes in all other major sectors of society (Basu and Taylor, 1999: 3). Mining’s accumulated capital assets were invested in agriculture. Some families gained large rural areas and introduced new methods of crop harvesting. As some authors explained, the changing scenario was the result of changes to tax laws introduced during the administration of President Manuel Montt (1851-1861). Chile reaffirmed its policy of commercial supremacy in the Pacific, assigning Valparaíso’s port a privileged position. The new policy approach focused on protecting the merchant navy, constructing storage warehouses in Valparaíso and included the war against the Peruvian-Bolivian Confederation. Another significant consequence of Valparaíso’s increasing importance as a navigation route and trade hub was what happened to the population in the country’s far south.41 Chile’s heavy involvement with commerce led to a political strategy with greater access to markets. The country’s strategic tool to differentiate their products has deep roots in history, since trade has been a core element in its foreign affairs (Weiner, 2007: 196). Despite the fact that the role of commerce was not consciously dealt with as a key component of international relations in the nineteenth century, the importance of trade is evident in shaping Chile’s contemporary nation branding. With respect to education, the liberal influence also played an important 41

Today Valparaiso is one of the South Pacific’s most important seaports. China has become its first-ranked import partner and second-ranked export partner, with the port helping to increase the amount of trade between the two countries. Business, “Port of Valparaíso brings Chile and China close together”, Wednesday 30 September 2015. http://www.scmp.com/presented/business/topics/2015-chile-businessreport/article/1862715/ port-valparaiso-brings-chile.

119

role during the term of President Montt, when he was both a minister and then as president. His administration coincided with the presence of the Argentine Domingo Faustino Sarmiento in Chile. Therefore, the Argentine influence on many aspects of Chile’s history can easily be seen. Argentina’s relationship with Brazil and Chile is an important part of this study. 42 Spanish American education should be viewed as much more developed than its Brazilian counterpart. In contrast to what occurred in Brazil, the Spanish colonies had created their educational system a long time ago, seeking to generate a sense of belonging and obedience to the king. Nevertheless, ethnic and cultural differences between those people who made the vast Hispanic American empire and their connection to the king’s fostered a stronger sense of citizenship among the Hispanics (Colvero, 2011: 311). As a result of the growth of mining activities, navigation, railways, wheat exports, public-private construction partnerships and the urbanisation process led to the development of manufacturing. In fact, the government created a mechanism to ensure that these sectors were protected. The importance of other sectors to the national industrialisation process – such as textiles, coal, gas, sugar and breweries among others – should be highlighted. Furthermore, the government created the Banking Act in 1860 to enforce a very liberal policy. This 1860 Banking Act facilitated access to credit and reports from mining areas, which led to the purchase of the first stock and arrival of bond brokers in Santiago and Valparaíso (Jones and Lluch, 2015: 49). This reflects a certain institutional development, since the increased economic activity demanded the opening of private and public banks. After the war with Spain, Chile experienced overwhelming financialeconomic development as a result of agricultural exports and the mining boom, due to the discovery of nitrate in Antofagasta in 1866. However, the first economic cycle faced serious difficulties because of the international context combined with local problems. In the 1870s, a long recession in the world economy began, leading to falling prices, which 42

Sarmiento was appointed director of the Normal School of Teachers founded in 1842 and he carried out significant work in primary education. Sarmiento was among a group of Argentine émigrés who had fled from the tyranny of Rosas. These circumstances contributed to the cultural flowering of Santiago in the 1840s. Pigna, Felipe; Domingo Faustino Sarmiento, 1811-1888. Biografías. http://www.elhistoriador.com.ar/ biografias/s/ sarmiento.php. Consultation held on 11 October 2012.

120

directly affected the main Chilean exporters.43 According to Harvey and Press, the drop in wheat prices in the world markets because of new technical methods introduced from other countries and the decline in copper prices which counted for more than half of Chilean exports were some of the factors that caused economic problems. Studies of copper prices and markets explain that an unsuccessful attempt to fix prices was due to the copper producers’ lack of a monopoly. Despite some of the beliefs about the copper producers' monopoly, prices fluctuated significantly between the 1870s and the 1930s (Harvey and Press, 1990: 9). A foreign trade crisis began in 1873, with the falling prices and afterwards production of the main export goods. Strategic place marketing concerns understanding the country’s prevailing economic model as long as historical circumstances that project the most beneficial aspects of its nation image. Chile historical backgrounds help to understand the importance of mining activity until present time. The country economic growth is clearly connected with the value of natural resources international prices. Mining strategic relevance for domestic economy justifies natural resources importance for nation branding strategy with the aim of attracting foreign direct investment. Nation brand and public diplomacy goes also about the recognition of historical aspects to formulate the country current foreign policy goals. The multiple dimensions of public diplomacy demonstrate the interaction of different levels in Brazil-Chile relationship as well as help to understand their similar historical roots.

2.2.1 Chile’s second economic cycle and its consequences Nitrate activity was the mainstay of the second economic cycle initiated in 43

The British were the chief exporters of capital, followed at some distance by the French and at the close of the century, by the Germans. As early as the 1840s, half the annual increase in wealth in Great Britain was going into foreign investments. By 1914, the British had US$ 20 billion in foreign investments, the French about US$ 8.7 billion and the Germans about US$ 6 billion. A quarter of all wealth owned by the inhabitants of Great Britain in 1914, consisted of holdings outside the country. Almost a sixth of French national wealth lay in investments outside of France. All three countries had been made hostages to fortune and fortune proved unkind, for in the First World War the British lost about a quarter of their foreign investments, the French about a third and the Germans lost everything. R.R. Palmer and Joel Colton (1995), A History of the Modern World. Columbus: McGraw-Hill, p. 599.

121

1860, which lasted from the War of the Pacific to the Great Depression of 1930. Some authors argue that industrial expansion occurred during the second cycle, as a result of the domestic market expansion derived from the nitrate boom. Indeed, protectionist government policies played a significant role in Chile’s industrial development. Furthermore, the nitrate industry represented economic and political power to a higher degree than silver, copper and wheat in previous periods. The nitrate industry represented a boom period in Chile and nitrate reserves transformed the country’s administration. These changes occurred as a result of Chile’s acquisition of vast nitrate fields in its second great war with Peru. The exports of nitrate to Europe generated taxes that provided important revenues for the State’s growth (Hutchison, 2001: 3). In contrast to the first economic cycle and its exports by entrepreneurs, nitrate cycle activities were conducted using foreign, particularly English, capital. Another important point to mention is that participation of foreign capital in nitrate activity integrated Chile into international economic system. On one hand, North American investments in the new copper industry and investments in nitrate later contributed to increasing the United States’ influence to the detriment of England. On the other, after the First World War, economic investments were redirected towards and renegotiated with the consolidated North American influence in mind. However, apart from nitrate, other mining activities also advanced technically procedures and remained as important as nitrate.44 Moreover, in the first decade of the twentieth century large mines emerged in different areas of the country. Again, foreign capital played a key role, with copper mining being considered the major industry in this period. As nitrate’s importance declined, increasing copper exports led to significant changes in terms of Chile’s main export product. Another component of the contrast between the first and second economic expansion cycles was the predominance of nitrate income in the national budget and in external financing commitments. The instability caused by a primary export subject to the capital of an international monopoly negatively affected the country’s economic stability. 44

Chile ranked as the top natural nitrate producer, although world production of synthetic nitrates reduced its share of nitrate output. International Business Publication, Mineral, mining sector, investment and business guide. Washington D.C., p. 47.

122

On one side, this instability led to a boom in exports. On the other, the country’s debt exerted pressure on the currency, which had consequences in terms of domestic economic development (Sicotte, 2008: 97). The expansion of the nitrate industry provided a new, emerging and wellconsolidated work force, as well as a rail network and port development in the north and the proletariat creation of an inspired work-force in the centre. Within the emerging nitrate scenario, social conflicts began to occur, especially in nitrate provinces. Therefore, pressure and tensions inside the country emerged as a result of nitrate economic expansion (Weber, 2015: 9). The fact that other sectors remained underdeveloped contributed to internal conflicts. The denationalisation of Chile’s output was consolidated through their purchase by North American capital. Three decades of parliamentary irrelevance, intensified social tensions, unstable financial circumstances and the lack of state intervention regarding the decrease of Chile’s predominance vis-à-vis other Latin American states laid the groundwork for an unstable scenario, which culminated with the election of President Arturo Alessandri Palma in 1920. 45 Chile’s second economic cycle ended with the international economic crisis and its consequences for nitrate exports. German technological developments led to falling nitrate output, since the use of new synthetic products replaced it as a raw material for producing explosives and fertilizers. As Medina and Soto point out, in contrast to the second cycle, the end of the first expansion cycle in 1870 involved increase in nitrate exports to the detriment of silver, copper and wheat. Historically, business cycles in Chile have been associated with the fluctuations in this commodity’s price, which represents approximately 40% of total exports and about 10% of public revenue (Medina and Soto, 2006: 18-19). However, at the end of the second economic cycle, copper emerged as the main export.

2.2.2 Chile’s political roots and physical framework In the late twenty years of the nineteenth century, two events had 45

During the first three years of his government, laws were passed aimed at protecting industry and the working class. See Simon Collier and William F. Sater (1996), A History of Chile 1808-1994. Cambridge: Cambridge University Press.

123

consequences on the construction of the Chilean society: the War of the Pacific (1879-1883) and the Revolution of 1891.46 The revolution encouraged the civil spirit and democratic forms of government and brought with it a parliamentary regime. The contextualisation of public diplomacy and national image has demonstrated that both concepts are influenced by the history of the particular country and therefore historical backgrounds improves our understanding of foreign policy targets in the long-run. Public diplomacy also refers to the government’s goals of consistent mid and longterm targets in a historical context. Since history helps understand current international relations, historical circumstances are relevant components of foreign affairs and bilateral links. In Chile, economy and trade play significant roles in explaining the country’s foreign policy strategy. The role of non-state actors as highlighted by the public diplomacy perspective represents a core element to the study of Chile’s foreign policy targets. In the Chilean economic context, the Treasury obtained its greatest income from indirect taxes, for example, customs on imported articles and on nitrate exports combined with other mineral products.47 Furthermore, in recent years, new taxes were introduced, with high proceeds resulting from commercial sales and industrial production. An increase in fiscal income led to domestic prosperity, which was evident in all sectors of national productivity. As already mentioned, foreign commerce was the key element to understanding domestic economic dynamics. Highly important products in the export trade were fertilizers, principally nitrate; metallic bullion, above all copper; cereals, especially wheat and some animal products, such as wool (Abreu, 2006: 105). Mercantile growth was illustrated by the development of national industry. In this scenario, agriculture, cattle raising, lumber, fishing, mining and the industries derived from these commodities benefit from emerging labour For additional reading, see William F. Sater (2002), book review of Bruce W. Farcau’s book. “The ten cents war: Chile, Peru and Bolivia, in the War of the Pacific, 1879-1884”, Hispanic American Historical Review 82, pp. 199-200. 47 Chile’s current indirect tax system includes VAT (IVA or Impuesto sobre el Valor Agregado), sumptuary taxes, a beverage tax, a tobacco tax, a fuel tax, a tax for legal services and a tax for international business. Niall Campbell and Maria Menzel (2011), “Latin America Indirect Tax Country Guide”, Global Indirect Service. Switzerland: KPMG International Cooperative, p. 17. For additional discussion on Chile’s tax policy see Edgardo Boeninger (2009), Chile rumbo al futuro: propuestas para reflexionar. Santiago: Uqbar Editores, pp. 103-105. 46

124

and the great display of energy. According to Chilean customs authorities, Chile’s exports are divided into 5,000 product categories, of which 1,000 are foodstuffs exported to 182 countries. Of this total, 10% comes from the salmon industry, which has transformed itself over the last 20 years into a global salmon producer. Chile supplies a third of all worldwide production, preceded by Norway and followed by Great Britain and Canada. 48 The government also played an active role in the policy of state protection. Firstly, the state has focused on indirect protection by spending part of public income on the opening of new roads, bridges and railroads, on improving harbours, on extending telegraph lines, on improving maritime communications and on the creation of public services like the police. Therefore, for many years, railroads building projects were carried out, with rapid improvements in infrastructure. The Trans-Andes Railway in Central Chile, linking Buenos Aires and Santiago, was consolidated. Indeed, as part of the great project called the ‘Longitudinal Railroad’ uniting Tacna and Puerto Montt, the railway lines crossing the country were finished. Nevertheless, the capacity of the roads to deal with traffic did not grow in proportion to the rising demand. Therefore, the national Treasury did not earn the profits it wanted, producers tended to tighten their belt and in practical terms, individuals had to pay a high price because of the scarcity of products. Despite several implementation problems, the country benefitted from the connection provided by more than ten thousand kilometres of steel. In the context of an emerging framework, highway and commercial aviation served to connect the lines of communication (Galdame, 1941: 412-417). Regardless of the state’s liberal approach, investments in infrastructure demanded the government protect economic interests. Various laws were passed in order to establish legal support for those initiatives; among them the surcharge on customs tariffs in order to tax some products and industries. Customs duties on animals imported into the territory promoted cattle-raising. A protectionist trade policy for industrial products manufactured in Chile was adopted, with the old free trade system being intervened. Despite the fact that the Treasury lost profits due to the implementation of protectionist policies, the benefits of encouraging the industrialisation process were obvious (Lederman, 2005: 34-35). The policy aimed at gaining energy sources was an important component 48

Salmon Chile, “Production”. http://www.salmonchile.cl/en/produccion.php.

125

of the execution of the national manufacturing initiative and a decisive factor in determining its rapid and constant progress. A system of paper money was established in order to complement this protectionist measure. According to economic policy, bank notes were forced into circulation as legal tender and were considered as a last resort in a passing crisis. However, paper money was indicated as the main cause of the raising cost of living, since the amount in circulation increased over thirty years (18951925) (Galdame, 1941: 416-418). Therefore, everyone who lived on fixed incomes - like employees - and those paid daily – like manual labour suffered the consequences. As a result, labourers sought a wage increase. Such was the order of things that, in 1926 the government opened the Central Bank of Chile, which was the only institution authorised by the State to issue paper money with a sufficient guarantee in gold. 49 The Central Bank’s opening favoured the stabilisation of the value of money. Despite the vicissitudes mentioned, the economic situation was stable, which was important for laying the groundwork for industrial development and domestic trade policy. The ideas of public diplomacy and nation branding are connected to historical analysis, since transforming the goals and image of a particular country is based on its historical roots and a multidisciplinary approach. 2.3 Brazil’s Historical Economic Evolution The so-called Brazil Company, as Darcy Ribeiro classified it, comprised four types of corporate actions: a) the slave company (the sugar mills and auriferous enterprises) that helped integrate Brazil into the world economy and ensured the prosperity of the rich; b) Jesuit community enterprises which despite competition from slave companies and conflicts with the colonial system that led to the expulsion of the Jesuits, were highly important within the context of the colonial system of production. The Jesuits created an alternative type of colonisation, relocating the Indians away from their tribes and seeking to integrated them into society, softening 49

According to the Central Bank of Chile’s first annual report on 21 March 1927, the country maintained a stable rate of exchange with insignificant fluctuations and helped lower the rate of interest. Above all, its moral effect was of great importance to the country, “First Annual Report of the Central Bank of Chile”, Federal Reserve Bullettin, September 1927, p. 653.

126

indigenous resistance; c) the multiplicity of micro-production subsistence enterprises combined with livestock enterprises, which complemented the sugar mills and mining, incorporating mestizos; d) the formation of a core of urban bankers, upwardly mobile ship-owners and the emergence of export/import traders and slaver traders, leading to the development of the colonial economy (Darcy, 1995: 176). During the colonial period, the development of manufacturing favoured the growth of industry. Official encouragement of industrialisation came in 1890, when a tariff revision provided slight protection for local manufacturing from foreign competition and also lowered the duties on the capital goods required for production (Skidmore and Smith, 2001: 149). The sugar mills themselves were an agro-industrial company. Interestingly enough, they were the largest and most complex world economic enterprises of the period. Despite the emergence of these enterprises, the slave mentality prevented the diversification of activities and economic development in general terms. Links between Portugal and England were strengthened, with the latter granting economic benefits to the former in exchange for political and military protection. 50 The Treaty of 1654 also guaranteed the British the right to negotiate directly with Brazil. During the nineteenth century, Brazil adapted to an economic order controlled by Great Britain. The latter assumed the role of industrial economic leadership, which meant exchanging manufactured goods for raw materials from abroad. In this way, a large part of international trade consisted of the exchange of raw materials from developing countries for manufactured goods from developed nations. Brazil fitted perfectly into this process, since its economy depended on coffee exports and other secondary goods like sugar, cotton and cocoa among others. During the nineteenth century, the Brazilian economy was open to foreign-made, mainly English, goods and capital which were intended to build a financial, transport and trade framework with the goal of linking the country to the international economic order. For instance, coffee was the third most valuable international trade commodity at the end of the nineteenth century (Topik, 2004). Since early colonisation, economic activities have been directed towards 50

See BBC Homepage, “A influência britânica atingou o ápice no século XIX”, 27th July 2001. http://www.bbc.com/portuguese/noticias/2001/010727_ukhistoria.shtml.

127

exports. This orientation was the result of the colonial situation and mercantile self-interests. The internal market was neither created nor encouraged at a certain point and in this way, the absence of a domestic market inhibited the industrialisation process. Colonialism and mercantilism encouraged economic growth towards foreign trade. Economic orientation towards foreign markets still existed, even after independence and after mercantilism was abandoned. During the nineteenth century, its share of exports that generated global income was slowly reduced, despite it remaining high until 1930.51 Since the 1930s, the decline in exports has been accentuated, to the extent that exports between 2001 and 2007 represented an annual average of less than 15% of the gross national product (GNP). Decreasing exports reflected the inward-looking domestic economic scenario. The percentage loss of exports in the national income was congruent with the gradual diversification of economic activities, industrial advances and internal market expansion. In this way, a key policy for gaining economic benefits was promoting the construction of railroads in the second half of the nineteenth century. Railway construction was expected to free up hundreds of workers engaged in a system of transport based on mules and bullocks (Lamounier, 2000). English companies financed railway investments and in 1870, four British companies were the owners of 72% of the railway lines. Unfortunately, the railroad network did not achieve substantial results, since it was built and operated by several different companies, which showed the network’s deficiencies regarding connecting remote areas with ports. As a result, the railroad lines did not transform the country into a unified market, even though the growth of railway lines was remarkable with Brazil having 14 kms in 1854 and 3,302 kms of line being opened in 1884.52 Moreover, during the nineteenth century, the central administration supported policies to encourage immigration and colonisation. However, a large-scale immigration process began after the abolition of slavery in 1888 and the Proclamation of the Republic in 1889. The goal behind this initiative 51

See Jerry Dávila, “Culture wars in Brazil: the first Vargas regime, 1930-1945”, Hispanic America Historical Review 82, pp. 398-399. 52 During the Proclamation of the Republic in 1889, the federal government aimed to implement a railroad construction plan, although the financial crisis made it difficult to carry out that initiative. João Bosco Setti (2008), Ferrovias no Brasil: Um século e meio de evolução. Rio de Janeiro: Memória do Trem, p. 24.

128

was to create positive economic effect, based on immigrants’ ambitions. In addition, attracting immigration was a political way of improving the quality of human resources in the economy without directly investing in formal education (Smith, 1997: 88). Some similar aspects of Brazil-Chile immigration will be pointed out in the following sections. At the end of the nineteenth century, the government’s aim was to protect strategic export sectors. Equipment exempt from import duties was offered by the government as a way of encouraging investment in the highly capitalised sugar mills. Specific policies for coffee were also implemented. If domestic coffee production surpassed international demand, coffee’s value declined. These circumstances laid the groundwork for the first valorisation policy of export products. Three major, successive cycles that were particularly important to Brazil’s economy were those of sugar, gold and coffee (United Nations Human Settlements Programme, 2010: 13). Along with these, the economy experienced minor cotton, rubber and cocoa cycles. Commercial exploitation of brazil wood (pau Brasil) was the first colonial activity and has been maintained for three centuries. In addition, the sub cycles of cattle and tobacco complemented the main cycles. Decade 1821-1830 1861-1870 1891-1900 1901-1910 1921-1930

Coffee 18.6% 45.2% 63.8% 51.4% 69.5%

Cotton 19.9% 18.3% 2.4% 2.1% 2.4%

Cocoa 0.4% 0.9% 1.5% 2.8% 3.1%

Rubber 0.1% 3.1% 15.8% 17.9% 2.5%

Sugar 32.2% 12.0% 5.6% 1.2% 1.4%

Source: Mircea Buescu (1958). História do Desenvolvimento Econômico do Brasil. Rio de Janeiro, A Casa do Livro, pp. 24-25.

The above table shows the percentage of country exports of the main cyclical products from 1820-1930. At the beginning of the cycle, sugar reigned supreme, followed by cotton and coffee (Baronov, 2000: 18-19). Afterwards, coffee ranked first in exports, while sugar as well as cotton faced a sharp decline in exports. The rubber cycle was short-lived and cocoa was a regional cycle from southern Bahia.53 53

The state of Bahia is Brazil’s largest cocoa producer and accounts for around 60% of the country’s production. Vladimir Pekic (2014), “Back to the future: Brazilian federal bill re-

129

National manufacturing production faced significant difficulties given the open-door policy for British goods in the post-independence period. Besides British goods, which enjoyed a privileged position, European and North American goods, also increased their participation in the domestic market in 1820, after trade agreements were made. The 1828 tariff set import duty at a rate of 15% and proceded the most liberal period. Thereafter, tariffs increased to a rate of 30% until 1844. Although Britain pursued an opendoor policy in its colonies, the country continued to dominate trade through informal instruments. Britain assured direct channels between colonial administrators and home states in order to conduct trade in appropriate directions (Lake, 2000: 131). Although increasing tariffs were aimed at raising government revenue, this measure led to the emergence of textile companies. Central administration encouraged the creation of firms through the tax exemptions granted in order to import raw materials and machines. Baer points out that most of the early industrialists were importers who at a certain point, changed their minds and opted to produce goods instead of importing them. This occurred mainly with textile products, but coffee producers also started to finance entrepreneurial activities (Baer, 2002: 47). However, the protection tariff policies adopted since 1840 did not have substantial results in terms of their contribution to industrial development. In practical terms, industrial development occurred when the government began to invest directly in specific initiatives like special concessions and subsidies for railways and foundries among others.54 Devaluating the Brazilian currency against the British pound also played an important role in advancing the industrialization process. Brazil’s industrial policy plan had its roots in the country’s early history, regardless of the high impact of capital investment on industrialisation policy during the military regime (Hanley, 2010: 251-252). Brazil’s industrialisation experience helps us understand its nation branding as far as selling a diverse range of manufactured products is concerned. In 1920, coffee production reached a high level, to the extent that the product’s participation in exports was 56% in 1919 and 75% of exports in discovers sustainable cabruca bean production”, Confectionarynews.com. http://www. confectionerynews.com/Processing-Packaging/Brazil-protects-sustainable-cabruca-cocoabean-production. 54 Additional information in Fernando Sarti and Célio Hiratuka (2011), “Desenvolvimento industrial no Brasil: oportunidades e desafios futuros”, no 187. Campinas: IE/UNICAMP.

130

1924. Exports as a share of the GDP rose from 5.7% to 12.5%. The country’s favourable balance and payments situation during the decade brought about as a result the valorisation of the exchange rate combined with an increase in domestic price levels. This led to disadvantage when competing with foreign goods. Moreover, the Wall Street Crash of 1929 had a negative impact on Brazil’s exports, with a decline in value from $ 445.9 millions in 1929 to $ 180.6 millions in 1932. In 1906, 82% of the world’s coffee harvest came from Brazil. From 1929 to 1932 the value of Brazil’s exports and coffee beans declined by 75% (Levine: 1999: 21). In 1931, coffee prices were at a third of the average price that they had reached between 1925 and 1929. Besides the fact that exports revenues declined, the entry of foreign capital into the country diminished significantly in 1932. Chile’s economy was also affected as a result of the 1929 crisis, which led to a devaluation of products’ value. The devaluation of copper and saltpetre exports had serious consequences for the domestic economy, with falling tax revenues and declining stocks. Chile was one of the countries greatly affected by the Great Economic Crisis, forcing the suspension of the payment of its foreign debt for the first time on 16th July 1931 (Toso and Feller, 1983: 47). At the same time, the constraints on imports, together with the continued domestic demand generated by the revenue from the coffee programme, led to a shortage of manufactured goods and an increase in prices. As occurred in the First World War, increasing industrial production during the first half of the 1930s was based on making better use of existing capacities. Steel capacity rose because of the emergence of small firms and the capacity to produce cement and paper rapidly increased. Furtado pointed out that “the maintenance of domestic income and purchasing power accompanied by the fall in imports and the rise in prices, led to a dynamic domestic market” (Furtado, 1972: 188). As long as the country reined in industrial overcapacity and the small capital goods industry grew, rising domestic demand fostered domestic industrial production. The result of all this was growth in domestic income. In our view, public diplomacy incorporates some of the aspects of nation branding, given that they share common grounds vis-à-vis complex foreign policy goals. Trade, infrastructure development and industrialisation are core elements for developing the basis for Brazil’s and Chile’s economic 131

policies. Economic-historical aspects have important implications when evaluating the differences and similarities in the two countries’ trajectories. Exploring historical backgrounds binds together significant elements, providing a broader view for analysing public diplomacy and a nation branding multi-faceted approach. Instead of addressing complex relationships based on traditional diplomacy, historical facts identify key elements that gave rise to Brazil and Chile’s contemporary foreign policies. Major historical events contribute specific means for understanding the nature of Brazil-Chile bilateral links throughout history. Historical understanding of the past is relevant, as it creates a better understanding of Brazil and Chile’s current public diplomacy, nation branding and presidential diplomacy.

2.3.1 Brazil’s industrialisation during the First and Second World Wars As in the First World War, the Second World War also led to a rise in production, although investment activities went into decline. However, foreign investments bounced back in 1945, mainly due to the imports of capital goods during the war. An increase in investments provided the opportunity to build the Volta Rendonda foundry. The Brazilian National Steel Company (Companhia Siderúrgica Nacional or CSN) was the main state-owned company and its main industrial enterprise in the mid-twentieth century. During the Estado-Novo government (1937-1945), President Getúlio Vargas developed the company to encourage the import-substitution industrialisation model (ISI) and laid the groundwork for an expansion of domestic industrial production (Dinius, 2011: 14-15). Apart from the cement and foundry industry, there was little creation of capital during the war. At the same time, an intense use of existing equipment increased production. The post-war period was characterised by the deterioration and obsolescence of industrial capital. During the war, the export of manufactured products grew significantly, although the reemergence of traditional supply sources led to a fall in Brazil’s exports (Coes, 1995: 8-9). The result of the dismal performance of domestic exports - caused by delivery delays and inadequate quality controls – was a fall in 132

manufactured goods ‘share of exports. The start of Brazil’s industrialisation process, initiated in 1890, was not smooth. In this sense, the sustainable industrial growth in the three decades that preceded the First World War can be seen, even though the lack of investments in that period should be highlighted (Curado and Cruz, 2008). The import-substitution development model encouraged the industrialisation process in Brazil and Chile as will be seen, despite their domestic differences and differences in how they responded to international economic crise.55 Brazil’s industrialisation process was not marked by continuity since the sector relied on agricultural exports and the country did not experience the necessary structural shifts in the economy.56 The country’s industrial base would be only shaped once and for all when it was considered the foremost economic sector. It should be pointed out that the period from 1919 to 1939 focused on light industries, which meant a more consumer-oriented than businessoriented industry, at first seeking industrial development rather than industrialisation per se. In this context, textiles, clothing, food products, the beverage industry and tobacco were to be found among the main domestic industries. However, since 1939, heavy industry sectors have experienced significant growth, given the rise of metallurgical products, machinery and electrical products. Heavy industry’s increasingly important role in the economy contributed to industrialisation as a driving force behind domestic growth. However, Brazil’s economy at that time was dominated by simpler 55

The same can be said about Mexico. The 1940s heralded important changes in this country. Despite an authoritarian administration, the post-revolutionary period was characterised by public policies aimed at industrialisation using the import substitution model. Mexico’s policy strengthened its domestic market in the post-war period and the manufacturing sector gained importance within the country’s economy. The import substitution industrialisation model provided internal market protection, economic expansion and the opportunity for resources to be channeled into development policies. In a social sciences’ context, Mexico, Chile, Brazil, Argentina and Uruguay experienced a research boom through the strengthening of and increase in the number of research institutions. José Luis Reyna. “A institucionalização das ciências sociais no México”, in Hélgio Trindade. As Ciências Sociais na América Latina em perspectiva comparada: 19302005. Porto Alegre: Editora UFRGS, 2006, p. 269. 56 Among the sectors involved in the industrialisation process, credit financing with the North-East Bank played a significant role in encouraging industrialising initiatives in the region. Arnaldo Santos. “Industrialização do Nordeste: impactos da parceria BNB-Sudene no desenvolvimento regional”. BNB 60 anos. 2005. IDESPP, p. 6.

133

consumer goods. The most important industrial sector, the cotton industry, had fewer than fifty factories in 1885. Only in the 1930s did Brazil begin to invest in industrial development (Hanley, 2010: 12). The development of the heavy industry field created an important segment for Brazil’s nation brand identifying the country as an exporter of manufactured products.

2.3.2 Chile’s economic roots It should be remembered that, during the colonial period, Chile consolidated itself as an important exporter of agricultural products to Peru, combined with developments in the mining of gold, silver and to a lesser extent, copper. However, the decrease in gold production was overcome by the discovery of silver in Chañarcillo in 1832. This made up a significant part of Chile’s economy. Indeed, the new extraction techniques implemented using the English system contributed to long-term mining production. The expansion of mining activities in the northern provinces caused economic development and a growing demand for agricultural products (Miller, 2002: 18). Chile’s industrialisation came later and lacked the depth of industrialisation in Brazil. CORFO played a central role in Chile’s industrialisation process and like other Latin American states the country implemented an import-substitution industrialisation model (ISI).57 In Chile, three initiatives paved the way for the industrialisation process: guaranteeing a domestic energy supply as a prerequisite for powering new industries, creating steelworks as key elements to laying the groundwork for industries and establishing new industries. 58 The search to safeguard the energy supply was considered a key factor in 57

CORFO is an agency that carries out government policy in the field of entrepreneurship and innovation. CORFO, http://www.corfo.cl/sobre-corfo 58 In contrast, Colombia was one of the first countries in the continent to implement the ISI in the 1950s, although Colombian industrial policy was not accompanied by significant social reforms. Fernando Urrea Giraldo. “Dinámica de reestructuración productiva, cambios institucionales y políticos y procesos de desregulación de las relaciones asalariadas: el caso colombiano”. In: Enrique de la Garza Toledo and Julio César Neffa (eds), Trabajo y modelos productivos en América Latina: Argentina, Brasil, Colombia, México y Venezuela, luego de la crisis del modo de desarrollo neoliberal. Buenos Aires: CLACSO, 2010, p. 143.

134

the execution of the industrialisation policy. In 1944, the creation of ENDESA (Empresa Nacional de Electricidad or the National Electricity Company) to harness hydroelectric energy served as a mechanism for carrying out the industrialisation programme. State policy also encouraged the development of the coal industry. Another significant step towards industrialisation was reducing the country’s dependence on foreign oil. As Collier and Sater argue, “thanks to CORFO, the oilfields satisfied threequarters of the country’s petroleum requirement by the 1960s” (Collier and Sater, 2004: 270). Diminishing the dependence on foreign oil led to an increase in Chile’s exportation of by-products such as butane and propane gas. Energy and the economy are key factors to understanding Chile and Brazil’s special relationship, since both areas exert an overwhelming influence on the approach to bilateral foreign policy. Chapter 5 describes the growing importance of energy issues in international relations in more detail, since energy supply has become a crucial element in strategic foreign policy. Faced with ever-rising demands for energy resources, increasing import dependency occupies an important position in Chile’s domestic agenda. At the same time, Brazil’s position as an emerging energy superpower because of the diversity of its energy matrix has enabled BrazilChile bilateral dialogue. Despite their territories having different dimensions, the differences in their socio-economic structure, their Iberian and Portuguese backgrounds, political differences and so forth, Brazil and Chile share historical similarities, opening up opportunities for dialogue and interaction. Their similar immigration policies demonstrate the same concerns about territorial occupation, as well as common strategic policies to solve similar problems. Brazil and Chile’s option for German immigration differentiates them from other Latin American states and created certain historic similarities that facilitate mutual understanding. Both governments encouraged German immigration - as opposed to the region’s other countries - adopting similar political views to deal with domestic issues. German immigration illustrates a similar pragmatic approach to domestic matters.

2.3.3 Brazil-Chile similarities to German immigration aspects German immigration to Latin America began after the region gained 135

independence. The governments of the newly emancipated Republic of Chile and the Empire of Brazil shared common concerns about their unoccupied regions in central and southern Chile and in the south of Brazil. Another similarity between both German colonisation processes is that they were made up of communities of smallholders that survived by subsistence farming several basic commodities.59 Smallholdings primarily sought to ensure their family’s survival and then to supply the market with food and other raw materials. This type of colonisation was a counterpoint to the states that led the trend for a monoculture, especially in the case of Brazil. This substrate gave rise to a subsistence economy to supply urban consumers, forming organised communities and a rural middle class. The German presence in Chile emerged after independence and was extended to the whole country. Later on, other German immigrants laid the foundations for an ambitious immigration settlement, with families setting up in the south from the mid-nineteenth century onwards. Immigration to the south became legal through the Colonisation Law of 1845, which added security to the process. Immigrants came to Chile or Brazil from all over Europe where there was a so-called ‘German order’. As in Brazil, no German community in Chile was ever a national colony or German protectorate (Heberlein, 2008: 22). According to a report in 1940, Germans or their descendants occupied about 1.5 million hectares, equivalent to 7.5% of the country’s arable land. Until 1898, legislation prevented autochthonous Chileans from colonising the south. This is one of the reasons for the predominance of German immigration in the region. Among Latin American countries with German immigration programmes, Brazil was the first country to implement colonisation projects for German immigrants. The reason for choosing Germans, Italians and others was summed up by their tradition of old peasant smallholdings and the fact that they never threatened the country’s sovereignty.60 However, German colonisation predominated in entire regions of parts of the country, 59

See Margrit B. Krewson (1991), Immigrants from the German-speaking countries of Europe: a selective bibliography. Washington D.C.: Library of Congress. 60 Additional debate on German immigration in Charles R. Haller (1993), Across the Atlantic and beyond: the migration of German and Swiss immigrants to America. Berwyn Heights Maryland: Heritage Books. Charles R. Haller (2000), The ABCs of GermanAmerican migration: annotated guide to German-American migration records. Asheville, N.C.: Money Tree Imprints.

136

particularly in the three southern states: Rio Grande do Sul, Santa Catarina and Paraná. Europeans occupation of large empty areas was part of Brazil’s project of projecting the empire, which focused on systematic and intensive land colonisation, the setting up of smallholding, the formation of the rural middle class, increasing production of different types of food, whitening the race, providing supplies for troops involved in border wars and consolidating national borders (Rombo, 2003: 107-125). Since the nineteenth century in Brazil and Chile, immense economic, social and political areas beyond the central government can be noted. In the context of Chilean state sovereignty, given that the country was newly independent, the consolidation of the southern border assumed an urgent nature. German colonisation in Chile and in Brazil fulfilled the same function: it populated empty regions with immigrants, making them productive, putting these regions on the national map, encouraging an agricultural model as an alternative to the existing one and attempting to reduce social inequalities through building a strong middle class.

2.4 The Triple Alliance War and the War of the Pacific: Brazilian and Chilean Positions 2.4.1 The Triple Alliance War (1864-1870) The consequences of the Paraguayan War influenced Brazil-Chile relations during the War of the Pacific, as will be studied in the following section. The result of Brazil’s most significant external conflict led to a cautious approach to subsequent explicit war alliances. Before getting into a brief analysis of the Paraguayan War, the national nature of this war should be considered since it helped consolidate the national identity of the Empire of Brazil. In contrast to Chile, the existence of the region’s only monarchy did not bring with it prior discussions on national identity. The national issue in Brazil was attributed to a set of circumstances, namely ideas originating from Europe, the development of new sectors of domestic intellectual elites, the impact of the Triple Alliance War and the influence of the abolitionist movement (1880-1888). As Salles highlights, in the context of the Empire of Brazil, the 137

Paraguayan War was closely related to three facts: first, the conflict occurred during the expansion of the capitalist economy – particularly British capitalism in the Platine region – although its influence was indirect. Secondly, the conflict followed a period of consolidation of the imperial government’s stability. Thirdly, Brazil’s government provided a series of modern technological resources for the war effort. The conflict helped to strongly consolidate the Empire of Brazil, given national scale mobilisation (Salles, 2010: 125-7). As should be remembered, the Viceroyalty of the River Plate did not survive as a political entity after Spanish colonialism ended early in the nineteenth century, with diverse struggles occurring in the area and it being absorbed into the nations of Argentina, Uruguay, Paraguay and Bolivia. 61 As opposed to the stable scenario in which the nations of Brazil and Chile emerged, the Republic of Argentina emerged in fits and starts, as well as amid internal conflicts and fights between Federals and Unitarians. The old province of Paraguay was largely occupied by the descendants of Guarani Indians who would not submit to the Buenos Aires’ bourgeoisie. The Paraguayan people began to govern themselves in the second decade of the nineteenth century. 62 However, the country’s independence was not recognised by Buenos Aires, which reacted by attempting to stop Paraguayan commerce with the outside world. Buenos Aires blocked the Plate estuary, which was Paraguay’s natural route to the sea. As a result, the Paraguayan leader José Gaspar de Francia isolated Paraguay and became its dictator. The government expropriated lands belonging to the church and to a sector of the elite and became the main manager of production and commerce in Paraguay. The most influential clergy in Paraguay were the Jesuits. The Jesuit province of Paraguay spread over the colonial jurisdictions that became the modern nations of Brazil, Argentina, Uruguay 61

By the end of the eighteenth century, the Spanish Crown had created the Viceroyalty of the River Plate in order to deal with smuggling and violations of the colonial trade system. The idea was to give centrality to the city of Buenos Aires. Alejandro Grimson (2012), “Nation, nationalism and ‘borderisation’ in the Southern Cone” in Thomas M. Wilson and Hastings Donnan (eds), A companion to border studies. Malden: Wiley Blackwell, p. 196. 62 Brazil’s recognition of Paraguay’s independence was announced by its envoy José Antonio Pimenta Bueno on 14th September 1844. Andrew Nickson (2015), Historical dictionary of Paraguay. London: Rowman & Littlefield, p. 307.

138

and part of Bolivia (Saeger, 2007: 16). The country was formed by small landowners under the command of a visionary state administrated by Francia as a dictatorship. After Francia’s death, Carlos Antonio López became president and declared Paraguay independent in 1842. His son, Francisco Solano López, came to power in 1862 after the death of his father. Solano López saw Brazil and Argentina as countries with expansionist aims, which would suffocate Paraguay in the foreseeable future. He decided to take a risk and on 11 November 1864, a Paraguayan gunboat captured the Marquês de Olinda, a Brazilian ship on the Paraguayan River. The act marked the break of relations between both states. War operations were put into practice on 23 December 1864 summarized by Solano López offensive in the Brazilian state of Mato Grosso. As Fausto points out, “there is much speculation about why Solano López was moved to begin the conflict, seeing that it could bring a union against Paraguay of two old rivals, Brazil and Argentina”. The fact is that Solano López might want to turn Paraguay into an active participant in regional geopolitics (Fausto, 1999: 120-3). What in fact happened was that Brazil put Venancio Aires - the Colorado - in charge. In March 1865, Paraguay also declared war on Argentina and on 1st May 1865 the Brazilian, Argentine and Uruguayan governments signed the Triple Alliance Treaty. From Brazil’s point of view, Caxias’s appointment as commander of the Brazilian forces in October 1866 was important. At the beginning of 1868, Caxias also took command of the allied forces because of Presidente Mitre had been obliged to return to Buenos Aires to deal with internal matters. This meant that the Brazilian troops carried the defence almost single-handedly (ibid: 124). The Triple Alliance War had undesirable consequences for both sides. Paraguay was devastated by the conflict and lost part of its territory to Brazil and Argentina. Brazil ended the war with a large public debt to Britain and it had a disastrous impact on the national economy. However, the Brazilian army emerged from the conflict with a definite form and its own aims. The war served to reinforce Brazil’s national identity through the presence of a true external enemy. Chile, on the other hand, was neutral during the Paraguayan War. In diplomatic circles, some authors defended Chile’s support of Brazil, although the existence of this alliance has never been explicitly proved. Before the Triple Alliance War, Paraguay was 139

Brazil’s strongest regional ally. However, after the war, the Empire of Brazil sought to achieve strategic alliances with other countries, such as Chile. According to Canaveze, the Brazil-Chile alliance was never explicit because the Empire of Brazil decided to maintain external neutrality instead of promoting new regional alliances and counter-alliances (Canaveze, 2008: 3). Whether Chile backed Brazil or not and to what extent gains importance in the analisis of the War of the Pacific, since Brazil-Chile’s ‘apparent neutrality’ was significant in this context.

2.4.2 The War of the Pacific The War of the Pacific, which pitted Chile against the Peruvian-Bolivian alliance and lasted from 1879 until 1883, had a significant impact on regional geopolitics. The acquisition of the Peruvian province of Tarapacá and the Bolivian province of Antofagasta by Chile should not be underestimated, since it caused changes to the map of South American and denied Bolivia access to the ocean. The War of the Pacific is of overwhelming importance to the study of Brazil-Chile links, given the diplomatic situation between the two countries, either prior to or during the conflict. Chile’s position, which attempted to neutralise Argentina activity, was important since it assured the benevolent neutrality of Brazil or even its active cooperation. One Chilean minister reminded the Emperor that Brazil and Chile could form a powerful alliance based on their common predominance in the southern regions (Burr, 2013: 56). Moreover, the War of the Pacific, showed that Brazil and Chile had a kind of political alliance, although it could not be said that they had an explicit partnership. According to Chilean diplomatic sources, prior to the war, Brazil’s intelligence operations informed Chile about the secret pact between Peru and Bolivia, establishing cooperation in a war.63 Indeed, Brazil’s information about building warships like the Huascar was important 63

Chile’s war with Peru and Bolivia had its origins in the severe Peruvian economic crisis, as a result of the decline of guano resources for fertilizers, combined with their mismanagement. Rory Miller (2013), Britain and Latin America in the Nineteenth and Twentieth Centuries. New York: Routledge. p. 64. At the end of the nineteenth century, Peru feared the ramifications of a Brazilian-Chilean alliance, given its interests in the Amazon basin on the border of Brazil. João Resende Santos (2007), Neorealism, states, and the modern mass army. Cambridge: Cambridge University Press, p. 163.

140

intelligence information for Chile at the time. The Brazilian Emperor Dom Pedro II provided vital information that was essential for creating Chilean military strategy. In this section, the isolated circumstances that help to sustain this perception of Brazil-Chile ties before and after the conflict will be explored. This episode demonstrated that enduring friendship was a crucial characteristic of their bilateral affairs. However, at present, the bilateral relationship encompasses a broader range of actors and sectors, prompting the adoption of dynamic concepts such as public diplomacy and nation branding to address the multi-faceted aspects of Brazil-Chile links (Bruit, 1985: 132). The Paraguayan War and the War of the Pacific should be considered as the most important military conflicts in the region’s history. Nevertheless, the War of the Pacific shed light on the Brazil-Chile relationship and contributed to understanding their bilateral links in the long-run. In fact, some authors argue that the War of the Pacific should not be studied as Chile’s war against Peru but England’s war against Peru, under which Chile served as a tool for executing English interests. Those interests were based on the ownership of nitrate companies, which had been nationalised by the Peruvian government. However, less contradictory topics existed, such as the clear interests of Chile’s bourgeoisie, who sought to protect their investments in Bolivia and Peru, with the country aiming for an international monopoly on nitrate exportation. In this way, authors such as Bruit indicate that the Chilean bourgeoisie did not, in the war, act to carry out imperative extra-national interests. He argues that Chile’s participation in the war did not occur because of English diplomatic pressure, but rather because the State sought to defend its own economic interests. This means that Chile played an active role in the war to sustain its own economic goals, which, in previous years, had been concentrated in the north, first on silver exploitation, then on copper and lastly on nitrate (Bruit, 1985: 132). The military conflict began due to the struggle between Chile and Bolivia for the Atacama Desert from 1842 onwards. The desert was unimportant during the colonial period, but emerged as a significant economic territory due to the exploitation of guano and nitrate deposits.64 Despite Peru’s 64

The agreement of 1874 protected Chilean capitals and investments in the Bolivian Atacama. Nevertheless the decision of the Bolivian Congress in 1878 to impose new taxes

141

attempts to mediate in the conflict, given the secret treaty of 1873, the lack of guarantees about its neutrality contributed to the failure of the peacemaking initiative. The quickness with which the war occurred was unexpected from a Brazilian diplomacy viewpoint. The military conflict caused surprise, since Brazil thought Chile-Argentina tensions were the main problem faced by Chilean diplomacy.65 In contrast to Brazilian diplomatic interpretations, Chile confronted Bolivia instead of Argentina, despite Chilean boundary disagreements with the former. Brazil’s formal answer to the invasion of Bolivian territory in February 1879 was that the Chilean government should seek a peaceful solution to the conflict between Bolivia and Peru.66 Brazil assumed its neutrality in the war and reaffirmed the absence of a secret treaty with Chile. Brazil’s chancellery in Santiago was not indifferent to the warfare and without actually taking part offered support to avoid war. Brazil’s support came later to such an extent that the conflict had already begun (Haas and Schmitter, 1994: 55-56). For the Chilean government, the peaceful solution suggested by Brazil did not apply to the current circumstances of war. Brazil’s support provided the conditions for a longterm harmonious relationship between the two states.67 Chile’s chancellery insisted on asking Brazil for support in the conflict to the extent that the Chilean minister asked what Brazil’s reaction would be vis-à-vis Argentina’s support for Bolivia and Peru against Chile. Again, Brazil avoided getting explicitly involved in the conflict and did not make any public pronouncement on the war. In 1883, Brazil took a decisive step on nitrate output caused discomfort and the subsequent occupation of the Atacama Desert by the Chilean military. 65 Like the Triple Alliance War, the War of Pacific brought significant development in terms of network telegraph expansion and technology in general. Leonardo Ferreira (2006), Centuries of silence: The story of Latin American journalism. London: Greenwood, p. 104. 66 Territorial disputes in the Atacama Desert were temporarily absent after 1826, while Bolivia and Peru attempted to form union. Initiatives were carried out between Peru and Bolivia to create a confederation which ended with the defeat of Peruvian forces at Ingavi in 1841. Ronald Bruce St John (1994), “The Bolivia-Chile-Peru dispute in the Atacama Desert”, Boundary & Territory Briefing, vol. 1, number 6. Durham, p. 4. 67 Bolivia was not the only country affected by the border dispute with Chile, with a War of the Desert being started by Buenos Aires in the 1870s Argentines believed that Chileans occupied large portions of Argentine land, so Buenos Aires claimed not only Patagonia but also the eastern mouth of the Strait of Magellan. William F. Sater (1990), Chile and the United Sates: Empires in conflict. Athens: The University of Georgia Press, p. 32.

142

towards challenging Chile’s position as the leading naval power in the region and at the same time as the Peruvian diplomat made an official visit to Rio de Janeiro, Chilean diplomat José Manuel Bamaceda attempted to pressure the Argentine Congress to be able to sanction the Fierro-Sarratea pact ratified by Chile (Sondhaus, 2001: 153). This pact restricted the boundaries between Chile and Argentina. Santiago nominated Lastarria as a plenipotenciary minister in May 1879 in Brazil and Uruguay. This minister intended to form an alliance with the Empire of Brazil, diminishing Peru’s diplomatic actions while also attempting to buy a warship (Fernandez, 1959: 89-90). Therefore, the Chilean diplomat paid an official visit to Rio, seeking to form a military alliance with Brazil. From Brazil’s perspective, the difficulties of the national treasury combined with economic problems as a result of the Triple War reinforced the tendency towards a peaceful approach (Reyes and Sawyer, 2016: 30-31). In this scenario, even the sale of warships could have led to the end of Brazil’s neutrality, therefore this sale was cancelled and Brazil’s support of Chile made itself felt in a much more implicit way. However, the Chilean chancellery considered the presence of the minister in Rio as a symbol of the strong intelligence approach of both states. In August of that year, the Argentine Congress refused to sign the FierroSarratea pact, increasing tension between the two countries. It should be remembered that Argentina was key to understanding Brazil-Chile links and the geopolitical balance relied heavily on the quality of the relationship between the three states (Shelley, 2013: 181). Chile’s tensions with the neighbour caused the country to establish closer ties with Brazil. BrazilChile bilateral links were profoundly influenced by Argentina’s separate ties to each country. A potential alliance between Argentina, Peru and Bolivia would have disastrous consequences for Chile, hence the last-ditch attempt to strengthen Chile-Brazil bilateral links. Despite Brazil’s insistence on not taking part in the Pacific conflict, the country’s declaration of neutrality demands cautious analysis. The precise interpretation made by Alvaro Díaz is that: “Brazil had neither the economic resources nor the political power to declare explicit support for its Chilean counterpart. Within the post-war scenario, Brazilian foreign policy opted to announce its neutrality. Brazil and Chile can summarise their ties

143

during the conflict as ‘neutralidad con preferencias’ taking into account both countries attitudes towards each other”.68

After Chile’s occupation of the Atacama Desert, the War of the Pacific meant there was military conflict between Chile and Peru. It was almost impossible to gain Brazil’s support for the war as a strategy to lessen Argentina’s influence in the conflict, since the Brazilian Empire had internal problems, which, in fact, would lead to its end. Internal difficulties would have made achieving the consensus necessary for political support unlikely and for this reason, neutrality was the easiest and the most comfortable position to adopt. Moreover, the Triple War caused a serious deficit in public finances, as well as political instability. The War of the Pacific was clearly economically motivated and was not, therefore, the result of deep-rooted values, but of, evident economic considerations. The military conflict occurred in an attempt to gain a monopoly over nitrate and guano. The acquisition of the provinces of Antofagasta and Tarapacá determined Chile’s international nitrate monopoly. Nitrate exports were essential for tackling the economic crisis that had existed in the country since 1874 and a new prosperous phase for the economy began (Aftalian, 2001: 100). Nevertheless, Chile had to take into account the large sums of foreign capital in the production sector in contrast to the previous model. At the end of the 1880s, the denationalisation of the nitrate industry was a consolidated fact. The War of the Pacific is a perfect example of how economic factors exerted an influence over foreign affairs, at the same time economic circumstances encouraged diplomatic bilateral dialogue between Brazil and Chile. Given that economic aspects exert an influence over diplomacy, public diplomacy offers a broader interpretation of international relations, since it embraces the interrelated relations between different actors concerning foreign policy goals. At the end of the War of the Pacific, four courts of arbitration were created in order to deal with European complaints about the conflict. Brazil contributed one judge to the court to analyse the complaints of the countries that had declared their neutrality in the war. The choice of the Emperor Dom 68

Interview with Alvaro Díaz, former Chilean Ambassador to Brazil during the administration of President Michelle Bachelet. Brasília, 24 January 2013.

144

Pedro II as Baron Aguiar de Andrada - the ancient representative of Brazil in Santiago - reinforced the idea of a bilateral alliance between both countries (Dennison, 2006: 206-207). Although it was not formally consolidated, the alliance did have an informal and secret nature during the war. Curiously enough, the end of the conflict led to the perception of Chile as the South American military power. Chile insisted on showing Brazil as its closest ally. From an international perspective, there were signs of the Brazil-Chile partnership on isolated occasions. For instance, the North American minister in Lima Christiancy, remembered that the houses that had the Brazilian flag outside were not burned down during Chile’s occupation of Lima.69 In practical terms, the perception of an informal alliance between Chile and Brazil was convenient for both sides. Chile’s government sought to obtain Brazil’s help in order to contain Argentina, preventing the latter from siding with Peru and Bolivia in the conflict. According to Chile, Argentina’s association with Bolivia and Peru would have had disastrous consequences for regional geopolitics. Despite the absence of an explicit Brazil-Chile partnership, the apparent nature of the association contributed to sustaining balance in the region (Dennison, 2006: 207-208). The situation of the Brazilian Empire discouraged the opening of new fronts for the war. The difficult economic situation produced by the Triple War did not favour the adoption of an explicit position regarding Argentina. Despite the tensions in Brazil-Argentina relations since the Triple War, the costs of military conflict did not favour any kind of participation in the War of the Pacific. In contrast, Argentina took advantage of the benefits of the new international division of labour, since meat and wheat exportations led to a prosperous economic cycle in foreign trade. The idea of an informal alliance between Chile and Brazil was also convenient for both countries. The boundaries between Brazil and Argentina were not totally consolidated, therefore maintaining the idea that a BrazilChile alliance was a strategic part of foreign policy. The fact that Chile emerged from the War of the Pacific as a military power encouraged 69

LIB em Lima. In: AHI (231/2/13). Despacho n. 17, de 1/06/1882 apud Santos, Luis Claudio Villafañe Gomes. “O império e as repúblicas do Pacífico: as relações do Brasil com Chile, Bolívia, Peru, Equador e Colômbia. Curitiba: UFRP, 2002, p. 145.

145

Brazil’s interest in closer bilateral ties. However, the weakness of the Brazilian Empire did not favour the creation of stronger links with Chile and so, Brazil opted not to make their bilateral ties obvious, given the difficult economic situation vis-à-vis Argentina. The study of the Brazil-Chile approach goes beyond the analysis of exclusive bilateral ties, since Argentina is important to understanding why both states were reluctant to externalise closer ties at some point. The importance of Argentina within the Brazil-Chile relationship should not be overestimated, although it does play a significant role in regional geopolitics and therefore should not be underestimated. With this in mind, we believe that the study of Brazil-Chile bilateral links needs a conceptual foundation (public diplomacy, presidential diplomacy, para-diplomacy and nation branding) and concern to be shown about the fact that Argentina is a key partner for Brazil and Chile. One of public diplomacy and nation branding’s most important influences are the historical background that helps us observe the importance of strategic sectors to a particular country. For obvious reasons, historical facts are connected with the current foreign policy context.

146

Chapter 3 Brazil-Chile Bilateral Relations since the 1990s This chapter explores the ways Brazil and Chile take their relationship beyond traditional diplomatic links. Both countries have indeed developed significant links in terms of political, scientific, energy, multilateral and decentralised cooperation. Brazilian and Chilean links have also been gradually adjusted to strengthen ties with non-official groups, such as public-private partnerships, in which the private sector assumes a key role in bilateral relations. Beyond the democratic regimes of Brazil and Chile in the 1990s, other aspects have also helped strengthen bilateral links. Brazilian President Cardoso (1995-2002) had a longstanding friendship with Chilean President Ricardo Lagos (2000-2006) and this was an important element that strengthened bilateral cooperation. Moreover, in the governments of President Lula (2003-2007) and President Bachelet (2006-2010), important pragmatic policies were set out in terms of trade cooperation and infrastructure projects between Brazil and Chile, such as the Brazil-ChileBolivia bioceanic corridor. Since the 1990s, Brazilian-Chilean links have not been restricted to traditional diplomacy and public diplomacy has also been carried out by decentralised actors, such as NGOs, civil society and the private sector, who all play a key role in bilateral affairs. 3.1. Linking the ABC Pact with Brazil-Chile Ties from the 1990s Onwards The origin of previous cooperation initiatives between Brazil and Chile goes back to 1904 and the Friendly Intelligence Policy Treaty - the well-known ABC Pact - in which Brazil sought to foster cooperation between the three main Southern Cone countries of Brazil, Argentina and Chile. However, as a Brazilian foreign policy initiative, the ABC Pact was not supported by the opposition and the latter’s opinion on the subject was reported in the media. Creating a more appreciative diplomatic environment was connected to counterbalancing the United States’ power in the region (Almeida, 1998: 51). The ABC Pact served to maintain peace in South America by 147

developing a relationship of trust between the three actors. Strengthening southern ties provided an effective context in which to agree on a common policy of resistance against the United States. The strategy of Brazil’s foreign policy was that a good relationship with Chile should be maintained to guarantee the geopolitical balance of power within the region (Gardini, 2010: 20). Moreover, the Brazil-Chile partnership was important as a diplomatic mechanism to contain neighbouring Argentina. Brazil-Chile’s stable friendship was demonstrated in the episode when, the rights to exploit mining territories of a company from the United States, Alsop & Co., were transferred from Bolivia to Chile because of the War of the Pacific (1880-1883). The United States sent an ultimatum to force Chile to pay an indemnity of one million dollars in ten days, given that the latter did not recognise the company’s mining rights. The Brazilian Minister of International Relations, Rio Branco, decided to defend the allied country and Brazil even threatened to break diplomatic ties with the United States. To settle the dispute, Chile proposed that Brazil act as arbitrator, but that idea was rejected by the United States. As a result of Brazil’s diplomacy, the United States withdrew their ultimatum and the topic was submitted to the international arbitration of the King of England, Edward VII.1 Thus, the Alsop episode served to strengthen Brazil-Chile links. Although the ABC Pact was not ratified, it became a key element in the analysis of Brazil-Chile links since it encouraged a closer friendship between the two countries. The importance of the ABC Pact was twofold: it contributed to the geopolitical balance among the three main actors of the Southern Cone and provided a strategic perception of Chile as a reliable ally for Brazil in the region. The ABC Pact also had strong support from Argentina and Perón argued in his articles the need to strengthen BrazilArgentina ties through the pact (Cavlak, 2008: 171). Since the pact played a fundamental role in Brazil-Chile ties and showed that their relationship was characterised by mutual trust, it is mentioned in the second and third chapters. Understanding the pact allows us to connect the countries’ historical backgrounds to the current Brazil-Chile relationship. The issue of a partnership with Chile was a long-standing concern of 1

See Adelar, Heinsfeld. “As relações Brasil-Chile: o pacto ABC de 1915”. ANPUH, Simpósio Nacional de História – Fortaleza, 2009. pp. 6-8. http://anpuh.org/anais/wpcontent/uploads/mp/pdf/ANPUH.S25.1436.pdf. Accessed on 12 April 2013.

148

Brazil’s foreign policy targets. Although Brazil’s ambition of a leadership role in South America has gone through a number of phases and at certain times in history seems to be more related to rhetoric rather than substance, the components of fostering regional ties have played an important role since the emergence of its very first foreign policy aims (Bonis, 2008: 12). The ABC idea contributed to maintaining Brazil’s long-term interest in Chile. Concordantly, it created the perception of Chile as an important ally and part of Brazil’s long-term broad geopolitical strategy. Therefore, the role of Chile within Brazil’s geopolitical plans should not be underestimated, given that the former was part of later traditional diplomacy goals. Since the nineteenth century Brazil and Chile have built up a good longterm relationship, with the official Chilean diplomatic presence in Rio de Janeiro illustrating this point. As the current Chilean Ambassador in Brazil, Jaime Gazmuri, argued, “Brazil and Chile share stable diplomacy, they have developed a trusting relationship since the nineteenth century and they have lived through military periods cooperation in ‘Operation Condor’.2 The democratic-period strengthened bilateral links, given that both states shared similar values and exerted an active role in Latin America through initiatives such as the Community of Latin America and Caribbean States (CELAC) and the Union of South America Nations (UNASUR)”. 3 Their historical background has strengthened their partnership in the long-run and their stable bilateral relationship has increased their multilateral political ambitions. Therefore, the ABC theory has borne fruit by shaping geopolitical strategy and situating Chile as a significant actor in the regional sphere. Regardless of prior initiatives, Brazil-Chile bilateral relations have long been determined by the absence of strong links, limiting the scope of possibly stronger ties. At the same time it has been argued that the lack of conflicts encouraged further steps forward to improve the bilateral relationship. A spirit of mutual understanding and respect has permeated the relationship between both countries in the long-run. The mutual perception 2

Finished by the early 1980s, Operation Condor involved the cooperation of the intelligence services of Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay. Rocío Montes (2015), “O horror da Operação Condor”, El País, 11th September. http:// brasil.elpais.com/brasil/2015/09/10/internacional/ 1441836066_190161.html. 3 Interview with the Chilean Ambassador, Jaime Gazmuri, on 12 September 2015.

149

that each is a reliable partner has laid a firm foundation for developing further cooperation within the democratic period. In this sense, the period from the 1990s onwards has been described as being at the heart of increased cooperation efforts between Brazil and Chile.

3.1.1 The Brazil-Chile decentralised approach This study considers that a profound transformation of both countries’ military regimes on the road to democracy in the 1990s was a key component of Brazil-Chile bilateral ties. The new democratic order facilitated the development of closer relations between the two countries. Furthermore, the combination of democratic restoration in the 1990s and the strength of formal and informal integration mechanisms laid the groundwork for more cooperational initiatives between Brazil and Chile. In other words, promoting official and non-official actors within the international arena paved the way for understanding Brazil-Chile ties from a public diplomacy perspective. The difficulties of the Brazil-Chile relationship mean that there are no formal specific links between the two states. This means that Brazil’s approach to Chile has been dissolved in the context of Brazilian continental policy. Despite its abstract character, Brazil-Chile interaction is pragmatic and this is an essential component of their bilateral ties. Due to the absence of strict formal links, it is difficult to make a distinction vis-à-vis Brazilian foreign policy towards that of South America as a whole. 4 In this sense, dynamic new forums of dialogue like UNASUR, CELAC and the Rio Group played a crucial role in building a new structure for regional and possible bilateral relations. They represented the possibility of constant dialogue and participation, in which strengthening and widening links on an increasing number of issues demanded further cooperation 4

The difficulties of the Brazil-Chile relationship mean that there are no formal specific links between the two states. This means that Brazil’s approach to Chile has been dissolved in the context of Brazilian continental policy. Due to the absence of strict formal links, it is difficult to make a distinction vis-à-vis Brazilian foreign policy towards South America as a whole. Ángel Soto; Rogelio Núñez and Cristián Garay. Las relaciones chileno-brasileñas: de la amistad sin límites al pragmatism del gigante (1945-1964). Santiago: RIL Editores, 2012, pp. 18-19.

150

efforts (Knight, 2014: 23). In this way, regular presidential summits have also played an important role in creating constant and distinguished cycles of regional participation.5 The convenience of frequent summits has represented the most significant step forward in strengthening Brazil-Chile bilateral relations, since they gave rise to the meetings needed to strengthen cooperation links. However, the difference between Brazil and Chile’s foreign policy strategies must be stressed, since Chile’s foreign policy has clearly been oriented towards the outward-market. Chile’s decision to adopt ‘neutral’ policies without having a strong political influence in foreign policy was illustrated by the negotiation of bilateral agreements worldwide. While Chilean foreign policy focuses on trade, public diplomacy favours the analysis of Brazil-Chile ties, given the importance of non-state actors in bilateral relations. Chile’s focused policy was the result of a coordinated trade reform and the elimination of trade barriers. Chile’s rapid negotiation of trade agreements worldwide can, at some point, be explained by its professional government bureaucracy. However, the existence of a business association with trade expertise played a core role in Chile’s foreign policy strategy (Bull, 2008: 195-196). Working with this is the core element to explaining the differences between how Brazil and Chile carry out their foreign policies. Obviously, the nature of Chile’s policy has a direct correlation with the obstacles it faces to regional insertion. In other words, Chile would not give up the openness of its regional project, even if this threatened the regional integration programme. From the point of view of Brazilian foreign policy, the protectionist economic model highlights a different approach to that of its Chilean counterpart. The logic behind Brazil’s policy is to protect domestic industry. However, the different nature of their economic models does not mean that mutual trade and investment links between both states are reduced (Baer, 2001: 3-4). Instead of bilateral trade decreasing, Brazil-Chile commercial activities are in a state of flux, which is a sign of their complementary economies. High-level bilateral trade dialogue demonstrates what some 5

Presidential diplomacy occupies an important role in a democratic context. Brazilian President Cardoso’s support of the anti-democratic regime of Peruvian President Alberto Fujimori garnered criticism in Brazil. BBC Brazil (2000), “Vargas Llosa diz que Brasil é cúmplice da ditadura peruana”, 25th October. http://www.bbc.com/portuguese/ noticias/ 2000/001025_vargasllosa.shtml.

151

specialists argue as a conflict-free relationship. Increasing trade brings with it the advantage of intensifying cooperation in the business sector, either directly or indirectly to the extent that some people use the term ‘business diplomacy’. Chile’s Exports to Brazil (Millions of US$) Exports Destination Brazil

2011 Fourth Quarter 1,083,2

2011 (Total)

2012 First Quarter 4,489,6 976,2

2012 Second Quarter 1,206,6

2012 Third Quarter 935,1

2012 Fourth Quarter 1,188,0

2012 (Total) 4,305,9

Source: Central Bank of Chile. Foreign Trade Indicators. http://www.bcentral.cl/index.asp.

Brazil’s Exports to Chile (Millions of US$) Exports Destination Chile

2011 First Quarter 1,548,0

2011 (Total) 6,225,2

2012 First Quarter 1,296,9

2012 Second Quarter 1,185,6

2012 Third Quarter 1,228,1

2012 Fourth Quarter 1,479,0

2012 (Total) 5,189,7

Source: Central Bank of Chile. Foreign Trade Indicators. http://www.bcentral.cl/index.asp.

The Most Important Destinations of Chile’s Exports (Millions of US$) Countries

China United States Japan South Korea Brazil

2011 First Quarter 5,501,5

2011 (Total) 18,600,9

2012 First Quarter 4,259,5

2012 Second Quarter 4,142,2

2012 Third Quarter 4,299,3

2012 Fourth Quarter 6,120,9

2012 (Total) 18,821,8

1,941,8

9,047,0

2,632,8

2,365,3

1,877,3

2,660,4

9,535,9

2,540,8

9,009,4

2,218,8

2,241,1

1,836,5

2,059,2

8,355,6

1,124,0

4,448,4

1,235,7

1,167,8

1,051,8

1,091,5

4,546,8

1,083,2

4,489,6

976,2

1,206,6

935,1

1,188,0

4,305,9

Source: Central Bank of Chile. Foreign Trade Indicators. http://www.bcentral.cl/index.asp.

In general terms, Brazil is the fourth-ranking destination of Chilean exports, which situates it as one of Chile’s main markets. It should be observed that no country deserves to have political problems with strong trading partners. 152

Trading links exert an influence by spreading the relationship into other areas. It should be remembered how difficult it is to establish definitive boundaries between the political and economic aspects of bilateral relations. The adoption of public diplomacy, paradiplomacy, nation branding and presidential diplomacy serve to show the tenuous dividing line between Brazil-Chile ties, sustaining the idea that ignoring their bilateral links leads to misconceptions in the Brazil-Chile approach.

Chile’s Imports by Main Countries of Origin (Millions of US$) Countries

United States China Argentina Brazil

2011 First Quarter

2011 (Total)

2012 2012 2012 2012 2012 First Second Third Fourth (Total) Quarter Quarter Quarter Quarter

4,034,6

15,092,3 4,095,1

4,462,0

4,532,3

4,796,2

17,885,6

3,346,7 12,696,0 3,103,6 1,312,5 4,750,3 1,263,3 1,5048,0 6,225,2 1,296,9

3,511,0 1,227,1 1,185,6

3,953,7 1,307,3 1,228,1

3,875,5 1,493,4 1,479,0

14,443,8 5,291,0 5,189,7

Source: Central Bank of Chile. Foreign Trade Indicators. Selected and sorted by amount imported over $ 30 million in 2012. Source: Statements of Income. http://www.bcentral.cl/ index.asp.

The restoration of democracy in 1990 began a new period in the history of Chile’s international insertion. After 17 years of international isolation, Chile started its reintegration into the world economy. The reestablishment of the democratic regime was accompanied by talks with the members of the ALADI in an attempt to strengthen the integration process.6 From Chile’s perspective, the possibility of developing some kind of broader integration did not go any further, therefore the country focused on building bilateral agreements with ALADI members separately. With regard to Brazil, there 6

The Latin America Integration Association is the largest Latin American integration group. It contains 13 member countries: Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Panama, Paraguay, Uruguay, Peru and Venezuela. The ALADI encourages the creation of an area of economic preferences in the region, with the ultimate goal of achieving a Latin American common market. Asociación Latinoamericana de Integración. Acerca de ALADI ¿Quiénes somos? http://www.aladi.org/nsfaladi/ arquitec. nsf/ VSITIOWEB/quienes_somos.

153

were several instances of dialogue, such as the Bilateral Trade Commission, the Consultative Committee on Agriculture and the Executive Work Group on Trade Promotion of the Programme for the Competitive Substitution of Imports.7 The rapidly growing bilateral trade relationship should also be analysed in order to consider its impact on other areas of Brazil-Chile relations. The trade relationship between the two countries is broad, significant and has seen unprecedented growth in trade and foreign direct investment (FDI), which means commerce is an important way of understanding their bilateral affairs.8 From 1974 until the beginning of President Aylwin’s administration the aperture of Chile’s economy involved a unilateral liberalisation policy (Foxley, 2005: 133-134). In fact, multilateral commitment to economic liberalisation began through the GATT and at that time bilateral negotiations had very little weight.9 During the Concertación administration, unilateral and multilateral policies were maintained through a specific policy of bilateral trade negotiations. Since 1991, signing economic bilateral agreements has reinforced trade strategy and what occurred in the 1990s was twofold: recovering the growth of Latin America countries after the lost decade of the 1980s and generalised structural reforms in the region’s economies that favoured an opening towards trade liberalisation. These policies were implemented during a period of economic recession, in which protectionist policies were implemented in the region with negative effects on Chile.10 As observed in the second chapter on historical backgrounds, the history of their relationship is linked to the way both countries strongly complement 7

Embajada de Chile en Brasil. “Bilateral Relations”. http://chileabroad.gov.cl/brasil/ en/relacion-bilateral/comercio-relaciones-bilaterales/. 8 As long as international economic relations are relevant in diplomatic sphere of influence, so-called ‘economic diplomacy’ plays a significant role in the Brazil-Chile relationship. More information about economic diplomacy in Peter A. G. van Bergeijk (2009), Economic diplomacy and the geography of international trade. Cheltenham: Edward Elgar Publishing. 9 After seven and a half years of protracted negotiations, the Uruguay Round of GATT was finally completed in April 1994 with 111 of the 125 participating states signing the final document. See Peter Malanczuk (1997), Modern introduction to international law. New York: Routledge, p. 231. 10 Dirección General de Relaciones Económicas Internacionales, Direcon, Ministerio de Relaciones Exteriores de Chile. “Chile 20 años de negociaciones comerciales”. Santiago: B&B Impresores, 2009, p. 73.

154

each other in commerce. Increasing trade has provided the opportunity to strengthen ties on major political, diplomatic and economic issues. This extensive network has also influenced para-diplomatic ties for instance. However, from Brazil’s perspective para-diplomatic policies are fundamentally connected to central foreign policy, as will be studied in the following sections. The absence of political conflicts and existing similar political values serve to measure the possibility of strengthening bilateral relations. Given that the two countries had not gone into serious political issues and shared similar positions in the multilateral field, their bilateral approach allowed the development of further multi-faceted links (Brands, 2010: 3-4). The special relationship between Brazil and Chile goes hand-inhand with the fact that public diplomacy’s perspective is not state-centric. The important role played by nation branding in Chile’s foreign policy strategy helps explain the nature of the Brazil-Chile approach.

3.1.2 Brazil’s international insertion vis-à-vis Chile The Brazil-Chile relationship should go well beyond mere trade issues, since the current regional scenario has profoundly modified in the way in which Brazil becomes the new emerging global power. Brazil’s deeper integration into the global economy has produced important changes regarding Chile’s perception of this huge South American country and has demanded the reformulation of Chilean foreign policy vis-à-vis Brazil’s current geopolitical position. Some authors believe that Brazil will be one of greatest global powers by the year 2030, given that it is the world’s fifth largest country and seventh largest economy (Reid, 2014: 110-111). There is room for strengthening bilateral links by understanding the mutual benefits generated by stronger long-term partnership. For obvious reasons, the fact that Brazil has become an object of fascination among diverse actors, such as academics, economists, policymakers and business groups encourages the need to recreate the Brazil-Chile approach. The new context has led to certain aspects of Chilean and Brazilian foreign policies converging as far as the region is concerned with both states having gained a respected visibility worldwide. The highs and lows of South America’s complex issues have not allowed for a regional bloc to be 155

continually projected, given the idea that strengthening a common position with other Southern American countries would have high costs to the detriment of domestic and international aims. Now that everything points to luck being on Brazil’s side and the country has achieved a major say in global affairs, the elites’ perception of regional gains has decrease. According to the neo-functionalism theory, regional integration is a product of many and varied forces, as will be observed (Mattli, 1999: 3). However, Brazil’s public debt and the need for long-term economic reform requires solid political measures.11 The disappointing results of the Brazilian economy during President Dilma Rousseff’s first term (2011-2014) shifted the diplomatic focus towards a more active foreign policy in her second term.12 Defining all its borders as part of the BRICS, IBSA and G20 and its position - as an energy power with pre-salt discoveries and as a sugar-cane ethanol exporter - has demonstrated the political and economic consequences of Brazil’s international insertion.13 The increasing prices of 11

Brianna Lee (2015), “Brazil economic crisis: Rousseff impeachment talks grows, but potential presidential replacements garner little enthusiasm”, International Business Times, 8th November 2015. http://www.ibtimes.com/brazil-economic-crisis-rousseff-impeach ment-talk-grows-potential-presidential-2104323. 12 The Economist, “Brazilian waxing and waning”, 30 October 2015. http://www. economist.com/ blogs/graphicdetail/2015/10/economic-backgrounder. 13 G20 is the bloc of twenty developing nations that was created at the fifth ministerial WTO conference, held in Cancún, Mexico. As some sources show, the origins of this coalition can be traced back to the Brazilian Declaration signed between Brazil, India and South Africa in June 2003. Others argue that the coalition emerged as an immediate response to the EU-United States text on agriculture despite the fact that cooperation among some of the G20 has precedents in both trade and other issues. Amrita Narlikar and Diana Tussie. “The G20 at the Cancún Ministerial: Developing countries and their evolving coalitions in the WTO”, p. 5. http://www.flacso.org.ar/rrii/publicaciones/g20-developingwto.pdf. The creation of BRICS in 2011 by Goldman Sachs’ Jim O’Neill, became a symbol of the perceived rise of emerging nations and their increasing economic power. In contrast the BRIC (latter BRICS), the so-called BIITS (Brazil, India, Indonesia, Turkey and South Africa) showed that investors’ concerns about emerging markets defined BIITS as the most vulnerable emerging markets. In Brazil, the solvency problems of former billionaire Eike Batista and his various businesses resulted in large losses for lenders as well as for the state-owned Brazilian Development Bank. Brazil’s 2014 Football World Cup and the 2016 Olympic Games, have absorbed resources at the expense of essential infrastructure. However, policy makers do not want to believe that an emerging market crisis is possible. Also see also Satyajit Das. “The return of the emerging market crisis”. Economonitor. 25th September 2013. See Shobhana Chandra. “BIITS replacing BRICS as emerging markets not a blanket by”. Blomberg. 21 October 2013.

156

agricultural commodities show that the world market has not reached a desirable equilibrium between agricultural raw materials for food, feed and fuel. There is no correlation between the world shortage of agricultural commodities and structural shortages of food. On the contrary, selfsufficiency has become a necessary condition for guaranteeing the food security. As Nassar points out, “We will see in the next few years countries with an availability of natural resources (like land and water), competitive agricultural sectors, and non-users of discriminatory policies against agriculture (the use of export taxes) responding higher prices by increasing production. Brazil fits into this group” (Nassar, 2009: 55). In this scenario, it can be argued that Brazil and Chile are in privileged positions within the world commodity debate - Brazil as an agricultural energy power and Chile as a mining power – meaning that both countries can take advantage of the current change in the world’s commodity prices. Another important multilateral initiatives also occurred with the meeting of the so-called G8+5, when Brazil, India, China, Mexico and South Africa participated as guests at a meeting of the most influential international club on the economy. 14 Their participation was hoped to consolidate a stronger and well-represented group that would encourage trade talks at Doha and focus on the need for better cooperation on climate change. Despite there being little evidence of significant results, Brazil is a permanent participant of another international club, the other G20, the Group of 20 Finance Ministers and Central Bank Governors.15 Brazil has played an active role in G20 summits through the participation of its Labour and Finance Ministers. Brazilian foreign policy places G20 as 14

Membership of the G8 is made up of the main industrialised countries. It is not an international organisation, nor does it have and administrative staff with a permanent secretariat; rather it is a process that culminates in an annual summit at which the heads of state and government of the member countries hold talks with a view to finding solutions to main world issues, which are summed up in the Final Statement. http://www. g8italia2009.it/G8/Home/Approfondimenti/G8-G8_Layout_locale-1199882116809_Come FunzionaG8.htm. Over the years the G7/G8 duty presidencies have begun inviting a number of emerging countries to specific sessions of talks on an ad hoc basis. http://www.g8italia2009.it/G8/Home/Summit/Partecipanti/G8-G8_Layout_locale-119988 211 6809_PaesiG5.htm 15 The G20 was created as a response to both the financial crises of the late 1990s and a growing recognition that key emerging-market countries were not adequately included in the core of global economic discussion and governance. About G20, Origins,http://www. g20.org/about_what_is_g20.aspx

157

the foremost international forum for discussing world economic matters.16 Among other issues, an exchange of information about lowering dependence on fossil fuels has taken place at various seminars during G20 meetings. The initiative to lower the use of fossil fuels in Brazil’s energy matrix has gained special attention in the last few years, as seen in the chapter on energy. 17 Thus, Brazil encourages adopting policies that increase the use of alternative energy sources and currently face difficulties because of strong dependence on non-renewable energy sources. Given that the energy sector is one of the most politicised in the Brazilian economy, the perfect scenario is created to help understand how other sectors permeate foreign policy. Brazil’s ethanol brand certainly has a significant influence worldwide, to the extent that Brazil-Chile relations cannot be considered without Brazil’s international insertion. Rebranding Brazil’s projection promotes Chile’s growing interest in strengthening dialogue with this new emerging international power. For obvious reasons, Brazil’s new international position has altered Chile’s perception of the importance of establishing closer bilateral ties and changes to the BrazilChile international position greatly influence their bilateral approach.

3.1.3 Brazil-Chile dialogue within the multilateral perspective The 1990s led to fundamental changes on a global scale, which cannot be underestimated given the end of the Cold War and the introduction of new technologies. The connection of computers worldwide and the emergence of the internet brought new actors onto the international scene. As previously analysed, the technological revolution encouraged companies to invest in other states, creating new instruments for international relations. The 16

Globalism poses a severe challenge to the nation state, most dramatically expressed in the global financial crisis of 2008-2009, in which the questionable lending practices of a number of United States’ banks ended up enveloping much of the world global economy and triggering the greatest financial crisis in eighty years. It was this very crisis that led to the creation of the G20 at a leaders’ level - the ‘steering committee of the world economy’ as it became apparent that only collective action could deal with fall out from the crisis, and attempt to prevent the eruption of new ones”. Jorge Heine, “From club to network diplomacy”, in Cooper, Andrew F.; Heine, Jorge and Thakur Ramesh. The Oxford Handbook of Modern Diplomacy. Oxford: Oxford University Press. 17 Ministry of Foreign Affairs, “Financial-G20”, http://www.itamaraty.gov.br/ temas/ governanca-global/g-20-financeiro

158

emerging context shows that politics is not the only way to achieve power within the international arena, since it gives way to other mechanisms for profits, as well as the growing role of non-officials in foreign affairs. Distance is now irrelevant to communications because of the internet and the change in telephone tariffs. At the same time, new forces such as globalisation and international migration have changed people’s perception of distance (Cairncross, 2001: 11-12). The rapid effects of increasing connectivity have led to the rapid strengthening of interstate relations and demanding new forms of international approach. The 1990s can be portrayed as the decade of the legitimate route taken to the creation of globalisation patterns – in other words - the international effort to discuss global issues on a wider scale. Globalisation brings together different sectors that interact, making things faster, cheaper and better than ever before requiring constant cooperation between sectors that used to be isolated from each other.18 The conferences that took place at the United Nations from the 1990s onwards on diverse matters illustrate this point (Fonseca, 2006: 128). Multilateralism exerts an overwhelming influence on the Brazil-Chile approach since the two countries have similar standpoints regarding international values. As Lazarou argues, beyond official state actors, NGOs and regional and civil society organisations demanded participation in international relations (Lazarou, 2014: 14). In this contemporary environment the foreign policy of the two countries was formed. In that context, it is important to stress that President Lagos accepted an invitation from President Lula to join him in his announcement of the Initiative to Fight World Hunger on January 2004 in Geneva. Fonseca highlights the strength of their common positions in a multilateral context, in which President Chirac and the Secretary-General of the UN Kofi Annan, also participated, contributing to the creation of horizontal links between 18

“Both law and economics largely ignored the norms until the 1990s, with norms remaining the exclusive province of the social sciences. Norms include patterns of behaviour, impulses, and spontaneous ordering initially enforceable by non-legal sanctions (they cannot initially be adjudicated and are passed by private parties)”. Juliet Kostritsky. “The law and economics of norms”. Texas International Law Journal, vol. 48, Summer 2013. Number 3. Texas: The Universiy of Texas School of Law, p. 467. Additional information in Caroline Bouchard and John Peterson (2014), “Conceituando o multilateralismo”, in Elena Lazarou (Ed.), Multilateralismo nas relações internacionais. Rio de Janeiro: Elsevier, pp. 1-29.

159

both countries (Fonseca, 2006: 130). The fact that both countries supported the nomination of Farouk Hosny, the Minister of Culture of Egypt as General Director of UNESCO in October 2009 shows how they maintained the defence of their common positions. 19 Furthermore, it means that their relationship was not restricted to trade issues, due to the way this initiative cemented relations in the multilateral arena. In this study of bilateral relations between Chile and Brazil, it can be demonstrated that the two states share certain features, reinforcing their closer relations and indicating changes to regional geopolitics. Among other things, Diamint indicates that “the addition of social concerns to issues of political stability and governance enlarges the security agenda, transforming social matters into state security matters” (Diamint, 2004: 48). In this context, the armed forces, who considered citizens their enemies for many years, are nowadays more inclined to protect people and even promote peacekeeping operations outside their countries. Another way to state the same point is by saying that the Chilean and Brazilian military played the role of democracy exporters within a multilateral context. It is interesting that, in order to carry out a peacekeeping mission, the military needs to act in the same terrain as NGOs, health workers, observers from multilateral organisations and soldiers.20 The new tasks undertaken by the armed forces require they adopt a more cooperative attitude to offer humanitarian assistance, health care and the demobilisation of combatants (Diamint, 2004: 48-49). In this way, security can be considered an important field of cooperation between Chile and Brazil, with the cooperation of both countries in Haiti illustrating this point (Fonseca, 2006: 131). Since 2004, both countries have looked for solutions to the Haitian crisis, with its roots in the failure of the Haitian state together. As Hirst states, the active participation of Chile and Brazil helped create a new structure for hemispheric cooperation initiatives, regarding the new paradigm of 19

Folha de São Paulo, Saturday, 30th May 2009, caderno Brasil, “Egípcio divide países, e 9 vão disputar Unesco”. 20 Since its foundation, the UN has undertaken 53 peacekeeping missions. Given that not every fight involving armed groups is a civil war, various qualitative measures are necessary to help distinguish mere conflict from war. Moreover, different types of civil war require different solutions. “How to stop the fighting, sometimes”, The Economist, 9th November 2013, pp. 26-29. See Ricardo Seitenfus (2013), Relações internacionais. Barueri: Manole.

160

multilateral action in local situations of institutional collapse (Hirst, 2008: 53-54). Thus, it is impossible to confine Brazilian-Chilean bilateral relations to traditional diplomacy, reducing them to the domain of interstate relations like Chile-Argentina cooperation through United Nations peacekeeping missions worldwide, which led to stronger links among the military sector illustrated by the creation of the Permanent Chile-Argentina Security Committee (COMPERSEG).21 Bilateral cooperation within the United Nations’ peacekeeping missions created a new form of dialogue between Brazil and Chile. 22 Thus, a social perspective was also introduced in this new context regarding military missions, which have a strong civil component and involve many different military and civilian agencies logistically and in communications and medical support (Diamint, 2004: 45). Indeed, when Brazil performs well in these military missions, it gains legitimacy before other countries in the international arena.23 As already stated in this chapter, new topics are currently emerging in the international agenda such as environmental degradation, organised crime, migration, human rights, and energy issues. Therefore, traditional diplomacy alone cannot deal with the current domain of foreign affairs, taking concepts such as public diplomacy, nation branding, presidential diplomacy and paradiplomacy as prerequisite for the study of bilateral relations between Chile and Brazil. Briefly, it is possible to generalise by saying that, in broad terms, this set of concepts is an increasingly standard component in the analysis of foreign affairs. An increasing number of interdependent situations demand harmonisation to reach a certain level of consensus in the dialogue.

21

Strengthening military cooperation boosts greater bilateral ties between Chile and Argentina. Ministerio de Relaciones Exteriores de Chile. Subsecretaria participa en inauguración de Reunión del COMPERSEG. Tuesday, 30th August 2011. http://www.minrel.gob.cl/prontus_minrel/site/artic/20110830/pags/ 20110830143332.php 22 See C.F. Amerashinghe. Principles of Institutional Law of International Organisations. New York: Cambridge University Press, 2005. 23 Debates over a variety of subjects such as human rights, social development, the environment and women rights were held. An attempt to define special rules for the flow of economics (the Uruguayan Rond) also emerged in this context. Additional information about human rights in Chile in Deborah Thomas (1995), “Human rights and the politics of agreements: Chile during President Aylwin’s first year”. USA: An American Watch Report, p. 36.

161

3.1.4 Redefining the Brazil-Chile bilateral approach Sharing democratic values influenced the stability of both countries’ democratic institutions. Their respect for democratic values, together with the lack of contentious issues between them, meant there was a chance to strengthening their relationship. Brazil and Chile share universal values and have policies that promote the interests that other countries share, like democracy, human rights, a mutual interest in regulating the WTO’s financial flow and similar positions on various issues in the international agenda among others. Brazil and Chile had already built up a partnership in the multilateral context with similar opinions on significant matters.24 The lack of a strong political relationship between the two countries led to a pragmatic approach when building horizontal links between the diverging sectors. As Ambassador Jaime Gazmuri argues, “Brazil and Chile have effective cooperation on logistical issues, in other words, trade, infrastructure and science and technology. Common bilateral scientific research projects in Antarctica show that both countries have similar interests in the area”.25 The Brazilian military base in Antarctica (called Comandante Ferraz) and the Chilean military base (called Eduardo Frei) carry out common research projects.26 The bioceanic corridor is another relevant point of bilateral cooperation, considering that the project was officially launched by Presidents Bachelet, Lula and Morales in 2000. According to Ambassador Jaime Gazmuri, “Bolivia’s demand for the exclusive use of Bolivian transport, which is against Mercosur clauses, is a point of conflict with Brazil. Indeed, the lack of planned economic investments has led to a delay 24

Not only in the democratic period, but also during the military regime Brazil was a permanent presence in multilateral forums bringing together states with the most diverse perspectives, from cultural to economic. See Shiguenoli Miyamoto (2000), “O Brasil e as negociações multilaterais”, Revista Brasileira de Política Internacional, vol. 43, n o 1. Brasília: UnB Editora, pp. 119-137. 25 Interview with the Chilean Ambassador in Brazil, Jaime Gazmuri, on 12th September 2015. 26 Brazil and Chile were among the countries that ratified the Antarctic Treaty. Together with Argentina and Australia, Chile was one of the last three countries to simultaneously ratify the Antarctic Treaty on 23rd June 1961, on which date the Treaty came into force. Davor Vidas (2000), Implementing the environmental protection regime for the Antarctic. Dordrecht: Kluwer Academic Publishers, p. 339.

162

in implementing the initiative”.27 However, the bioceanic corridor project demonstrates the pragmatic nature of the Brazil-Chile bilateral relationship. Furthermore, it should be considered that the two countries have a positive nation brand worldwide, which means that strengthening bilateral ties benefits them both. The two states share convenient nation brand projections, which are recognised in the international community. Despite natural differences between each country’s brand, they are similar because they do not emphasise regional roots.28 Neither Chile nor Brazil Latin America and their respective countries, since both present themselves as disconnected from the region. Obviously, Brazil occupies the position as the only Latin America country with Portuguese roots, which has contributed to its sense of isolation. Chile, on the other hand, insists on presenting itself as a pillar of stability in a volatile region. At the same time, President Dilma Rousseff (2015-2016) paid her first official visit to Chile on 26th February 2016 during the term of President Michelle Bachelet (2014-2018), which illustrates the long-term relationship between the two countries. Although Brazil and Chile do not share particularly strong relations with Latin America, the Bachelet administration sought to strengthen relations with Brazil and other Latin American states. Moreover, increasing trade between Brazil and Chile had laid the groundwork for encouraging economic relations. Brazil is the main destination of Chilean investments. Since 2010, the favourable balance of bilateral trade to Brazil, together with the lack of import tax on Brazilian goods in Chile, has promoted a pragmatic approach to strengthening bilateral links.29 As opposed to the idea that Mercosur and the Pacific Alliance are opposing initiatives, President Bachelet considered the possibility of strengthening bilateral relations. The Chilean attitude of ‘convergence in 27

Interview with the Chilean Ambassador in Brazil, Jaime Gazmuri, on 12th September 2015. 28 In Chile, the partnership of both private and public sectors were strategic concerning wine and salmon exports. The government provided a stable economic environment to promote a national brand for wine. Jean-Philippe (2004), Trade and competitiveness in Argentina, Brazil and Chile. Paris: Organisation for Economic Cooperation and Development, OECD, p. 186. 29 See Portal Brasil, “Visita da presidenta Dilma ao Chile coroa parceria entre os dois países”, Relações Internacionais, 26/02/2016. http://www.brasil.gov.br/governo/2016/02/ visita-da-presidenta-dilma-ao-chile-coroa-parceria-entre-os-dois-paises.

163

diversity’, which means the opportunity to strengthen Brazil-Chile bilateral links despite the countries belonging to two different regional projects, encouraged a closer bilateral approach. President Rousseff’s official visit illustrates the quality of current bilateral relations, embracing policies, encouraging trade and providing significant tax benefits. In 2015, Brazil was Chile’s third most important trade partner.30 The development of closer economic links has shown the continuing importance of the bilateral relationship beyond traditional diplomacy. Therefore, the most important concept for understanding Brazil-Chile relationship is not traditional diplomacy, but the focus on the decentralised standpoint. This also means that more inter-sector topics are up for discussion, such as public diplomacy, presidential diplomacy and paradiplomacy. The increasing importance of public diplomacy should not be underestimated, since the Itamaraty recognised the important role played by public diplomacy in the formal foreign policy approach.31 As mentioned in the first chapter, the concept of nation branding also plays an important role in explaining both states’ mutual perception and to what extent the particular message injected into each country’s domestic field corresponded to its aspirations. Moreover, the new multilateral agenda implied widening Chile-Brazil cooperation in world affairs. The new world order demanded thinking and acting globally, establishing increasing new foreign policy issues in the multilateral field (Bernal-Meza and Christensen, 2012: 19-20). At the present time, Brazil and Chile share similar values on international insertion, promoting the defence of human rights, social development, women’s rights and environmental topics among others. The two countries behaviour turned from regionally-oriented to globally-oriented and their new ties highlighted the complex new international agenda.32 Together with 30

See Jornal do Brasil, “Dilma inicia visita ao Chile em meio à reaproximação”, Internacional, 26/02/2016. http://www.jb.com.br/internacional/noticias/2016/02/26/dilmainicia-visita-ao-chile-em-meio-a-reaproximacao/. 31 On 11th June 2013, the Brazilian Ministry of Foreign Affairs announced a new tool for promoting dialogue with the Brazilian community, as well providing information on foreign politics and the Itamaraty’s proceedings in a platform that allowed readers to interact by posting comments, questions and suggestions. The blog called “Diplomacia Pública” (Public Diplomacy), can be assessed at http://diplomaciapublica. itamaraty. gov.br/. 32 With respect to civil rights, Brazil also signed up to all the regional and international human rights protocols and conventions, is an active backer of the UN system of human

164

this come emerging new regional issues in the foreseeable future, such as drug trafficking, immigration, energy sources, preventing phytosanitary diseases and money laundering among others.33 The new regional agenda requires constant dialogue between both states, due to the countless transnational issues that have emerged in the last few years. Beyond cooperation initiatives, the harmonising methods and tools to tackle common problems demand a stronger partnership between Brazil and Chile. The big shift from the past means that the present context brings new actors to the forefront and go-it-alone policies are replaced by enthusiasm for fostering regional and bilateral ties. The fact that Brazil and Chile do not share a partisan foreign policy can be seen as a sign that not only short-term bilateral alliances can be formed, but that long-standing coherent bilateral links can also be built. Indeed, Brazil and Chile’s foreign policies are characterised by the continuity of essential courses of action, despite the particular emphasis they are given by each government. Although Brazil and Chile are stable and trustworthy countries in the region, major steps must be taken towards constructing pragmatic bilateral cooperation. In addition, Brazil’s new status as an emerging power on the international scene should encourage Chile to build closer relations with the giant of the south, seeking substantial benefits from this partnership. 3.2 The Background of the Latin American Context During the 1980s Before the 1980s, the traditional hypothesis of conflict in the Southern Cone prevented any possibility of cooperation in the region. At that time, each

rights protection and has been engaged in a gradual rapprochement with the Inter-American system. Fiona Macaulay. “Human rights in context: Brazil”; In Mónica Serrano and Vesselin Popovski. Human rights regimes in the Americas. New York: United Nations University Press, 2010. p. 133. Historically, Chile had been one of the most active Latin American players in international forums on human rights, as demonstrated by its significant role in the drafting of the Universal Declaration of Human Rights and the American Convention on Human Rights. Felipe González. “Human rights and democracy in Chile”. In Mónica Serrano and Vesselin Popovski (2010), Human rights regimes in the Americas. New York: United Nations University Press, 2010, p. 159. 33 Issues such as the adoption of new regional industrial policies to promote enhanced specialization, based on knowledge, is also part of the regional dialogue. Ninth World Economic Forum for Latin America in Panama City from 1-3 April 2014. https://agenda.weforum.org/2014/03/three-big-issues-facing-latin-america/.

165

country perceived the other as its main rival and a potential military aggressor, which led to difficulties in building a cooperative environment in regional security matters. Indeed, the debt crisis of the 1980s, with high rates of inflation prevented any economic and political cooperation in the region.34 The abrupt macroeconomic over adjustment, as a result of the shifting abundance of external funding, led to serious economic debt. Decreasing regional production capacity, reduced revenue from tax collection, currency devaluation and weak financial transfers caused a conjuctural regional crisis (Moniz Bandeira, 2010). Given these economic problems, countries were less inclined to support cooperation initiatives and placed greater emphasis on the domestic market. Given the absence of significant regional dialogue between Latin American states, the international context of the 1980s transformed cooperation efforts through the creation of a favourable environment for building partnership. During this period, the international scenario chipped away the Berlin Wall, which led to the end of the Cold War. Consequently, international affairs became less defensive to some extent, which led to foreign policies worldwide being expanded. However, the top exporters and importers in world trade were the United States, Germany, France, Japan and the United Kingdom, accounting for 39% of world exports and 40% of world imports. At that time, the trade of goods accounted for 81% of total trade.35 Moreover, in the late 1980s, interest in the regional approach with a focus on trade liberalisation increased. The substantial changes that took place in that period also had their origins in the emergence of information and communication technology, which led to a reduction in transport and communications costs. The participation of emerging markets has grown rapidly in recent decades, leading to a quadrupling of trade volume in goods 34

In this context, the start of the 1990s led Latin America to attempt international reinsertion into the global economy and abandon the import-substitution economic model. Andrew Crawley (2006), “Europe-Latin America relations: towards interregional coalition building”, in Heiner Hänggi et al Interregionalism and international relations. New York: Routledge, p. 177. 35 Department for Business Innovation & Skills, Department for International Development.“Global Context – how has world trade and investment developed, what’s next?, p. 4. https://www.gov.uk/government/ uploads/system/uploads/attachment_data/file/ 43309/11-722-global-context-world-trade-and-investment.pdf

166

between 1980 and 2008.36 As a result, the phenomenon of the transnationalisation of companies occurred at the same time as the growth of intra-company trade. This combination caused an increase in total world trade (Van Rompay, 2001: 6). From the Latin American perspective, the United States’ rising dollar policy combined with increasing interest rates led to a problem with the growth of debt services duties, which increased foreign debt.37 Another case in point that explains South America’s lost decade in the 1980s is due to the fact that the region had to confront a situation in which the continent was no longer considered as strategically important to the United States as it was during the Cold War.38 Moreover, a decrease in foreign direct investment, the slow economic rise of developed countries, the instability of the world economy and a fall in the number of primary products, among others, contributed to the effects of the recession the Latin American states lived through in the 1980s (Marangoni, 2012). Another interesting aspect is that the 1980s caused an increase in international links between states and subnational actors as will be seen further on. As a result of this period’s difficult economic features, states, provinces and municipalities turned to international relations to minimize the domestic economic consequences of the crisis. Therefore, the democratic transition of Latin American states should be considered a consequence of the economic crisis, worsened by the second oil shock, the recession that came afterwards and the general crisis in society, in combination with the systematic collapse of policies in the region. The disastrous economic performance demanded macro and structural policy reforms. In general terms, the military governments’ lacked the resources to deal with social issues and the plurality of diverging society 36

Ibid. As a consequence, in August 1985, the Contadora Support Group was established, with its first members being Brazil, Argentina, Peru and Uruguay. Shortly thereafter, its members started to act as a group in relation to other countries. This situation led to the establishment of the Group of 8, expanding its sphere of influence to many of the problems faced by Latin America, especially foreign debt (Ayerbe, 2002: 206). 38 During the Cold War, the United States destabilised governments in Argentina, Brazil, Chile, Uruguay, British Guyana, Bolivia, the Dominican Republic, Ecuador, El Salvador, Guatemala and Nicaragua. Stephen G. Rabe (2013), “Cold War memories: Latin America versus the United States”, Análisis Político, vol. 26, n o 79, Sep/Dec 2013. Bogotá: UN Periódico, pp. 5-18. 37

167

interests in the economic, political and social scope (Ayerbe, 2002: 210211). These difficulties sidelined the relationship between the Latin American countries. The urgent reforms varied from country to country but in general included a combination of fiscal and monetary tightening of belts, greater aperture to foreign trade, privatisation and deregulation.39 As well as aforementioned situation, the lack of attention paid to South America is linked to the collapse of the Eastern bloc, which meant diplomatic efforts were focused on Eastern Europe. Moreover, other international circumstances also served to divert attention from the continent, such as the war in the former Yugoslavia and the Gulf War. In summary, these circumstances led to South America occupying a lower profile in international affairs (Mullins, 2006: 105). In this scenario, Latin American countries had to look to one another as possible partners because of the unfavourable international context. The combination of these circumstances provides the context for the fostering of closer regional ties and obviously created the scenario for Brazil-Chile bilateral relations.

3.2.1 The military influence in the transitional period By analysing the Chilean-Brazilian foreign policy in the transitional period, the topic of whether or not the armed forces maintained their extensive functions and privileges during civilian governments should be addressed, depending on the nature of those transitions. There has not been a sudden institutional rupture in Chile and Brazil’s transitional process. As a result, after the withdrawal of the military from power, the two countries’ foreign policies did not go through remarkable strategic changes. In this way, both countries adopted a low profile in foreign affairs, which means that civilian governments did not engage in confrontational foreign policies.40 39

Arminio Fraga. “Latin America since the 1990s: Rising from the sickbed?” Journal of Economic Perspectives, Volume 18, Number 2, Spring 2004, pp. 89-106. http://faculty. nps.edu/relooney/00_New_23.pdf 40 As some authors point out, only a few countries in Latin American can be considered as increasingly stable, such as Chile, Costa Rica and Ecuador, despite these countries also having political divisions and conflicts. See Laura Tedesco and Jonathan R. Barton (2004), The state of democracy in Latin America: Post-transitional conflicts in Argentina and Chile. New York: Routledge, p. 1.

168

Nonetheless, it is essential to mention that Brazil’s democratic constitution passed in 1988 produced a formal rupture between the military regime and the democratic government. When studying the Chilean transitional period, it should be highlighted that no other country in the region has been so influenced by the past. Chile’s foreign policy throughout the transitional period was overly focused on trade, an emphasis inherited from Pinochet’s regime. Although there was a degree of continuity between the economically focused military foreign policy and the civil foreign policy that came afterwards, there are some remarkable differences. The main one lies in the defence of human rights as the most important focus since the restoration of democracy, although it should be remembered that the civilian government remained concentrated on the economic foreign policy of the former regime and even reinforced it.41 One way of understanding the transitional period is by observing that Aylwin’s government pursued a strategy of maintaining a low profile on the international stage, due to Chile’s international political isolation during the military regime. In this respect, the transitional period’s complex foreign policy had its origins in the domestic political scene and the military’s continuing influence. Hirst stresses that “not only is regime change important, but the nature of any transition to democracy is also critical. In terms of the creation of foreign policy making among the principal countries of the Southern Cone, the nature of the transition to democracy is seen as a crucial determinant of foreign policy in the 1990s” (Hirst apud Martin, 2006: 104). Another concern for Chilean foreign policy was that the military retained, to some extent, their political influence in the system of governance, even though they were not key to driving the political system. In this regard, Chilean political reform processes have been consistently low-profile and cautions. Military influence was exercised through political allies in the Chilean Congress, this lasted until 2004 when the constituion’s mechanisms were reformed (Mulins, 2006: 104). In this way, the main difficulty in 41

It is important to remember that, unlike other countries in Latin America, Chile had significant experience in human rights. Chileans generally expected the State to respect civil and political liberties. Darren G. Hawkins (2002), International human rights and authoritarian rule in Chile. Lincoln: University of Nebraska Press, p. 67.

169

establishing closer links with other Latin American countries arose from the fact that the military still retained a high degree of autonomy, which constrained civilian authorities’ options in foreign policy. 42 Similar to Chile to some extent, Brazil also adopted a low-profile foreign policy, which tended not to align itself to government by the armed forces. After Brazil’s military regime, power was peacefully transferred to civilian rules in 1985.43 Interestingly, the Itamaraty’s long-term strategy of maintaining a low-profile consisted of outlining issues instead of confronting them directly. The Itamaraty sought to delay difficult decisions and avoid creating new areas of conflict. However, it should be highlighted that Brazil’s position as a global player has changed this strategy somewhat, given the country’s new aspirations, as will be analysed in more detail, later on. In Brazil, the military still played an important role during democracy, as demonstrated by their participation in President Itamar Franco’s government (1992-1994). Itamar Franco expanded the number of military ministers from five to seven military officers (Codato, 2005). Furthermore, the civilian Ministry of Defence was created in 1999 and as a result, many of the Brazilian democratic government’s tasks remained in the hands of the armed 42

In Chile, the military period ended on 11th March 1990, when the first democratic authorities since 1973 were elected. The post-dictatorial regime gave way to democratically elected governments, Parliament expressed partially popular volition. This meant that the arbitrary electoral system imposed by the military government allowed the military to have the same number of deputies and senators as the majority of the Concertación coalition. Despite maintaining of the democratic government, it cannot be concluded that Chile had largely democratic institutions. Although this situation improved with the constitutional reforms in 2005, it did not generate a completely democratic system. Manuel Antonio Garretón. “Reflexiones sobre la democratización política chilena”, pp.167-168 in Cave, Rose. Brazil y Chile: una mirada hacia América Latina y sus perspectivas. Santiago: RIL Editores, 2006. The military’s importance not only extended to politics, but also exerted an important influence on investment measures. The Taxable Profit Funds or FUT, a mechanism set up by the military government in 1984 to encourage investment – still exists. This mechanism allows companies to indefinitely defer payment of some of the tax on their retained profits. “Reform in Chile: the lady’s for turning”, The Economist, vol. 411, 24 May 2014, p. 32. 43 The military dictatorship in Brazil lasted for 25 years, from 1964 to 1989 (only in 1989 did the country hold direct presidential elections). This period included six different presidential administrations, one of which had a civilian at its head. Adriano Nervo Codato (2006), “A political history of the Brazilian transition from military dictatorship to democracy”, Revista de Sociologia e Política, vol. 2. Curitiba: Relume-Dumará, pp. 83106.

170

forces and diplomacy did not suffer restrictions as it had in the Chilean foreign affairs during the Pinochet government.44 In contrast, Brazil’s foreign policy was carried out by the Itamaraty, distinguishing itself from the military’s influence in Chile on the construction of foreign policy strategy. It is important to bear in mind that the military played a much more significant role in Chile’s foreign policy aims than in those of its Brazilian counterpart. There are considerable similarities between Brazil and Chile’s military periods, in the sense that the two countries inherited their economic foundations from their military years. However, the totally different economic focus each country has adopted should be highlighted. What is important in this study is that Chile has continued to adopt the same neoliberal model that was initiated in 1975.45 Interestingly enough, the Concertación government not only maintained the same economic system, but also sought to strengthen the existing neoliberal policy. Like Chile, Brazil also built up its economic structural base of domestic development during the military years and Brazil’s military policy focused on the need to develop domestic industry. Brazil and Chile shared a strategy of not creating a rupture with the military government particularly regarding the economy. During the military period, Brazil achieved the so-called economic miracle (19681973), with the country experiencing spectacular economic growth. As opposed to the Argentine military regime that led to financial disaster, the Chilean Chicago Boys’ economic strategy helped the regime gain some legitimacy in the international financial community. In the economic realm, the economic model involved imposing a rigid free market system with privatisation becoming a key tool. The other economic measures taken by 44

In countries with civilian defence ministers such as Brazil, Chile, Argentina and Uruguay relevant changes took place. Therefore, civilian management of the defence policy was considered a prerequisite of democracy. Uruguay, for instance one of the countries in which civilian state institutions remained the strongest, established full civilian supremacy in its defence policy. Rut Diamint (2003), “The military”, in Jorge I. Domínguez and Michael Shifter (eds), Constructing democratic governance in Latin America. Baltimore: The Johns Hopkins University Press, p. 63. 45 The fact that Chile has maintained the same economic model since the military years led to students making demands for fundamental changes in the economic model and more democracy for the country in 2011. See Andrés Solimano (2012), Chile and the neoliberal trap: The post-Pinochet era. Cambridge: Cambridge University Press.

171

the government were designed to deregulate the economy and to encourage trade using the concept of comparative advantage (Oppenheim, 2007: 11314). Independent of whether Brazil’s foreign policy is carried out by the Itamaraty, it can be seen that the military is still considered an important actor in the country’s foreign affairs. It should be pointed out that General Pinochet won a tightly controlled referendum to institutionalise his regime in 1978. He won another tightly controlled referendum in 1980, which approved the constitution that continues to govern Chile today.46 Although Brazil did not face significant problems during the transitional period, the fact that Chile’s constitution has been the same since the military period is a fundamental argument for understanding the strong connection between the military and foreign policy strategy. The fact that Chile has maintained strong military links within foreign policy up to the present time should be taken into account when studying Brazil-Chile bilateral relations. As Pizarro says: “The consensus around the importance of the military is shared among the Chileans. The military possess relevant background knowledge, which is essential to understanding Chile’s foreign policy up to the present time. Understanding Chile’s foreign policy demands the study of the military perspective, since the sector has formulated and conducted foreign policy in the recent past. Considering that the country did not undergo complete rupture with the military regime, the military are still significant actors in Chile’s foreign affairs. Moreover, in Chile, we don’t have a traditional diplomatic academy like Brazil’s venerable Itamaraty. Therefore, the military plays a major role in explaining Chilean foreign policy strategy throughout the years (interview with Roberto Pizarro, Santiago de Chile, 24th August 2011)”.47

From Brazil and Chile’s perspectives the transitional period was not 46

In 1982, the international environment was an important factor that led to the downfall of the Pinochet regime, as well as the subsequent rise of democracy. Alejandro Ortega (2010), “International effects on the democratic onset in Chile”, Stanford Journal of International Relations, vol. XI, no 2. https://web. stanford.edu/group/sjir/pdf/Chile_11.2.pdf. 47 Roberto Pizarro is an economist, academic, consultant and Chilean socialist politician and former Minister of State during the government of President Eduardo Frei-Ruiz Tagle. He currently serves as President of the Universidad Academia de Humanismo Cristiano.

172

accompanied by a significant rupture with the military regime. From both countries’ view, there was a kind of consensus about not making dramatic changes to the previous organisation, especially concerning the economy. Interestingly, the two countries did not significantly modify their military foundations, showing to some extent a certain degree of continuity with their military roots. It is important for our analysis that Chile has maintained the same commercial foreign policy focus during the democratic period and has tended to prioritise economic links to the detriment of political cooperation ties.

3.2.2 Brazil and Chile’s regional policy during the 1980s The international context explains Brazil’s redefinition of its foreign policy throughout the 1980s. The difficult international scenario helped Brazil to direct the focus of its foreign policy towards strengthening its ties with Latin America. From Chile’s perspective, the 1980s did not usher in significant changes to the country’s foreign policy strategy. It should be stated that the transitional period brought with it key changes to Chile’s international reinsertion, even if the country tended to maintain the theoretical discourse of strengthening regional ties to the detriment of definite attitudes towards integration (Mares and Aravenas, 2001: 20-21). In practical terms, Chile maintained its isolation during the military years and began to develop cooperation ties with the region afterwards, maintaining a low profile and as will be studied as part of the following topics. From Brazil’s perspective, the lack of attention to central states shifted the focus of its foreign policy towards building up regional ties. Brazil’s positon on foreign policy had two aims, the first of which was related to the difficulties faced by its attempt to maintain relations with central countries. The inflationary process as well as the foreign debt crisis demonstrated Brazil’s vulnerability in the international system. Secondly, increasing inflation and the protectionism of industrialised countries at that time contributed to a worsening debt crisis (Altemani, 2005: 201). The unfavourable international context set the stage for changing Brazil’s regional perception and therefore promoted cooperation initiatives among the continent’s countries. 173

As a result, Brazil tended to adopt a more autonomous position in commercial and economic fields. Adoption of an independent position is also reflected in Brazilian bilateral relations with the United States, which were characterised by a defensive approach from that period onwards. Indeed, the Falklands War brought with it the perception that the interAmerican defence system only came into effect when attending to the United States’ regional interests (Ayerbe, 2002: 210). In this context, Brazil opted to carry out a policy of ‘encapsulating the crisis’, which meant that the respective crisis with the United States would be encapsulated in order to avoid crisis from one sphere overflowing into another. With the re-establishment of democracy Brazil attempted to minimise the negative image of the country generated during the military years. Shifting the national image was an important factor that contributed to redirecting foreign policy strategies towards the continent. In other words, it contributed to changing the nation branding and distancing it from past perceptions. The democratic period urged the reformulation of Brazil and Chile’s nation branding to project an attractive national image.48 The two countries had to distance their image from the military period and build a modern democratic image approach. Furthermore, it should be taken into consideration that the difficulties imposed by the international system on maintaining foreign relations with Africa and the Middle East also contributed to redirecting Brazil’s foreign policy towards the continent (Altemani, 2005: 194). Given the changes in global geopolitics, it is not surprising that improvements to South American relations led to peace and the region’s countries began to look to one another as both diplomatic and possible trading partners.49 48

Despite the 30th anniversary of the return to democracy in Brazil, the second mandate of President Dilma Rousseff will have important effects on its future. David Rockefeller Center for Latin American Studies, “Brazil+30: The legacy of 30 years of democracy and challenges to come, 18th April 2015. http:// drclas.harvard.edu/event/brazil-30-legacy-30years-democracy-and-challenges-come. Unpopular economic measures carried out by President Dilma Finance Minister Joaquim Levy, led to internal problems among the National Congress and population. Edna Simão et al. (2015), “Levy: Dilma paga o preço politico do realinhamento da economia”, Valor Econômico, 11 November 2015. http:// www.valor.com.br/brasil/4311864/levy-dilma-paga-o-preco-politico-do-realinhamento-daeconomia. 49 See for a detailed approach to the nature of the present international system, see Joseph Tulchin and Ralph Espach (Eds). Latin America in the new international system. Boulder:

174

Like Brazil, Chile also underwent significant changes regarding its foreign policy image, though to a much greater degree. This means that Chile’s process of rebuilding its image occurred at a much more profound level. During the military period, Chile’s complete isolation from international affairs should be considered, which led to its foreign policy being considered as ice age. Facing a domestically declared war against communism and internal subversion in the Cold War context, Chile’s internal policy went hand-in-hand with its foreign policy scope (Neack, 2003: 194). This means that the result of the almost complete absence of foreign policy strategy during the period led to difficulties in carrying out regional alliances. This explains the lack of any possibility of building links with other countries in the region. In contrast to the military period, the main goal of Chile’s foreign policy after the dictatorship was its focus on international reinsertion. As will be stated in this chapter, due to a well-coordinated effort, Chilean democratic reconstruction policy gained a lot of foreign support, to the extent that the country sought to rapidly recover its international status vis-à-vis the previous period. Chile’s reforms promoted neutral policies and the negotiation of bilateral agreements that led to important trade reforms. These reforms included the elimination of trade barriers, a tariff reduction and the introduction of the uniform tariff policy, aimed at promoting development based on integration into the world economy. 50 In this regard, bilateral agreements function as a key tool to promoting international insertion. As Parker states: “Moreover, the congruence between Chile’s economic development policy and its international insertion strategy illustrated by several trade agreements worldwide laid the groundwork for creating rapid international links. Chile’s focus on trade as the development mechanism to liberalise trade policy has had significant results for its economy. The strategy was complemented by a strong commitment to the multilateral trade system, which encompassed a wide number of free-trade agreements worldwide.”51 Lynne Rienner, 2001. 50 Dirección General de Relaciones Económicas Internacionales (Direcon). “Chile 20 años de negociaciones comerciales”. Impresión: B&B impresores, November 2009. 51 Interview with Carlos Parker, Santiago de Chile, 23 August 2011. Carlos Parker dedicated 18 years to working for the Ministry of Foreign Affairs. He held the post of

175

In this context, cooperation among South American nations improved substantially, with agreements made, constructive dialogue and economic integration initiatives renewed, as well as the capacity to enforce arrangements and treaties. Latin American interstate commerce grew with the aim of fostering industrialisation and domestic development during the 1980s. Promoting trade was a result of the opposite perspective that free trade and privatisation were essential for guaranteeing sustainable economic growth. Moreover, industrialisation was not to be left to the market, but was to be the product of government intervention. The existing complementary nature of primary production and industrialisation meant that the manufacturing sector was not to develop at the expense of agriculture. The strategy used was to promote exports of primary products in order to allow financial resources to buy imported capital goods, machinery and equipment, for instance, which were indispensable to sustaining industrialisation policies.52 Dialogue existed between Brazil and Argentina in the early 1980s, since closer ties between the two important regional actors paved the way to strengthening Latin America integration.53 As Fonseca highlights, at a regional level, two essential facts come into play. First is the emergence of the previously mentioned democratic regimes Chilean Ambassador to Romania and Bulgaria. 52 Brid, Juan Carlos Moreno and Caldentey, Esteban Pérez. “Trade and economic growth: a Latin America perspective on rhetoric and reality”. ECLAC, Sub-regional Office in Mexico, D.F., December 2009, p. 9. http://www.eclac.org/publicaciones/xml/3/38143/L945.pdf 53 It should be remembered that, until 1979, rivalry and a lack of friendship were the key components to Brazil-Argentina relations. From the 1980s onwards, an alliance between Latin American countries has been the mechanism for encouraging States insertion into the international system. Regional agreements – even without integration projection models – play an important role in linking the region to the international scenario. The new type of relationship that emerged between Brazil and Argentina, which was symbolised by a summit in Buenos Aires in November 1981, had wider implications for regional geopolitics. Firstly, the initiative was carried out by the Argentine Council for International Relations with the cooperation of the Getulio Vargas Foundation and the ArgentineBrazilian Business Council. Second, closer bilateral dialogue occurred not only between official diplomacy, with the business sector and academics also participated in the process. Cavalheiro, Carmela Marcuzzo do Canto. “Desde la ALALC hasta el Mercosur: la integración entre Argentina y Brasil desde la perspectiva brasileña”. Departamento de Estudios Latinoamericanos (TCLA), Universidad de Leiden, June 2004. Supervisor Prof. P. Silva, pp. 29-30. The reformulation of Argentina-Brazil ties laid the groundwork for BrazilChile ties, given the importance of multifaceted analysis within the latter’s.

176

and the second is the enforcement of integration mechanisms in combination with the expansion of Latin American conferences. This new scenario facilitated closer relations and dynamic dialogue between the countries in the region and moreover, created a common diplomatic language, which was important for generating a trusting environment (Fonseca, 2006: 128). As was already stated in the first chapter, the emergence of presidential diplomacy during the 1980s meant that presidents’ foreign policy was more active and dynamic. The advantages and disadvantages of this fact is that periods of presidential affinity tended to lead to fruitful gains, while a lack of affinity translated into a lack of prospects. In the following sections, how presidential diplomacy exerts an influence on the Brazil-Chile bilateral context will be studied. Therefore not only presidential diplomacy, but also public diplomacy, nation branding and paradiplomacy contribute to the analysis of the way in which these concepts involve the participation of different actors, apart from the already well-known and traditional entities in Brazil-Chile bilateral cooperation. Indeed, successful nation branding creates significant rewards for fostering cooperation links between countries, with far-reaching consequences for other areas and influence exerted on public diplomacy, presidential diplomacy and paradiplomacy. In our opinion, these theories provide a more realistic approach to understanding the transformation of both states’ bilateral relations from the 1990s to the present. The misconception that in periods in which there is a predominant lack of official links there is also an absence of any ties between Chile and Brazil should be avoided.

3.2.3 The development of Brazil-Chile links from the 1990s onwards The 1990s should be highlighted as the period in which a dual process of change occurred in the Latin American context: the economic recovery of the region’s states after the lost decade, as well as the general economic structural reforms adopted by the countries, which facilitated the aperture and liberalization of trade. As has been mentioned, this took place at a time when industrialised countries faced a recession, which led to protectionist 177

policies towards other countries like Chile and Brazil. The adoption of trade aperture policies within the context of the LAIA contributed to widening and strengthening intra-regional relations. The 1990s were marked by increasing levels of trade and the creation of a favourable environment for emerging integration initiatives such as the Mercosur. Many facts laid the groundwork for strengthening links between Brazil and Chile from the 1990s onwards, although the key element was the restoration of democratic regimes in both states. A consolidated democracy should be considered a key element for studying long-term Brazil-Chile cooperation. As already pointed out, Brazil and Chile do not share as profound a sense of cooperation as has been developed with their neighbour, Argentina and they probably never will. However, since the democratic government, the gap between Brazil and Chile has narrowed significantly and, despite some ups and downs during this period, the possibility that they will improve their ties cannot be underestimated. Brazilian-Chilean trade intensified from the 1990s onwards, in synch with the emergence of both countries’ democratic governments. The return to democracy was the main element for understanding the increase in bilateral trade.54 The fall of Pinochet’s government in Chile marked the end of disagreements between both countries’ regimes and the end of 17 years of military government and international absence. The success of the transitional period was significantly connected to economic indicators, so Chile sought international insertion through increasing trade (Gamboa, 2011: 57). The need for high levels of economic development was a favourable context for the development of Chilean-Brazilian bilateral relations, particularly regarding trade. Another way of explaining the lack of bilateral relations between the two countries before the 1990s is Chile’s neoliberal economic model, implemented since the 1970s and which prioritised relations with developed countries (Leite, 2016). This policy tended to distance Chile from other Latin American countries. In contrast, Brazil redefined its foreign policy 54

Since the 1990s, Brazil’s foreign trade policy has gone through important changes. The trade liberalisation that began during the Collor administration and was extended to the administration of President Fernando Henrique Cardoso integrated Brazil into the new globalised world order. André Averbug (2000), “Brazilian trade liberalisation and integration in the 1990s”, BNDES-PNUD. Associationhttp://www.bndespar.gov.br/ SiteBNDES/export/sites/default/bndes_en/Galerias/Download/studies/trade.pdf.

178

throughout the 1980s and tended to prioritise closer relations with other Latin American countries, especially Argentina, as already pointed out.55 Moreover, both countries initially focused on establishing relations with their neighbours instead of aiming to strengthen bilateral ties. The development of Brazil-Chile ties was, at some point, the result of Brazil’s foreign policy, which had encouraged dialogue with other Latin America states since the 1980s. However, since the 1990s, President Patricio Aylwin’s government programme sought to establish Chile’s regional reinsertion. The initiative was a step towards the project of incorporating the world into Chile’s development plans. The fact that the Latin American Free Trade Association (LAFTA) was updated with the Treaty of Montevideo in 1980, transforming LAFTA into the Latin America Integration Association (LAIA), helped strengthen the cooperation process. The LAIA oversees bilateral agreements between these countries and favours the creation of a preferred market within the region. The LAIA organisation made an important contribution to fostering intra-regional trade, since it created a more flexible mechanism of cooperation. The LAIA encouraged bilateral agreements between Chile and other Latin American countries, for example Chile’s complementary economic and free trade agreements with Mexico signed in September 1991; with Venezuela in April 1993 and with Colombia in November 1993. Chile also signed an agreement with Argentina in August 1991 that did not involve free trade but focused on other commitments, particularly physical integration.56 In contrast to the perception that Chile made no effort to integrate itself 55

The neoliberal model in Mexico emerged in the 1980s, characterised by stabilisation policies such as measures to control inflation, the public deficit, restrictions on domestic consumption and public spending. In this context, the productive restructuring of large companies was carried out in Mexico. Such restructuring policies led to the introduction of modern technologies and new forms of labour organisations. The neoliberal model was implemented in Mexico - as in other Latin American countries - through the idea of productive restructuring. Enrique de la Garza Toleto. “El modelo económico neoliberal y los límites de las configuraciones productivas en México”. In: Enrique de la GarzaToledo and Júlio César Neffa. Trabajo y modelos productivos en América Latina: Argentina, Brasil, Colombia, México y Venezuela luego de la crisis del modo de desarrollo neoliberal. Buenos Aires: CLACSO, 2010, pp. 53-54. 56 Dirección General de Relaciones Económicas Internacionales (Direcon). “Chile, 20 años de negociaciones comerciales”. Impresión: B&B impresores, November 2009, p. 124.

179

regionally, it should be considered that to re-establish democracy, talks on integration were conducted with members of the LAIA. The new framework for action facilitated agreement among the region’s states on certain points and allowed Chile and Brazil to build up regional links contributing in an important way to strengthening their bilateral ties. In this sense, the LAIA’s institutionality has provided legal protection in the negotiation of many agreements. LAIA’s aim is to implement in a gradual and progressive way the Latin America common market gradually and progressively, mainly characterised by the adoption of tariff preferences and the elimination of non-tariff restrictions. 57 It should be highlighted that integration projects in Chile were to a certain extent limited. Instead of carrying out integration initiatives, Chile opted to close bilateral agreements as its core foreign policy strategy. The return of democracy can be explained through the re-establishing of traditional relations with central countries, which means emphasising links with Europe and the United States, as already studied in the second chapter. However, re-establishing ties with central states does not indicate that there was lack of attention paid towards Latin America, since trade agreements were reached with Mercosur (1996), Peru (1998) and Central America (1999). This study will focus on the analysis of Mercosur (Direcon, 2009: 67). Indeed, Chile’s foreign policy strategy seeks to establish regional agreements as a mechanism to broaden trade and investments, which facilitate networks between non-state actors. In this way public diplomacy became a fundamental concept for observing Chilean foreign policy. Furthermore, it can be argued that the process of regional integration was not homogeneous, since it was more intense on the eastern side of the Andes and between Brazil and Argentina. In this respect, Chilean foreign policy was different to other countries in the continent, since after Pinochet’s term the re-establishment of ties with its neighbours was not automatic process, as will be seen in this chapter. Chile needed to formulate a nation brand in order to invest in a positive international image to benefit from economic gains. According to Maira:

57

INTAL, Institute for the Integration of Latin America and the Caribbean, Inter-American Development Bank. http://www.iadb.org/intal/detalle_articulo.asp?idioma=eng&aid=121 &cid=789

180

“Chile’s foreign policy with diplomats without academia led to foreign policy being carried out conservatively and as a consequence to a cautious approach to international affairs. Chile lacks a strong connection with the Ministry of Foreign Affairs and with civil society”.58

In this sense, Chile’s relations with the regions’ countries and with Mercosur were somewhat reticent and did not improve immediately. On the one hand, Chile’s foreign policy was not subject to as many ups and downs as other policies in the region and as has been pointed out, a stable Chilean foreign policy scenario favours the development of Brazil-Chile long-term bilateral relations. On the other, the country’s foreign policy strategy maintained conservative forms of international trade insertion. Insulza, the Foreign Minister in the mid-1990’s, said: “We think that Chile has to define itself as a Latin American country, not just for historical reasons or due to values, but also for the national interest in this period of democracy. Chile, due to its size, economic capacity and geographical location cannot function isolated in the world.”59

While studying Brazil-Chile bilateral relations, it is important to bear in mind in the first place that Chile has its own economic development strategy and the country’s go-it-alone policy does not lead to regional integration being prioritised. Secondly, since the restoration of democracy, Chile has sought to strengthen its ties with the region, even though multilateral and permanent dialogue with Europe and the United States has to be considered.60 It has been argued that, even when adopting regional integration policies, Chile did not give up its decision-making autonomy to 58

Interview with Luis Maira, Santiago de Chile, 30th August 2011. Luis Maira. Minister of Planning and Cooperation, 1994-1996 during the administration of President Eduardo Frei Ruiz-Tagle, Ambassador to Mexico, 1997-2003 and Ambassador to Argentina, 2004-2010. 59 José Miguel Insulza, Ensayos sobre Política Exterior de Chile (Santiago, 1998), p. 64 apud Mulins and Martin (2006: 105). 60 The Chilean government signed the Rome Statute of 1998 which created the International Criminal Court, and under Pinochet’s regime, signed the United Nations Convention against Torture. As a democratic government Chile had to act in accordance with the rule of law. Many Chilean citizens demanded that justice be done in the case of the Pinochet regime. See Laura Neack (2003), The new foreign policy: U S. and comparative foreign policy in the 21st century. Maryland: Rowman & Littlefield.

181

focus on integration. At the same time, Chile has had to maintain and strengthen its ties with South American countries, ensuring some kind of relationship with regional actors. However, the United States is key to understanding Chile’s foreign policy and the correlation between traditional ties between the United States and Chile and the capacity to enforce Latin American links.61 For obvious reasons, the extent of the Chile-United States relationship has shown some correlation with the former capacity to strengthen its links with Brazil. Another important issue is that Mercosur represents the possibility of strengthening ties with Southern Cone countries. Indeed, Mercosur illustrates the total impossibility of incorporating Chile as a permanent member for several reasons, the most important of which is the country’s inability to raise its external tariffs. As Chilean Ambassador Gazmuri argued, “Brazil suggested a special regime for Chile’s incorporation as a full member of Mercosur, however there was opposition from the group’s smaller members”. 62 The nature of Chilean foreign policy does not mean the lack of a bilateral relationship or the impossibility of strengthening ties between Chile and Brazil. Importantly, the theories explained in the first chapter help understand why Brazil-Chile links cannot be examined from a traditional diplomacy perspective, but why horizontal links should be considered instead of main lines of cooperation exclusively. In this scenario, public diplomacy, nation branding, presidential diplomacy and paradiplomacy play an important role in the direction of this study and demonstrate the establishment of cooperation initiatives between the two countries from the 1990s up to present time. Therefore, the focus is not only a state-centric view and new players are introduced into the agenda of bilateral cooperation between the two countries. This does not mean that diplomacy is not carried out by diplomats or that their activities are relegated. In fact, opinion shared is that the importance of public diplomacy for this study lies in considering the 61

Chile has maintained friendly relations with the US since its transition back to civilian rule in 1990. Bilateral commercial relations are particularly strong and total trade in goods and services has more than tripled since the implementation of a free trade agreement in 2004. Peter J. Meyer (2014), “Chile: political and economic conditions and United States relations”, CRS Report, Congressional Research Service. 62 Interview with the Chilean Ambassador in Brazil, Jaime Gazmuri, 12 September 2015.

182

emergence of new actors as an important component in the development of world affairs. In brief, according to public diplomacy special relationships between countries can be constructed on the basis of diplomacy, even though diplomats are not the only actors allowed to retain control over the process.63 Moreover, the dynamism of the international scenario has undeniable implications for the way foreign affairs are carried out. Thus, the traditional diplomacy perspective is limited due to the changing world scenario. Given the shifting global context, there are emerging topics in the international arena that cannot be treated exclusively from a nation-state perspective. The new reality groups together topics such as the energy crisis, pandemic concerns, environmental discussions, transnational organised crime, civil society organisations and NGOs among others which demand a multisector partnership beyond the idea of states as single actors. Therefore, ChileanBrazilian bilateral relations should not be studied from an intra-state standpoint and non-central actors should be taken into account as concepts of public diplomacy and paradiplomacy. 3.3 Mercosur vis-à-vis Brazil-Chile Bilateral Relations The complementary N° 35 (ACE N° 35) economic agreement between Chile and Mercosur was signed on 25th June 1996 and came into force on 1st October of the same year. The main explanation for Chile’s inability to be incorporated as a permanent member of the bloc was that total membership would limit its autonomy concerning its trade policy and the ability to continue reducing general tariffs unilaterally. Assuming the role of a full member would also imply subordinating future trade negotiations to Mercosur interests, which was vehemently opposed to Chile’s foreign policy strategy. Moreover, a position of full membership contradicted Chile’s access to NAFTA negotiations. What is fundamental to the approach in this study is the role played by 63

It is important to note that public diplomacy does not imply a decrease in the diplomats’ role, on the contrary, they remain a key players in foreign affairs and in turn, other actors like groups and leaders in authority may also implement their decisions in the public sphere. Luis Melo Lecaros. “El Estado, fuente único de la diplomacia”. Lecaros, Luis Melo. Diplomacia contemporánea: teroría y práctica. Santiago de Chile: Adica/RIL Editores, 2004.

183

trade in terms of Brazil-Chile bilateral ties and the degree of influence trade exerts over this relationship. Of course, the public diplomacy concept serves to help understand the importance of these links in developing greater bilateral cooperation in a range of areas beyond trade. Like Brazil, Chile would also take advantage of Mercosur as an export market especially for manufactured products given that, according to both countries’ a growing trade in manufactured goods occurs within the common market. For instance, in the mid-1990s, around 60% of manufactured Chilean exports were destined to Mercosur. Among the manufactured goods that Chile exports are chemicals and metallurgical and transport equipment (Dirección General de Relaciones Económicas Internacionales or Direcon, 2009: 97). Although Chile became an associate member of Mercosur, it can be argued that any form of economic integration demands negotiation. Indeed, Chile’s foreign policy on free trade, backed by its neoliberal development model was not aligned with Mercosur integration. However, Chile’s associate membership cannot be linked to lessening interest in intensifying relations with the region. According to Baeza: “The perception of Chile was that there was a state of insensitivity on the part Mercosur members with regard to Chile’s particularities. Therefore, harmonising Chile’s aims with those of other Mercosur members would be a step towards greater cooperation. Chile viewpoint is based on the argument that its economic features were not taken into account by either Mercosur or Brazil. The fact that Chile adopted a free trade policy does not mean a lack of interest in regional approach projects. On the contrary, it is possible to think about reformulating mechanisms to take into consideration the country’s special situation. It is easier to argue about Chile’s neoliberal policy as an impediment to regional integration.” (Jaime Baeza, professor at the University of Chile, interviewed on 30 August 2011, Santiago de Chile).

Chilean demands received very little attention during the negotiation process because of the country’s high external tariffs. In this situation, the manufacturing export sector voiced concern about Mercosur’s high tariffs, since these meant a lack of opportunities for manufacturers. That is why Chile sought full association with Mercosur from the very beginning through the signing of a complementary economic agreement in the LAIA. 184

The ACE would serve as a mechanism for negotiating a broad integration agenda of topics, which comprise: incorporating methods to achieve a reciprocal liberalisation of trade, basic disciplines to regulate goods and services and complementarity economics between the members. However, differing perceptions accounted for difficulties within the negotiations. Chile aimed to negotiate with each member separately and bilaterally, whereas Mercosur stated that negotiations must occur multilaterally. 64 The bloc’s vision stated that different levels of tariff reduction would interfere with the rules of the common external tariff, therefore tariff levels needed to be the same for each member. Among other issues, Chile argued that, after the negotiations, no good would come from lowering access conditions even more. This was one of the most significant points of the negotiation process. In practical terms, the 4 + 1 negotiation form implies that each proposal first had to be studied by Mercosur members that, afterwards, all of the members had to agree on a common proposal. The problem with this was the lack of flexibility within the bloc, making it impossible to achieve reasonable result. The need for total consensus within the bloc caused signficant barriers in terms of the negotiation process with Chile. Several rounds of negotiations were transformed into summits among Mercosur members, with a large range of responses to the Chilean delegation. Therefore, the downside to this kind of negotiation process was very visible, especially regarding the invisible benefits of using this way to segment negotiations.65 Despite the difficulties concerning the negotiation process, it should be remembered that there is no quick way of negotiating a preferential agreement. Furthermore, the importance of public diplomacy when analysing Brazil-Chile bilateral relations is essential to this study, since the 64

Chile’s external negotiations with Mercosur had similar rules for the bloc in the area of non-trade barriers, rules of origin, safeguards and dispute settlement and physical integration protocols. Paolo Giordano (2003), The external dimension of Mercosur: Prospects for north-south integration with the European Union. Washington D.C.: INTAL, p. 7. 65 The Complementary Economic Agreement between Chile and Mercosur became part of national legal internalisation on July 17th 1996 and was approved on 12th September of the same year. The ACE Nº 35 was passed by Supreme Decree Nº 1,441 on 30th September 1996 and published in the Official Gazette on 14th October 1996. This agreement was stipulated in its text, entering into force on 1st October 1996. Direcon: 115

185

role played by trade in their bilateral ties is highlighted. The international multilateral environment characterised by multiple links demands a new focus for analysing Brazil-Chile bilateral ties. The question is raised as to what extent trade influences the political relationship between the two countries. In other words, is it possible to correlate two distinct sectors based on the argument that intra-sector cooperation should foster intersector links? How do intra-sector ties affect inter-sector relations? This is crucial for studying whether trade relations are separate from policy issues within the Brazil-Chile relationship. As discussed in the first chapter regarding the importance of nation branding in Chile’s foreign policy strategy, a new perspective should be adopted when studying Brazil-Chile bilateral links, placing the work of public diplomacy and nation branding into a perspective of traditional diplomacy. As already stated, Chile foreign policy mechanisms require the engagement of various sectors to carry out foreign policy goals. In the same way, Brazil’s foreign policy strategy demands a growing inter-sector partnership in order to coordinate core interests ranging from economic issues to energy policies. The different dimensions of the two countries explain the decision to try and understand inter-sector coordinated efforts from Chile’s standpoint. Chile illustrates the work of many sectors regarding foreign policy, making advocacy its objectives. Furthermore, in the case of Chile, it is easier to see the concise and systematic propagation of the country’s foreign policy, since many of the reforms the country underwent in the 1990s were actually implemented in the 1970s.66 The fact that Chile has achieved a sustained expansion of its economy goes hand-in-hand with the country’s projected foreign policy image. Chile’s strategic planning included the participation of various actors and paved the way for understanding public diplomacy campaigns, which were goal-oriented and needed private-public partnership. Since Chile’s economic reform was strongly associated with its international insertion strategy, an increase in the strength of financial, technical and marketing ties can be highlighted, helping to build a coherent foreign policy strategy. 66

Economic reform in Chile according to free-market principles started in the 1970s and was endorsed by social emphasis in the 1990s. Andrés Solimano et al (2000), “Introduction and Synthesis” in Andrés Solimano, Distributive justice and economic development: The case of Chile and developing countries. Ann Arbor: University of Michigan Press, p. 1.

186

Harmonising Chile-Brazil trade was a significant step towards greater bilateral cooperation, in accordance with the role played by public diplomacy in strengthening bilateral links between both states. In this way, the ACE Nº 35 was a mechanism to stimulate bilateral trade with business between the two countries experiencing considerable growth. The ACE No 35 benefits specific sectors such as agriculture by means of increasing existing quotas for some products. The liberalisation of the chemical sector within the agreement was another important step. Bilateral dialogue seeking access to automotive products demonstrated the growth of the reciprocal trade partnership.67 According to Camargo: “Increasing trade between Chile and Brazil in the last few years is due to two factors: first, the implementation of the ACE Nº 35 which delimited the legal mechanisms and second the entry of Chilean companies to Brazilian market, taking advantage of the latter’s colossal south Chilean private investors and companies identify trade opportunities in Brazil. The first group of Chilean companies encountered difficulties due to Brazilian law. By tackling initial barriers, investors understood the real benefits of local opportunities. For instance, the entry of the Cencosud Group to North-east Brazil through the acquisition of the supermarket chains, G. Barbosa in Sergipe, Superfamília in Ceará, and Perini in Salvador.”68

Following the trend of Chilean investments in Brazil, the Cencosud Group expanded by acquiring the Bretas supermarkets in Minas Gerais in 2010.69 In this regard, the ACE Nº 35 helped form a free trade zone and encouraged reciprocal investments. In 1999, important advances in terms of improving the architecture of the ACE No 35 were achieved, with the approval of procedures providing safeguards and dispute resolutions. From 1st January 2006, 97.7% of goods were free from taxation which meant a preference of 100%. Goods (2.3%) reached a zero tariff from 1st January 2011 onwards, 67

Ministério das Relações Exteriores, Brasil. “Reunião bilateral Brasil-Chile”, nota no 301. Accessed on 3rd May 2013. http://www.itamaraty.gov.br/sala-de-imprensa/notas-aimprensa/2001/08/09/-bilateral-brasil-chile/?searchterm=ACE%2035 68 Álvaro Camargo, Interim Director of ProChile São Paulo/SP and Representative of ProChile Salvador/BA- interviewed on 26th July 2011, São Paulo. 69 Cencosud. Accessed on 30th July 2011. http://www.cencosud.cl/eng/unidades_ gbarbosa.htm

187

with the exception of products which were more sensitive for Chile which reached preference margins from 1st January 2012 (sugar) and 1st January 2014 onwards (wheat and wheat flour).70 Despite the growth in Brazil-Chile trade in the last few years, it is necessary to take into account that a certain degree of cooperation in the political field is required for bilateral relations, although the question is to what extent. It can be seen that Brazil-Chile trade has grown enormously and therefore the question is whether or not policy has played an important role in commerce. Some argue that while there is an intense level of BrazilChile bilateral trade, progress has been made without policy influence. In this analysis, questions about the impossibility of cooperation based on only one sector are raised. Indeed, it should be remembered that no country wants political problems with a strong trading partner.71 Although there has been little visible effort to strengthen political ties between the two countries, the states have never faced major conflicts.72 The lack of serious conflicts in the past and up to the present has encouraged the growth of bilateral trade. In this sense, a stable political relationship contributes to promoting trade links between the two countries instead of discouraging the building of trade ties. Since the foremost aspect of public diplomacy is its coordinated campaign with various sectors of society, trade and policy cannot be studied as separate institutions as if they did not exerted any degree of influence over each other. Therefore, both policy and trade are considered as significant elements of long and short-term foreign policy aims within the study of public 70

Ministério das Relações Exteriores, Brazil.“Mercosul-Chile ACE 35”, accessed on 3rd May 2013. http://www.itamaraty.gov.br/temas/mercado-do-sul-e-integracao-regional/aladi/ mercosul-chile-ace-35/?searchterm=ACE%20n%2035 71 When a country opens itself up to trade, there is a capital and labour shift towards industry and these are used more efficiently. Brad McDonald (2012), “International trade: Commerce among nations”, International Monetary Fund. http://www.imf.org/external/ pubs/ft/fandd/basics/trade.htm. 72 Even stable bilateral relationships change the level of the relations. For instance, Obama’s foreign policy with traditional allies such as Brazil and Argentina has been cordial but, at the same time, tension has arisen. The United States has refused to accept the increasing independence of Brazil and to a lesser extent, Argentina in foreign affairs. Gary Prevost and Carlos Oliva Campos (Eds) (2011), Cuban-Latin American relations in the context of a changing hemisphere. New York: Cambria Press.

188

diplomacy. According to the analysis of public diplomacy, trade and policy - along with informal sectors - play an important role in explaining the Brazil-Chile bilateral relationship. Since public diplomacy involves the desire to create a positive image of the advocating country and is clearly tied to foreign policy aims, trade and policy can be considered as complementary actors focused on the same target. Therefore, the absence of the influence that trade exerts over policy and the fact that each sector could be studied separately may not be considered. Considering this liberal perspective, countries are less inclined to enter into conflict with those with whom they can do business. Therefore, business can serve to prevent conflict and, to a greater extent, foster political cooperation. It should be remembered that public and traditional diplomacy serve the same purposes and should be used in a coordinated fashion in order to lead to significant gains. What is most interesting for this study is that no one concept implies the exclusion of the other – in other words traditional diplomacy and public diplomacy are totally complementary. Indeed, trade pertaining to the idea of multi-criteria analysis can play a supporting role, making traditional diplomacy more persuasive when building an approach to foreign policy. The increasing role of other actors in foreign affairs helps create strong links through diverse ties. The fundamental issue for this study is whether Chile restricting political aims affects its relationship with Brazil or whether there is a misconception about Chile’s participation in the regional agenda. Chile exerts political diplomacy by participating in some multilateral events, for example, the country has been an active participant of the OAS and supported the formation of the UNASUR. Along with Chile’s participation in the multilateral field, presidential diplomacy plays an important role in building up bilateral relations. It can be argued that presidential diplomacy helps to either foster trade ties in a way that cements relations between various sectors or has a negative effect on trade. To illustrate this point, the ChileMercosur negotiation process will continue to be analysed. From Chile’s perspective, it is essential to understand how the negotiations were conducted. As Pizarro argues: “Negotiations to establish the conditions and timetable for Chile’s entry as a full member began in September 2000. The negotiations were carried out to create the

189

document which would be submitted for approval by the XIV Presidents Summit of Mercosur scheduled for December 2000, in Florianópolis, Brazil. However, the possibility of full membership was jeopardised by Chile’s negotiation of a free trade agreement with the United States. The occasion brought about unpleasant consequences for Brazil-Chile diplomatic relations, since Brazil found out about Chile’s actions via the US during the Florianópolis summit. For obvious reasons, Chile’s actions caused an unpleasant reaction within Brazilian diplomatic circles” (interview with Roberto Pizarro, 24 August 2011, Santiago de Chile).

The consequences were two-fold: first, Brazil found out about Chile’s actions from the United States. This fact aggravated the consequences in terms of Chile’s relationship with Mercosur members, especially Brazil. Secondly, Chile chose to favour its relationship with the United States instead of strengthening regional links.73 For obvious reasons, Chile’s decision to start FTA negotiations with the United States, accompanied by how Brazil became aware of Chile’s actions led to Brazilian diplomatic bemoaning, particularly taking into consideration the fact that the negotiations occurred during the government of President Lagos and President Cardoso in a period of supposed closeness between the two.74 Interestingly enough, diplomatic reticence remained up until Chile’s support of Brazil as a permanent member of the UN Security Council. The fact that President Lagos announced the negotiation of a FTA with the United States in California on 29th November 2000 did not fit in well with Brazilian diplomacy, which remembered that Chile had interrupted its Mercosur negotiations to negotiate a Chile-United States FTA, which it had 73

An interesting aspect about the integration of the United States, Canada and México into NAFTA is that the agreement encompasses the only example so far of a economic integration scheme involving two advanced economies and one emerging or developing economy. Prospects for trade growth have been good for all three countries. However, considerable volatility has characterized their trade. When the Mexican economy was recording growth in 1994, the United States had a US$ 5 billion trade surplus with Mexico. Robert N.Gwynne (1999), “Globalization, neoliberalism and economic change in South America and Mexico”, in Robert N. Gwynne and Cristóbal Kay (eds) (2014), Latin America transformed: globalisation and modernity. London: Arnold, p. 93. 74 Ibid. Cardoso and Lagos were colleagues at Flacso and were together in the Latin American Council of Social Science. The close friendship between the two presidentes can be observed on the occasion of the lunch offered for the President of Chile on 13th July 2000. http://www.itamaraty.gov.br/sala-de-imprensa/notas-a-imprensa/2000/07/13/discurso -do-presidente-fernando-henrique-cardoso.

190

found out through the United Sates causing a certain amount of diplomatic discomfort between Brazil and Chile. In this context, the Chilean Minister Soledad Alvear stated that negotiating with the United States did not mean that the Mercosur Project was lagging behind, highlighting that Chile’s aim was not incorporation into NAFTA, but to sign a bilateral free trade agreement with the United States. Although the bloc was kept informed about negotiations with the United States, Chile’s policy towards the United States shifted their focus somewhat. Despite the difficulties with the Mercosur negotiation process, some benefits of Chile-Brazil trade links were already visible. In May 2008 the administrative procedure of the ACE Nº 35 amended Article 12 of the agreement allowing products from free zones located in member countries to be eligible for the liberalisation programme of tariff benefits. Therefore, Chile negotiated bilaterally with each member country of Mercosur about which goods could be included in this provision.75 After the ACE Nº 35 came into force, Chile made progress in its political negotiations with Mercosur. Much of this progress was due to the incorporation of a mechanism for consultation and political coordination in the bloc - not the ACE Nº 35 per se – but something that was related to it.76 This association was strengthened in December 1998 with the creation of the Mercosur Forum for Political Consultation and Concertation in which Chile participated seeking to widen the political cooperation between member states and associated members. Its main aim was to coordinate issues regarding foreign policy and common policy agenda. From Chile’s perspective, the ACE Nº 35 is not only significant because of trade, but also because policy plays an important role in the integration process. In this way, Chile’s membership of Mercosur brought with it the possibility for the country to play a more active role in regional dialogue.77 75

Ministério do Desenvolvimento Indústria e Comércio Exterior. Acordo de Complementação Econômica No 35, Quinquagésimo Terceiro Protocolo Adicional, accessed on 3rd May 2013. To that date only Chile and Brazil had managed trade harmonisation. www.desenvolvimento.gov.br/arquivos/dwnl_1244571281.doc 76 Chile has participated in this since the second summit of political dialogue for Mercosur members held in Asunción, Paraguay on 23rd July 1997. 77 Chile also aims to expand the group’s economic and political field to include the liberalization of services and investment. Global Investment & Business Center (2015), “Chile: Investment, trade laws and regulations handbook”, vol. 1, strategic information and basic laws. Washington D.C.: International Business Publications, p. 60.

191

The Mercosur association paved the way for constant dialogue on diverse topics such as: migration issues, public safety (a working group on firearms), international security and humanitarian affairs among others. This means that Chile considers Mercosur a relevant part of the regional integration process and a valuable tool for coordinating positions in multilateral agencies and the country has demonstrated its interest in maintaining and increasing its participation in the Mercosur agenda. Efforts to build up regional links were more visible during President Bachelet’s government, since substantial progress was made in terms of strengthening bilateral and multilateral ties in Latin America and the Caribbean. This does not mean that a certain degree of regional cooperation was not achieved by her successor. During President Bachelet’s term, Chile addressed Mercosur as a very relevant opportunity for encouraging the regional integration process. According to Riquelme and Gusmán: “Mercosur also plays a major role in coordinating positions in the multilateral field. For example, Mercosur has requested the redefinition of positions between countries, taking a common approach to critical issues in the United Nations’ agenda. Beyond strengthening trade cooperation, Mercosur also promotes fundamental dialogue about bilateral, transnational and multilateral topics in the international agenda.”78

Chile’s participation in Mercosur through the ACE Nº 35 is a clear example of how public diplomacy works together with traditional diplomacy in order to offer tangible gains to a country’s foreign policy within the Southern Cone. The ACE Nº 35 contributed to creating of more diverse environment, bringing trade and policy into the same sphere of importance when strengthening bilateral ties between Chile and Brazil. Most importantly, a coordinated effort from various sectors is seen in order to create foreign policy goals. Increasing trade helps build up common positions with regards to diverse issues, from trade links to civil society topics. 79 The new foreign 78

Jorge Riquelme, Official from the Multilateral Policy Office/Ministry of Foreign Affairs of Chile, professor at the University of Chile. Alvaro Gusmán, Official of International Security/Ministry of Foreign Affairs of Chile. Interviewed on 29 August 2011 at the Ministry of Foreign Affairs, Santiago de Chile. 79 The strategic importance of trade has grown over the years. In general terms, trade includes investment, shipping, tourism and the management of enterprises. Michael B.

192

policy agenda demands the coordinated mobilisation of diverging areas, which cannot be achieved by conventional diplomacy. One of the most interesting aspects of this study is that public diplomacy varies from country to country, to the extent that, in some countries it can be seen that advocacy demands much of the State’s attention, while, in others, branding programming deserves the majority of the efforts. What probably makes the creation of Brazil-Chile ties easier is the coherence of Chile’s public diplomacy message, demonstrated in the congruence between the three activities traditional diplomacy, relationship-building between diverse sectors and branding programming and cultural events.80 Chile’s wellcoordinated policy helps develop possible long-term bilateral links.81 In the public diplomacy context, the benefits of the Mercosur Forum for Political Consultation and Concentration were visible in shaping political ties and enforcing regional links. 82 Together with fostering regional cooperation, the strengthening of Brazil-Chile bilateral relations in the long run can be seen as an opportunity for constant dialogue between regional actors. Building cooperation in diversified areas has emerged as a key factor for strengthening bilateral ties, as well as creating indirect closer links. Having said that, diverse cooperation links are prerequisite for any longterm progress in bilateral aims. Froman (2014), “The strategic logic of trade: New rules of the road for the global market”, Foreign Affairs. November/December. New York: William S. Hein & Co. 80 Public diplomacy in the twentieth century has its origins in two world wars and the Cold War between the communist east and the capitalist west. The twenty-first century is a postSeptember 11th environment dominated by military invasions, information and communication technologies. Nancy Snow and Philip M. Taylor (2009), “Preface and introduction” in Nancy Snow and Philip M. Taylor (Eds), Routledge handbook of public diplomacy. New York: Routledge, p. 9. 81 The new public diplomacy demands a national reputation strategy. In its beginnings public diplomacy was conceived as propaganda, whose idea was to persuade and coordinate social consensus. Today, public diplomacy has to take into account the participation of social networks in foreign policy. Aleix Sanmartín (2015), “Chile: Nueva diplomacia pública para una mejor reputación”, Diario Financiero, Thursday, 19th November. https://www.df.cl/noticias/opinion/columnistas/chile-nueva-diplomacia-publica-para-unamejor-reputacion/2014-09-30/212606.html. 82 Two new forums emerged within Mercosur, the Forum for Political Consultation and Concertation with three working groups and the Forum for Consultation with Municipalities, Federal States, Provinces and Districts. Olivier Dabène (2009), The politics of regional integration in Latin America: Theoretical and comparative explorations. New York: Palgrave Macmillan, p. 98.

193

3.3.1 The potential benefits of UNASUR regarding Brazil-Chile relations A analysis of the Union of South America Nations (UNASUR) is twofold, since the initiative is extremely important for encouraging integration among its 12 members, creating a multilateral space for dialogue. Another positive feature is that UNASUR illustrates the relevant aspects of presidential or summit diplomacy within regional integration projects. Presidential politics provide the fundamentals for facing contemporary issues, serving as a priceless tool for strengthening the dialogue between regional actors (Acosta, 2009: 97). The combination of these two aspects is remarkable encouraging Brazil-Chile cooperation, because of UNASUR’s pragmatic features. UNASUR has its origins in a sequence of summits of heads of states, heads of governments, foreign ministers, council delegates and working groups, which, at that time, gave the union an institutional character that is still recognised as the South American Community of Nations, later known as UNASUR.83 With its roots in leader-to-leader diplomacy, UNASUR reshaped regional relations by exploring new areas of cooperation. 84 The lack of trade in UNASUR conferred great importance on cooperation, since the initiative is focused on strategic political partnerships. The idea of a South America institution that could tackle transnational issues with a view to ensuring greater regional dialogue is something new. At the Second Summit of Heads of State and Governments, in Brasilia in May 2008, the sub-region’s members signed the Constituent Treaty, which formally institutionalised the Union of South American Nations (UNASUR). The institutionalisation of UNASUR occurred without prejudice and still had to be approved by the Chilean National Congress to fully enter into force. At the same time, Chile assumed pro tempore presidency of the body (2008-2009). The UNASUR Constituent Treaty was 83

“Perspectivas, proyecciones y desafios de la política exterior de Chile”. Gobierno de Chile, February 2010, p. 40. 84 The convergence of integrationist positions in the three regional powers of Argentina, Brazil and Venezuela led to the emergence of the bloc. See João Carlos Amoroso Botelho (2013), La evolución y la creación de UNASUR. Paraná: Juruá Editora.

194

approved by the Brazilian Senate on 7th July 2011. This step ended the legislative procedure, allowing Brazil to participate as a full member. UNASUR emerged because of the need for a transnational body in which to discuss issues that could not be relegated to the domestic field, because of the national limitations to facing complex matters. In this scenario, the formation of cooperative links was necessary to deal with strategic topics, making countries increasingly interconnected. Transnational demands stress the need to create public opportunities for facing issues pertaining to new phenomena that will be ineffective if only treated within the nation-state (Jácome, 2010: 21-22). It should be pointed out that transnational demands not only deal with economic globalisation topics, but also with safety, the environment, energy, health, infrastructure and drug trafficking among others. Moreover, the transnational agenda has to deal with fundamental rights’ issues related to the survival of human beings. UNASUR provides a coherent regional voice, seeking to strengthen the mechanisms and the rule of law in international relations to achieve a multipolar, balanced and fair opportunity for the sovereign equality of states in a world of nuclear weapons and mass destruction. One of UNASUR’s most effective policies is that of helping to solve problems that affect the region, such as poverty, exclusion and social inequality. 85 Indeed, UNASUR bring matters such as energy and infrastructure to the foreground, serving to complement initiatives like IIRSA, whose goal is to create a common agenda related to infrastructure, energy and communications.86 Interestingly enough, neither UNASUR nor IIRSA has strong presidential diplomacy as its core element for carrying out these initiatives. Brazil assumed its role as regional leader within the field of UNASUR. Even though many regional matters arose, UNASUR provided a more appreciative and focused scenario in which to deal with regional issues. Indeed, President Lula exerted his regional leadership role there more than the international sphere. For obvious reasons, the settlement of centre-left 85

Nota: Tratado Constitutivo da UNASUL 14.02.pdf.p.1. http://www.itamaraty.gov.br/ temas/america-do-sul-e-integracao-regional/unasul 86 In Chile the IIRSA includes the region of Coquimbo, Valparaíso, Libertador O’Higging and Maule. In Brazil it includes Rio Grande do Sul, Santa Catarina, Paraná, São Paulo and Minas Gerais. Iniciativa para la Integración de la Infraestructura Regional Suramericana, IIRSA, “Mercosur-Chile hub”. http://www.iirsa.org/Page/PageDetail?id=124&menuItemId =57.

195

governments in the region in the last few years, combined with the increasing role played by presidential diplomacy, advocated for shared priorities to be established. In this context, presidential diplomacy paved the way for common positions from which to face regional issues (Yopo, 2010: 222). Personal interactions has shown itself to be an important way of strengthening bilateral foreign policy, especially considering the possibility of establishing a more intense dialogue within the Southern Cone. Bringing foreign policy affairs closer to civil society is congruent with public diplomacy, nation branding and paradiplomacy, highlighting approaches to new areas of issues as a way of creating new cooperation ties. Actions taken by the president and reported by the press go hand-in-hand with the increasing public interest in foreign policy. Moreover, the president’s more active role encourages domestic actors to get involved in international affairs and leads, therefore, to the closer participation of inter-sector players foreign policy strategy.87 In a similar way, Chile and Brazil have assumed a kind of intermediate degree of presidential diplomacy, to the extent that the concept has translated into a more active role for the president. As has already been said, the fact that the two countries had centre-left governments favours the building of closer bilateral links during periods when policy is headed in a similar direction. Of course, the charismatic figures of President Lula and President Bachelet have largely contributed to the establishment of increasing cooperation between the two countries.88 Increasing presidential ties has laid the groundwork for strengthening regional links and for embarking on cooperation initiatives such as UNASUR. However, this does not mean that in the context of Brazil-Chile foreign policy the president takes over foreign policy replacing the function of the Department of Foreign Affairs. On the contrary, neither the creation of Chilean foreign policy making nor Brazilian foreign policy strategy 87

Souza, Matilde and Ramos Bahia, Bernardo. “Democratisation and the new deliberative and contested spaces in Brazil’s South America Policy.” 2011: 2. http://www. saopaulo2011.ipsa.org 88 Lula and Bachelet were often said to be part of Latin America’s responsible left, whilst Chávez and Morales represented the radical or popular left. Ted G. Goertzel (2011), Brazil’s Lula: The most popular politician on earth. Boca Raton: Brown Walker Press, p. 151.

196

indicates that foreign policy is based on short-term perspectives or subject to the ups and downs of foreign policy. At the same time, it cannot be denied that presidential diplomacy has been influential and that it cannot be supplanted without major consequences for the strengthening of regional ties. In this respect, UNASUR is similar to other hemispheric initiatives, such as the Contadora Group, the Contadora Support Group, and later the Rio Group, which means that, despite their cooperation and multilateral cooperation links, all share a kind of informal character.89 Since the beginning, UNASUR has aimed to converge with other systems of Latin American integration such as Mercosur and CAN (the Andean Community). UNASUR does not attempt to duplicate cooperation efforts, but rather strengthen country’s participation in regional concerns. Chile considers UNASUR an important opportunity for carrying out integration.90 In this regard, through the creation of a multilateral environment in which to deal with concrete issues, UNASUR accounts for the development of further bilateral links due to closer relations between the countries when facing regional issues.91 UNASUR can be seen as one of the core mechanisms for establishing cooperation between the regions’ countries. As opposed to the European 89

The aim of Latin American unity in the peace process was to find an indigenous solution to regional problems, such as the Contadora Group in 1987. The idea was that Central America’s upheavals were primarily indigenous and therefore the conflict needed a regional solution. Mary K. Meyer (2009), “Cooperation in conflict: The Latin American diplomatic style of cooperation in the face of foreign threats” in Douglas P. Fry and Kaj Björkqvist (Eds), Cultural variation in conflict resolution: Alternatives to violence. New Jersey: Psychology Press, p. 168. 90 Ministerio de Relaciones Exteriores de Chile. “Hitos de la política exterior 2006-2010. http://www.minrel.gob.cl/prontus_minrel/site/artic/20091230/pags/20091230083503.php 91 The UNASUR has made definite progress in solving regional conflicts, such as the solution of the internal crisis in Bolivia in 2008. The South American diplomatic reaction to this conflict was markedly different, demonstrating the importance of new emerging actors such as UNASUR in regional politics. “The Bolivian crisis, the OAS&UNASUR”. Densidad regional de América del Sur. September 2008. http://www.densidadregional. com/?p=29. Moreover, in response to the institutional crisis that occurred in Ecuador in September 2010, the heads of state of UNASUR decided to incorporate an additional protocol into the Constitutional Treaty, which established concrete measures to be adopted by the member states of UNASUR in case of the breakdown of constitutional order. “UNASUL”, Ministério das Relacões Exteriores. http://www.itamaraty.gov.br/temas/ conteúd-do-sul-e-integracao-regional/unasul

197

Union or other global integration models based on a single solid institution, the South American integration process is made up of countless networks of different sizes and scopes, each with a different function. In fact, UNASUR has not replaced Mercosur as the main Southern Cone body for integration and on the contrary, Mercosur and UNASUR should be studied as complementary regional institutions. Furthermore, both UNASUR and Mercosur are relevant to regional integration and create a valuable multilateral arena in which to coordinate common positions and discuss diverse issues. In addition to its convergence when facing regional matters, it should be pointed out that the importance of UNASUR is linked to Brazil’s ability to strengthen its role as a regional power. Brazil’s capacity to exert its authority as a regional leader is aligned with that confirmed by integration bodies such as UNASUR. Chile’s support for Brazil’s regional leadership represents a significant step forward in Brazil-Chile relations, even if Chile did not make relevant changes to its foreign policy goals as a result of its support. For authors such as Malamud, Brazil would probably consolidate itself as a middle global power before achieving its aim of being a regional leader (Malamud, 2011: 3-4). Despite this, Chile recognises Brazil’s leadership as long as it does not interfere in its own international insertion strategy. The core element to understanding Chile’s support – apart from being supportive in itself – is related to its cooperation aims. However, Chile’s international insertion does not signify a lack of support for regional integration projects or Brazil’s initiatives. Their mutual trust and perception of each other as stable partners commits the two countries to working towards common ground, even though isolated positions may cause concerns about their foreign policy targets. However, it should be remembered that, during their bilateral relationship, Brazil and Chile have never been through serious conflicts and both states share a longterm foreign policy strategy. These two elements should be considered as important features for fostering bilateral links within UNASUR. Indeed, UNASUR encourages closer dialogue in different areas, which goes handin-hand with the features of public diplomacy, presidential diplomacy, nation branding and paradiplomacy that serve as core elements for our study.

198

3.3.2 Brazil-Chile relations in the democratic context Under democratic governments, Brazil and Chile strengthened their bilateral relations. Due to the new international and regional multilateral agendas, the two countries had to define their relationship one way or another. The fact that the two countries shared similar values and had libertarian vocation helped strengthen bilateral ties. Indeed, Chile and Brazil underwent a transitional period that was crucially important, since both countries needed to consolidate their strategic international reinsertion in order to prevent regressing to an authoritarian regime. Sharing common demands for consolidating democratic regimes marked both countries’ foreign policy and therefore, the way bilateral ties were created. The combination of a favourable regional context and their commitment to multilateral institutions made room for the development of bilateral relations. Brazil and Chile share similar values regarding social, political and economic multilateral issues in the debates within the field of the United Nations. The defence of democratic values facilitated closer relations between the two countries. In this context, they agreed on the importance of rules and norms to establish a harmonious and stable order in international relations. The construction of common positions in diverse and sensitive topics like the environment, human rights, social development, women rights and reproductive health can be seen. Thanks to the proliferation of inter-sector cooperation in the twenty-first century, broadening horizons connected more sectors of the two countries as pointed out by the concept of public diplomacy and paradiplomacy. Most importantly, emerging new issues proved that the nation-state as a single actor had been unable to deal with present international relations (Agirreazkuenaga, 2009: 209). The long-term stable relationship between the two countries was illustrated by Brazil’s rapid assistance after the earthquake that took place in Chile on 27th February 2010. President Lula sent rescue units and medical equipment, including dialysis machines, to assist Chile in its relief efforts, after one of the biggest earthquakes in Chilean history.92 Brazil also announced the deployment of a field hospital to help treat victims. The 92

The Wall Street Journal, U.S. Edition. Posted by Jeff Fick and Charles Roth. “Brazil sending rescue teams and equipment to Chile”, O Globo Mundo. 1st March 2010. http://blogs.wsj.com/dispatch/2010/03/01/brazil-sending-rescue-teams-equipment-to-chile/

199

rescue team was transported on an Aircraft from the Brazil Air Force (Força Aérea Brasileira or FAB) and was mobilised by the National Secretary for Civil Defence.93 In this respect, Brazil and Chile not only held similar positions in terms of vital standpoints, but also shared a positive attitude towards a consensus on the discussion of emerging new issues.94 The most important point on which they agreed was that Brazil and Chile had similar views about the reform of the United Nations, particularly in what the amplification of the Security Council and the creation of the Peace and Human Rights Councils. Moreover, Chile supported Brazil’s aspirations of occupying a permanent seat on the UN Security Council, revealed for the first time by Chancellor Insulza support of Brazil in 1997 and reconfirmed by the state visit of President Lagos to Brazil in 2003. In fact, Chile also supported expanding the UN Security Council to include Germany, Japan, India and Brazil. Chile’s support for Brazil’s aspirations can be understood as an important element for the climate of trust that has existed since the 1990s.95 Like Brazil, Chile argued that the Security Council should adapt to the new realities of the present and therefore should become more democratic. Its static structure, which had existed since the Second World War and which maintained the Cold War’s power framework urged a rapid change, as a way of renewing public confidence in the UN by almost quadrupling 93

O Globo, Mundo. “Lula promete ajuda ao Chile e resgate aos brasileiros”. 1 March 2010. http://g1.globo.com/Noticias/Mundo/0,MUL1511096-5602,00.html 94 The sharing of common positions can be demonstrated in initiatives such as the Cairns Group, which was created in 1986 to establish the liberalisation of agricultural-trade. Among the founding countries were Chile and Brazil, coming together as a third force and working during the Uruguay round, in response to the United States and European Union’s policies. The idea behind this group was a commitment to achieving free and fair trade in agriculture that would provide real and sustainable benefits for the developing world. http://www.cairnsgroup.org/introduction.html 95 President José Mujica of Uruguay, made a declaration supporting of Brazil as a permanent member of the UN Security Council. Curiously, Argentina did not support Brazil’s aspirations to be a permanent member. Martín Pintos. La ruptura: historias secretas del conflicto con Argentina. Montevideo: Fin de Siglo Editorial, 2010, pp. 285290. Brazil’s aspirations for a permanent seat on the UN Security Council lay in the perception that developing countries should play a more central role on international agenda, assuming credentials to the maintenance of international peace and security. Virgílio Arraes, “O Brasil e a ONU, de 1990 a nossos dias: das grandes conferências às grandes pretensões”, in Henrique Altemani and Antônio Carlos Lessa. Relações internacionais do Brasil: temas e agendas. vol. 2. São Paulo: Saraiva 2006, p. 28.

200

the number of countries affiliated to it. The inability of the current Security Council to represent the emerging multipolar order demanded a new structure and the inclusion of new members. In this context, Yopo highlights: “Chile’s support for Brazil as the Latin American permanent member of the Security Council, goes hand-in-hand with its regional weight and the history of trust between the two countries. Indeed, Chile supported a rotating chair for the region, sharing the same view as Argentina. There were speculations that Chile’s support occurred in a scenario of exchanging favours, since we see a parallel between the support of the latter and Brazil’s support for Insulza as a candidate for the OAS.”96

President Piñera reconfirmed his predecessors’ view and shared the same opinion as President Dilma concerning the need for an urgent reform of the UN Security Council and other international institutions such as the World Bank and the International Monetary Fund (IMF). According to him, there was an urgent need to modernise international organisations, starting with the Security Council and then expanding to other organisations (Josephson, 2013). Like Brazilian diplomacy, Chile foreign policy sustains the same political values and both countries claimed there was a need for the redemocratisation of the UN.97 What is missing is not only the lack of studies on Brazil-Chile bilateral relations, but also the analysis of the factors which led to their closer 96

Mladen Yopo Herrera, Deputy Director of the National Academy of Political and Strategic Studies (ANEPE), Chile. Interviewed in Santiago de Chile on 4 November 2011. 97 Brazil’s international insertion as an emerging global power demands a different approach on Chile’s part. Understanding Brazil’s changing role in foreign affairs is the core element for re-establishing foreign policy strategy. Among other global issues, the important role played by Brazil in international organisations should be highlighted. For instance, the removal of Brazil’s Ambassador, José Maurício Bustani, from the Organisation for the Prohibition of Chemical Weapons (OPCW) needs cautious analysis. Eduardo Salgado, “Briga com os EUA”. Revista Veja, 1st May 2002. São Paulo: Editora Abril. Today, the head of the OPCW’s inspectors is a Brazilian engineer, which shows the country’s participation in multilateral forums. Lidy Nicolasen, “Onbekende international club met een opmerkelijk snel succes”. Profiel Organisatie voor het Verbop op Chemische Wapens (OPCW). De Volkskrant. Saturday 12th October 2013. p. 6. Rob Goor. “VS steekt lont aan in OPCW”, Haagschese Courant, 20th April 2002 in Crisis in de OPCW: de verwijdering van Directeur-Generaal Bustani. PENN-NL Facts and Reports Nr. 6, May 2002.

201

cooperation, combined with a growing convergence on aspects of their foreign policy. These points are valuable in order to understand contemporary Chilean-Brazilian foreign affairs. From Chile’s standpoint, the apparent resistance to strengthening political ties could not continue over the following years, given Brazil’s regional influence and the country’s new status as an emerging global player. From Brazil’s perspective, Chile represented an opportunity for access to the Pacific with it, worth remembering that Brazil is the only BRIC without an outlet to the Pacific. In this context, infrastructure integration plays a major role in terms of BrazilChile foreign policy priorities.

3.3.3 Brazil-Chile cooperation in infrastructure Analysis of international trade flows demonstrates that the main route that today is still the Atlantic Ocean will shift to the Pacific in the foreseeable future because of the growth of China and other Asian nations. Moreover, trade with the Middle East is becoming more intense. Therefore, the goal of bioceanic routes is congruent with international demands, backed by the fact that Brazil regained its ability to invest in infrastructure through the Growth Acceleration Programme (PAC). This means that new investment in transportation received specific attention from the Brazil government’s political strategy that sought to promote infrastructure integration in the region.98 The implementation of the bioceanic corridor project constitutes a series of investments by governments in partnership with national and international transport infrastructure (road, rail and waterways). After being deployed, the corridor would connect Brazil and Chile to both the Atlantic and Pacific coasts. Therefore, the origin of the ‘bioceanic’ concept refers to 98

See Gelson Fonseca Jr. (2004) “A visita do Presidente Luiz Inácio Lula da Silva ao Chile, 22 a 24 de agosto de 2004”, Embajada de Brasil en Chile. Concha y Toro: LOM Ediciones, pp. 9-10. However, infrastructure initiative face costly and difficult bureaucratic procedures. Internal administrative problems of Mercosur illustrates this point considering the lack of consensus towards fuel tax distribution, tax collection, dimensions and wights of vehicles among others. See Clarissa Dri and Maria Eduarda Paiva (2012), “Parlasul, um novo ator no processo decisório do Mercosul”, 36o Encontro Annual da ANPOCS, Política Internacional, p. 12.

202

the possibility for moving goods (exports/imports) and capital through the two oceans. The logic inherent to the project is based on the search for a greater movement of goods and capital to expand geographically, whilst disrupting political boundaries and physical and cultural order by spreading a nexus of consumption and money. The systematic study of the bioceanic corridor was executed during the administration of President Fernando Henrique Cardoso in 1996. The study supported the idea of trans-oceanic corridors that allowed access to the ports of Brazil and Chile, from where the Brazilian products would be moved to Asia and the Middle East.99 More recently, during the two terms of President Lula (2003-2006 and 2007-2010), the project gained consistency and public-private investments. The project also facilitated market access and the countries involved achieved economic growth, taking advantage of regional comparative advantages to expand their presence in international markets.100 In this sense, building up new connections tackles real demands. Such an approach recognises that Brazil and Chile share a pragmatic vision of cooperation and demonstrates that substantial initiatives are carried out in order to expand physical links. The restoration and modernisation of ports reduces logistic costs, boosts competitiveness and improves operational efficiency (Ding, 2008: 119). Reducing geographical proximity represents a core element to bridging the gap in Brazil and Chile’s relationship in the long-run. Furthermore, transportation links promote private-public bilateral dialogue, sustaining the argument that Brazil-Chile ties deserve a much broader and deeper interpretation than that highlighted by traditional diplomacy. Importantly, Brazil’s new role as an emerging global power demands 99

The IIRSA emerged as a cooperation initiative of President Fernando Henrique Cardoso at the South American Presidential Summit held in Brasília on 30th August 2000. The aim of the initiative was to build corridors that serve as multinational strips to concentrate on potential and current flows of trade. Manuela Garza Ascencio and Raúl Zibechi (2006), “Brazil-the difficult path to multilateralism”, Alterinfos América Latina, 7 April 2015. http://www.alterinfos.org/spip.php?article282. 100 On 23 May 2015, China’s Prime Minister Li Keqiang, met with Peruvian President Ollanta Humala to sign the implementation of feasibility studies on a bioceanic railway corridor through the Amazonian rainforest, connecting Brazil to Peruvian ports. Martin de Angelis (2015), “South America’s bi-oceanic railway”, Global Risk Insights, 31 May 2015. http://globalriskinsights.com/2015/05/south-americas-bi-oceanic-railway/.

203

more investment in infrastructure. In this way, the need for a physical regional connection assumes two directions: on one hand, the need for Brazil to develop closer regional ties, which includes fostering the BrazilChile relationship with the goal of strengthening their economies and political dialogue.101 On the other hand, Brazil’s rise on the international scene promotes the need for an organised and efficient network of infrastructure to deal with increasing foreign demands. Therefore, an efficient infrastructure network is a prerequisite for expanding bilateral and inter-regional links, besides being a critical element for determining Brazil’s new geopolitical position.102 In this context, the PAC is a mechanism for Brazil to carry out its management initiatives. In this scenario, the PAC was a crucial tool for engaging in definite initiatives regarding physical regional integration efforts. The PAC 2 is one of the largest strategic projects carried out by the Brazilian government, making significant changes to how investments are planned and executed. Likewise the first phase of the programme, the main goal of the PAC 2 was to boost the economy and maintain sustainable growth, taking advantage of the great potential for business expansion and the favourable historical climate in the country. The PAC 2 seeks to promote public-private investments in a rapid build-up of infrastructure to leverage economic development. In road and railway sector construction, growth was six times higher than the average in previous administrations. Public-private partnerships have advanced on the topic of credit policy and the contracts of services concessions. Indeed, the PAC 2 also helped the country face the international crisis of 2008-2009. While other countries had to mobilise public investments, Brazil was already planning the work-in-progress.103 101

The IIRSA goes beyond an infrastructure approach and is part of a wider case of southsouth integration, as an instrument to encourage higher productivity, equity and growth. Mauricio Mesquita Moreira (2007), Trade costs and economic fundamentals of the initiative for integration of regional infrastructure in South America (IIRSA). Buenos Aires: INTAL ITD, p. 3. 102 At the turn of the century, strengthening integration in Latin America under the initiative of the Free Trade Area of the Americas (FTAA) and United States hegemony seemed unthinkable. However, two regional initiatives emerged in this scenario, the Union of South America Nations (UNASUR) and the Bolivarian Alternative for the Americas (ALBA). See Paul Kellogg (2007), “Regional Integration in Latin America: Dawn of an alternative to neoliberalism”, New Political Science, vol. 29, Issue 2. New York: Routledge. 103 Ministério dos Transportes, Relatório 1-PAC 2, pp. 6-7, http://www.transportes.gov.br/

204

For obvious reasons, territorial planning combined with bilateral publicprivate coordination paved the way for Brazil-Chile relations this century. The first and foremost effect of the bioceanic corridor on their bilateral ties was twofold: the focus on pragmatic diplomacy regarding the way BrazilChile interact and the multi-criteria analysis that demands infrastructure coordination efforts, taking into account the partnership between several diversified sectors in order to carry out such an initiative. In our view, the context of the bioceanic corridor demands the use of the public diplomacy, nation branding and paradiplomacy theories to understand how various actors interact in Brazil-Chile links. 104 In summary, the bioceanic project combined management initiatives and public administration as core mechanisms for executing contemporary dynamic bilateral links. Bioceanic corridors involve a series of investments made by national governments and international organisations, led by a coordinated initiative in the infrastructure and transport sectors (road, railways and waterways). The investments aim to link opposite sides of the region, linking the Pacific with the Atlantic Oceans through a multimodal transport system. The project relies on public-private partnerships and serves to reinforce the idea that Brazil-Chile ties demand a broader approach in order to explain bilateral connections. In this sense, the project is to be carried out with the support of the following financial institutions: the Andean Development Corporation (CAF), the Initiative for the Integration of the Regional Infrastructure of South America (IIRSA), the Inter-American Development Bank (BID), the Plata Basin Financial Development Fund (FONPLATA)

index/204onteúdo/id/38152 104 Local governments are increasingly important for infrastructure projects, wich illustrates the growing role of paradiplomacy in foreign affairs. For instance, central governments are uninformed about local needs and unable to monitor service allocations. Pranab Bardhan and Dilip Mookherjee (2006), “Decentralisation and accountability in infrastructure delivery in developing countries”, The Economic Journal, vol. 116, Issue 508. Malden: John Wiley Sons. pp. 101-127. Decentralisation should also take into account efficiency and corruption levels. Theoretical literature makes ambiguous predictions about this relationship, despite the cross-country relationship between fiscal decentralisation and corruption being measured by criteria such as a number of different index. Fiscal decentralisation in government expenditure is strongly associated to lower corruption. Raymond Fisman and Roberta Gatti (2002), “Decentralisation and corruption: Evidence across countries”, Journal of Public Economics, vol. 83, Issue 3. London: Elsevier, pp. 325345.

205

and the actions of the Integrated Zone of the Center West of South America (ZICOSUL).105 As will be seen, the continental structure, which is made up of the bioceanic routes has mainly been supported by IIRSA, which offers the opportunity for a coordinated approach to infrastructure. The fact that IIRSA is the main executor of the route means that it helps governments set priorities for integration and trade while strengthening regional dialogue, as well as promoting regulatory and legal harmonisation. It is interesting how various sectors interact to consolidate the bioceanic route and other infrastructure projects to the extent that new councils were created to expand logistical networks. Once again the fact that in Brazil-Chile foreign policy dialogue, political-economic aspects are interrelated brought into the discussion. 106 The bioceanic corridor project embraces four bioceanic corridors. One of the bioceanic corridor projects was launched in 2010 during the administrations of Presidents Bachelet, Morales and Lula and UNASUR prioritised five regional integration projects based on infrastructure. 107 In 105

The corridors are segments of the transport system, linking areas (producers/consumers) to operating systems integrated between two or more methods (waterways, rail or road). The main purpose of the bioceanic corridor is the possibility of accessing Brazilian exports and imports from the Chilean coast, specifically the ports of Iquique, Antofagasta and Mejillones on the Pacific coast. The integration of transport infrastructure would allow Brazilian exports, which are currently confined to the Atlantic Ocean (the Port of Santos-SP and Paranagua-PR) to have a direct route to the Pacific and easier access to Asian and Middle Eastern markets. Valquíria de Araújo Oliveira. “A infraestrutura de transportes como política governamental para o desenvolvimento regional e a integração SulAmericana: uma análise sobre as rotas bioceânicas em Mato Grosso do Sul”. Universidade Federal de Grande Dourados, 2010, p. 16. 106 For instance, the South American Council of Infrastructure and Planning (COSIPLAN) is linked to UNASUR and was created in August 2009 to meet existing demands. The council intended to replace the Executive Steering Committee of the IIRSA by a Council of Ministers level within the institutional structure of the UNASUR. By adopting this measure, the countries sought to give greater political support to activities in the area of infrastructure integration, to ensure investments for the implementation of priority projects. Conselho de Infraestrutura e Planejamento (COSIPLAN) da UNASUL, Rio de Janeiro, 28th April 2011. Ministério das Relações Exteriores. http://www.itamaraty.gov.br/sala-deimprensa/notas-a-imprensa/conselho-de-infraestrutura-e-planejamento-cosiplan-da-unasulrio-de-janeiro-28-de-abril-de-2011 107 Gabriela Mañana (2014), “UNASUR priorizará el corredor bioceánico que incluye a Bolivia”, La Razón, Economía, 8 December 2014. http://www.la-razon.com/economia/ Unasur-priorizara-corredor-bioceanico-Bolivia_0_2176582349.html.

206

practical terms, the Chilean-Bolivian-Brazilian bioceanic corridor faces investment problems. PAC 2 INVESTIMENTS in US$ billion (R$ billion) PAC 2 INITIATIVES 2011-2014 POST 2014 BETTER CITY 31.3 (57.1) BRINGING CITIZENSHIP TO 12.6 (23.0) THE COMMUNITY HOUSING 152.5 (278.2) WATER AND 16.6 (30.6) LIGHT FOR ALL TRANSPORTATION 57.3 (104.5) 2.4 (4.5) ENERGY 255.3 (465.5) 343.9 (627.1) TOTAL 526.0 (958.9) 346.4 (631.6)

TOTAL 31.3 (57.1) 12.6 (23.0) 152.5 (278.2) 16.6 (30.6) 59.7 (109.0) 599.2 (1,092.6) 872.3 (1,590.5)

Source: Growth Acceleration Programme. Ministério do Planejamento, Desenvolvimento e Gestão.http://www.planejamento.gov.br/servicos/faq/pac-programa-de-aceleracao-do-cresci mento/visao-geral

As the Chilean Ambassador Jaime Gazmuri points out, “Bolivia’s demands for exclusive transport rights increased the difficulties faced by the project, since Brazil wanted transportation to be carried out by the Brazilian counterpart. Brazil argued that Bolivia had to respect the legal provisions of Mercosur which allowed transportation to be conducted by Brazil”. 108 The main problem with regard to the Chilean-Bolivian-Brazilian project lies in the Brazil-Bolivia conflict. Brazil and Chile, on the other hand, enjoyed a long-term relationship and had been developing a stable partnership in infrastructure initiatives. Despite Brazilian-Bolivian issues, the road linking Brazil and Chile has made significant progress and will link the Brazilian ports of Santos and Mato Grosso with the Chilean terminals of Arica and Iquique. Brazil has already finished constructing their connections to the border of Bolivia and Chile has complied with the section that corresponds to the bioceanic corridor that will link the country to Brazil across Bolivia. Work on the 108

Interview with the Chilean Ambassador in Brazil, Jaime Gazmuri, on 1 September 2015.

207

bridge over the Isluga River has been completed, which will benefit trade and tourism between the two countries.109 Infrastructure cooperation is meaningful in the way that it demonstrates that there is planning to physical integration and that it does not only involve theoretical projects that are never applied. As opposed to the road corridor, the establishment of a railway line between the two states demands further study and effort. Source: Ecologia e Ação (ECOA), “Corredores Ferroviários Bioceânicos na América do

Sul”.http://riosvivos.org.br/a/Noticia/Corredores+Ferroviarios+Bioceânicos+na+America+ do+Sul/18999.

Regardless in late 2009, a delegation of 18 Chileans visited the port of Rio Grande to discuss the issue. Despite the debate on strengthening BrazilChile political bilateral dialogue, strengthening bilateral cooperation will come in the following years. Inter-sector connection will lead to publicprivate partnerships, especially in the domain of infrastructure. Brazil’s international insertion as an emerging global player demands an efficient infrastructure to reduce transport costs. The current scenario encourages a pragmatic bilateral approach to new market demands. As the Brazilian Ambassador to Chile, Frederico Cezar de Araujo argues: 109

Clarise Árduz. “Chile termian seu trecho de corredor bioceânico”, Construção Latinoamericana, 12th January 2012. http://www.khl.com/magazines/construcao-latinoamericana/ detail/item70195/Chile-termina-seu-trecho-do-corredor-bioceanico/

208

“In one way or another, Brazil and Chile took major steps towards bilateral infrastructure cooperation, regardless of their respective governments and foreign policy targets. Therefore, the two countries pushed forward pragmatic cooperation in order to achieve closer ties. Both countries’ long-term foreign policy aims contribute to strengthening their ties in the following years. For obvious reasons, the idea that Brazil-Chile would not become close partners should be replaced by the fact that physical proximity is their goal and would bring closer bilateral dialogue” (Brazilian Ambassador Frederico Cezar de Araujo, interviewed on 23rd August 2011 at the Embassy of Brazil in Santiago de Chile).

President Dilma Rousseff and her counterpart, President Sebastián Piñera complied with their promise of inaugurating the bioceanic corridor (road corridor) linking the port of Santos in São Paulo with Arica and Iquique in Chile in 2012. This initiative expanded and strengthened the ties between Chile, Brazil and Bolivia with direct benefits for these countries’ economies. Firstly, physical integration allows for more dynamic trade between the three states. Secondly, the project promotes economic development, social progress and quality of life, through access to health care and better economic conditions.110 It is worth mentioning that the bioceanic corridor is more than 4,000 kilometres long and involves railroads and highways that are part of the IIRSA. One of the bioceanic corridor projects is the creation of a railway to link the ports of Brazil and Chile, as already mentioned. 111 One of the proposed routes for these railway lines connects the Brazilian ports of Rio Grande, Paranagua and Santos or some part of Santa Catarina. The Chilean proposal involves connecting the cities of Valparaíso in Chile, Mendoza and Cordoba in Argentina, Montevideo in Uruguay and Rio Grande do Sul and Santa Catarina in Brazil. Another route considered by Brazil is the 110

“De Leste a Oeste de oceano para oceano”. Odebrecht Informa Online. http://www. odebrechtonline.com.br/materias/01801-01900/1872/ 111 Among the obstacles mentioned by experts is each country’s bureaucracy related to the project. At the same time, the project will reduce the trip from the port of Santos to the port of Arica to around 11 days. Soy Arica, “El corredor bioceánico Chile-Brasil reducirá de once a dos días el viaje terrestre entre los puertos de Arica y Santos”, 6 December 2012. http://www.soychile.cl/Arica/Sociedad/2012/12/06/139322/El-corredor-bioceanico-Chile Brasil-reducira-de-once-a-dos-dias-el-viaje-terrestre-entre-los-puertos-de-Arica-ySantos.aspx.

209

construction of a railway to connect the ports of Santos and Paranagua to the Chilean ports of Antofagasta and Mejillones, across Paraguay and Argentina. This route is only a project and has not been started.112 As already stated, IIRSA is an important institutional mechanism for coordinating intergovernmental actions and the physical integration of Brazil and Chile. It comprises a series of projects organised around the concept of integration hubs, the environment and social sustainability. The IIRSA project was organised around five main parameters divided into ten integration zones, conferring a pragmatic dimension to the project. In this respect, most of the axes are interconnected. For instance, the MercosurChile axis shares a common territory with five other ones (Andino do Sul, Capricórnio, Hidrovia Paraguai-Paraná, Interoceânico Central and Eixo do Sul). Brazil gave special attention to projects linking Mercosur and Chile, which includes nine railroads and bridges and six ports and airports. It should be considered that either the road or the railway corridor would generate important savings for the logistics of exports. The development of the road corridor serves to illustrate that infrastructure cooperation existed, even though South America’s huge territorial dimensions make governmental decisions crucial when deciding on specific initiatives (Luchetti, 2015: 96-97). Of course, the consolidation of democracy in Brazil and Chile, accompanied by the process of an aperture to trade, the multiplication of regional agreements, the growth of bilateral trade and the impact of government policies ranging from sub-national governments to local authorities, play a critical role in developing physical integration. In this sense, cooperation initiatives are not only implemented by governments, but also by subnational entities, a fundamental element in the networking process. From Chile’s perspective, an infrastructure partnership seeks to strengthen soy and rubber trade relations from Brazil towards the Chinese market.113 The bioceanic corridor would allow exports from Brazil to reach 112

Although the port of Santos’ terminal operations planned to invest in order to foster efficiency and cut load times, there is little room at Santos port for expansion. Even after Paranagua’s expansion to 32 berths from the previous 20, the port’s capacity is below that of Santos, which has 63 berths. American Journal of Transportation (AJOT), “Paranagua ports plan major expansion”, 24 July 2011. http://www. ajot.com/news/paranagua-portplans-major-expansion. 113 China’s goal of obtaining raw material with a lower added value and of processing grain

210

boarding platforms at the port terminals in Chile. The COSIPLAN of which Chile is a member, announced at the summit that took place in Brasília in December 2011 that it would invest $ 994 million to enable the corridor between Paranagua (in southern Brazil) and Antofagasta (in northern Chile).114 Resources would be allocated to construct and improve the railway network in Chile, Bolivia, Argentina, Paraguay and Brazil, as well as investments in roads and ports. Chile is committed to carrying out a regional infrastructure project in the context of COSIPLAN. In this new phase, Chile will focus on three projects: the Paranagua-Antofagasta bioceanic rail corridor, the Christ the Redeemer border-crossing system and the bi-national Black Water Tunnel. The development of these projects promotes regional economic-political integration and brings Chile in to closer contact with regional actors. One of the advantages of this project is the possibility of transferring loads to AsiaPacific ports in northern Chile. The mayor of Antofagasta argues that the project has been under discussion since 1990-1993, with the city taking specific measures and implementing infrastructure initiative. The port of Mejillones features that facilitate further investments in technology. The investment of US$320 million already made in concession routes in Antofagasta, Mejillones and Sierra Gorda illustrates this point.115 Since coordination initiatives would first be decided directly by national governments, without any prior understanding of private stakeholders, there could be clashes during the railway negotiation process. However, attracting private investment is critical element to ensuring a stable regulatory for domestic consumption increased Brazilian imports. Valdemar João Wesz Junior (2011), Dinâmicas e estratégias das agroindústrias de soja no Brasil. Rio de Janeiro: E-papers serviços editoriais, p. 50. 114 Ministério das Relações Exteriores, “Conselho de Infraestrutura e Planejamento (COSIPLAN) da UNASUL – Rio de Janeiro, 28th April 2011”. http://www.itamaraty.gov. br/index.php?option=om_tags&view=tag&id=836-cosiplan-conselho-sul-americano-deinfraestrutura-e-planejamento&lang=pt-BR. 114 “Anuncian inversiones por US$ 944 millones en Corredor bioceánico que Unirá Antofagasta y Brasil”, LosTiempos.com, Economia, Wednesday 7 March 2012, http://www.lostiempos.com/diario/actualidad/economia/20111202/anuncian-inversionespor- us-944-millones-en-corredor-bioceanico-que-unira_151810_315273.html 115 “Anuncian inversiones por US$ 944 millones en Corredor bioceánico que Unirá Antofagasta y Brasil”, LosTiempos.com, Economia, Wednesday 7 March 2012, http:// www.lostiempos.com/diario/actualidad/economia/20111202/anuncian-inversiones-por-us944-millones-en-corredor-bioceanico-que-unira_151810_315273.html

211

framework for the railway operation. The public-private sector has to reach a consensus in order to tackle the major obstacles involving the heterogeneity of the agents involved, covering the instruments of grant holders (Brazil) and holders of railway lines (Chile).116 Indeed, the bioceanic partnership is a complex issue, which demands the participation of political-judicial sectors to regulate the concession contracts already signed and in force. In summary, infrastructure cooperation requires multisector coordination efforts to execute its projects. As a result, the bioceanic route would strengthen Brazil-Chile bilateral dialogue, building trust between its partners.117 Although the railway corridor demands further steps, studies are being carried out to quantify the route’s socio-economic impacts. A clear benefit is helping trucks and private vehicles to load. Another advantage would be the reduction of road accidents. The significant benefits obtained by the reduction of accidents are typical of major investments in rail, particularly regarding developing economies like Brazil’s.118 Brazil’s position as an emerging power demands a change in regional political strategies, which means that ideological theories gives way to a pragmatic approach and a strengthening of initiatives involving physical integration links.119 The point 116

The ways public-private partnerships embrace the contracting-out of services, the business management of public utilities and the formation of hybrid organisations for risksharing and co-production between government and private agents. Chris Skelcher, “Public management: The word, the movement, the science” in Ewan Ferlie et al. (2005), Publicprivate partnerships and hybridity. Oxford: Oxford University Press. 117 Infrastructure projects demand a high level of investment. The bi-national railway corridor between Brazil and Peru illustrates this point, since the initiative has investment from China. Portal do Governo do Estado de Rondônia, “Comitê integrador e empresários debatem a ferrovia binacional Brasil-Peru”, 23rd November 2015. http://www. rondonia.ro.gov.br/2015/09/85106/. 118 Economic benefits together with the importance of paradiplomacy to carrying out the bioceanic corridor initiative are clear. The region of Coquimbo is carrying out the project in Chile. Portogente Transporte/Logística, “Corredor bioceânico central ampliará logística para produtos do Sul”, 1st June 2015. https://portogente.com.br/noticias/transportelogistica/corredor-bioceanico-central-ampliara-logistica-para-produtos-do-sul-86282. 119 Brazil’s pragmatic approach towards Latin America has been pointed out. Brazil favours a market-oriented position, whilst Venezuela has developed a state-orientated approach. Brazil’s neo-structuralist option is congruent with a pragmatic vision, as opposed to Venezuela’s state-centric approach. See Sean W. Burges (2007), “Building a global southern coalition: The competing approaches of Brazil’s Lula and Venezuela’s Chávez”, Third World Quarterly, vol. 28, Issue 7, pp. 1343-1358.

212

is that Brazil and Chile share the same pragmatic values, grounded in trade benefits, as an essential ingredient for the future of long-term bilateral ties. The greater movement of goods and geographical capital expansion would disrupt political boundaries, boost potential socio-economic benefits and expand cultural links. Public diplomacy aims to answer many practical questions about bilateral cooperation ties and inter-sector partnerships. The gap between foreign policy and domestic policy is closing, to the degree that the Brazilian PAC focuses on the benefits of domestic infrastructure projects, while working together with the IIRSA initiative. This means that the increasing participation of non-official groups in international affairs demands another analytical perspective, studying foreign affairs from the perspective of the constant communication between asymmetrical actors.120 The significant developments made in transport infrastructure serves to show how publicprivate partners from different countries interact when building diplomatic links. The responsibilities of the actors in international relations are not clearly defined, given that foreign policy strategy is not only carried out by diplomats, but also by a variety of emerging actors who play an important role in the scenario.121 Increasing economic-political and public-private interdependence brings up new issues to be addressed and changes the approach of international affairs. In this sense, cooperation in critical sectors cannot be considered less important than security cooperation, considering that trade, investments, infrastructure and transportation are also core elements in the relationship between the two states. The combination of all these sectors promotes substantial links for fostering and sustaining longterm partnership. The infrastructure that has begun to be constructed has caused a profound shift in the way regional actors interact, strengthening cooperation and showing the importance of decentralisation in international affairs. The 120

When practising public diplomacy, politics highlight common interests and global public goods. Specifically, non-official actors play an increasing role in public diplomacy. Jan Melissen (2013), “Public diplomacy”, in Andrew F. Copper et al. (2013), The Oxford handbook of modern diplomacy. Oxford: Oxford University Press, p. 450. 121 New instruments of communication favour a closer dialogue with civil society. Eduardo Mello (2015), “Relatos de motocicleta-ator global”, Jovens Diplomatas, 15th November 2015. https:// jovensdiplomatas.wordpress.com/.

213

physical connection between Brazil and Chile by means of railroads, highways, ports and waterways, linking the Atlantic Ocean to the Pacific, serves a purpose beyond trade, to the extent that it offers an opportunity to rebuild the Brazil-Chile relationship in a much broader way. This new physical infrastructure is essential to embracing mid and long-term growth prospects. Another significant aspect is that Brazil and Chile demand further interaction in terms of fiscal-tributary policies, public-private partnerships and political-subnational dialogue in order to make substantial progress on bilateral relations. The bioceanic route has played a strategic role in shaping consistent and increasing dialogue between the partners.

3.3.4 Brazil-Chile background of paradiplomacy The transformations that occurred in international relations in the 1990s laid the groundwork for the emergence of new forms of integration, as illustrated by the institutionalisation of intergovernmental and regional organisations. In this scenario, subnational and local powers strengthened the legitimacy of participating in international affairs. Multilateral organisations recognised sub-local entities as being able to participate in international discussions, even though subnational governments are not considered the subjects of international law. From the 1990s onwards, the increasing participation of provinces and municipalities gaining legal and administrative powers is seen, although some claim that the term already existed in the 1980s. In fact, the concept paradiplomacy means the international relations between states, provinces and municipalities, which reflect the participation of autonomous subnational entities in the external scenario.122 The key word for understanding paradiplomacy is as a ‘partnership’ between different actors within the international arena. Like the concept of public diplomacy that has already been studied, the idea of decentralised cooperation was brought into effect in the 1980s and early 1990s in OECD donor countries, firstly in countries such as the United 122

The concept of paradiplomacy has grown in Brazil, even though in developed countries the idea is already widespread. Fábio Pereira Ribeiro (2014), “Paradiplomacia: Enfoque estratégico para Estados e municípios”, Exame, Brazil no Mundo, 28/05/2014. São Paulo: Editora Abril.

214

States. Like public diplomacy, the approach’s key element is the growing conviction that the State should not be in charge of every international links at a national level. In this context, the proliferation of public-private partnerships in sectors such as public goods and social services such as water, energy and health among others can be seen.123 This was accompanied by a greater emphasis on reducing poverty and on social development favoured by the creation of agencies such as the Human Development Index in 1990 by the United Nations Development Programme. This initiative boosted micro-enterprise activities and intervention from donor countries to recipient countries. In practice, new actors have emerged on the international scene such as NGOs, specialised consulting companies, chambers of commerce and local governments.124 The idea of multi-sector partnerships is congruent with the concept of public diplomacy, nation branding and presidential diplomacy, which confer a new dynamic on foreign affairs. For obvious reasons, Brazil and Chile benefit from the growing influence of paradiplomatic ties, since such links contribute to fostering inter-sector partnerships to the extent that they create a more ambitious approach to connecting the two countries. Brazil and Chile’s paradiplomatic links create political-economic opportunities that emerge from the diverse networks developed, given the relationship’s dynamism. 125 Therefore, paradiplomacy has significant implications insofar as it deals with several issues concerning 123

Public-private partnerships have increased their participation in Latin American public administration. M. Rivas (2014), “Parcerias público-privadas, solução para as turbulências econômicas?” El País, August. http://brasil.elpais.com/brasil/2014/12/04/economia/ 1417729410_750723.html. 124 Hafteck, Pierre. “An introduction to decentralised cooperation: definitions, origins and conceptual mapping”. Published online on 28 July 2003 in Wiley InterScience. www. interscience.wiley.com, p. 337. 125 Paradiplomatic cooperation has been developed by the Brazilian Department of Federal Affairs. Paula Ravanelli Losada (2015), “Cooperação descentralizada do Brasil”, III Reunião da Cooperação Descentralizada do Brasil, Subchefia de Assuntos Federativos/SRI. http://www.relacoesinstitucionais.gov.br/portal-federativo/articulacao-federativa/assessoriainternacional/eventos-e-reunioes/ii-reuniao-da-cooperacao-internacional-descentralizadado-brasil-2013-brasilia-df/apresentacao_saf__cooperacao_internacional_descentralizada.pdf. Chile also emphasises the importance of paradiplomacy for boosting regional integration from the perspective of decentralized actors. Loreto Schnake (2015), “Paradiplomacía en Chile: El caso de la región metropolitana”, Relaciones Internacionales: Análisis y Propuestas. Friedrich Erbert Stifitung. http://library.fes.de/pdf-files/bueros/chile/08521.pdf.

215

the economy, politics, culture and business. In practical terms, Brazil and Chile are already involved in some form of paradiplomatic relationship. It should be borne in mind that paradiplomacy is not dismantled by traditional diplomacy aims, since it maintains links with official foreign policy ones. In general, the term subnational/local governments refer to units of the federation that provide direct services to citizens. Despite the central role of a high governmental level in foreign affairs, especially with regards to Brazil’s long-term strategic targets, subnational entities become new actors in a regional context. For instance, in the Brazilian context, the politicaladministrative organisation of the Federal Republic of Brazil comprises the union, states, the federal district and the municipalities, all of which are autonomous entities (Article 18 of the Constitution of the Federal Republic of Brazil, 1988). Therefore, in principle, the already mentioned entities of the Brazilian federation are entitled to exercise all the powers not reserved to the central government. The Brazilian Constitution of 1988 encourages discussion about the capacity of decentralised international intervention. However, Article 21, item I of the Brazilian Constitution highlights that the union (federal state) shall have the ability to maintain relations with other states and participate in international organisations. This means that subnational actors are not allowed to explore further aspects of foreign affairs, although the increasing participation of decentralised entities in transnational affairs is allowed. In this respect, a constitutional amendment proposal is under discussion in the Brazilian National Congress (PEC 475/2005), which aims to add this paragraph to Article 23 to allow states, the federal district and municipalities to engage acts and agreements with foreign subnational entities. The proposal can only be passed with the approval of the Plenary Assembly.126 Various studies suggest that a significant element of paradiplomacy is the existence of a democratic government, accompanied by the federal government’s organisational structure.127 To a certain point, Brazil has fulfilled the prerequisites for 126

Projetos de Leis e outras Proposições, Câmara de Deputados. http://www.camara. gov.br/proposicoesWeb/fichadetramitacao?idProposicao=305376 127 Within the context of the Chile-Bolivia relationship, paradiplomacy has become an important tool to promote dialogue. The emerging participation of Chilean political and social actors, which demanded greater integration with Bolivia, has increased the relevance of paradiplomacy. Cristián Ovando Santana and Sergio González Miranda (2014), “La relación bilateral chileno-boliviana a partir de las demandas tarapaqueñas: aproximación

216

strengthening paradiplomatic links and fostering subnational cooperation in the coming years. In Brazil, decentralised diplomacy began with Argentina-Brazil integration initiatives in the context of Mercosur. Afterwards, decentralised initiatives were also carried out with neighbouring countries such as Paraguay and Bolivia. The most significant tool for Mercosur members for strengthening paradiplomatic ties was the creation of the Advisory Forum of Municipalities, Federal States, Provinces and Mercosur Departments, which occurred during the XXVII Meeting of the Common Market Council in December 2004. Curiously, Brazil first recognised its significant paradiplomatic potential at a Mercosur level, while the idea of subnational interaction was not meaningful in the domestic context.128 Lula’s administration sought to explore the possibility of decentralised ties by strengthening certain health and education programmes that promoted transnational dialogue. Moreover, Lula’s term invested more in municipalities than in state interaction. Another important point is that Lula’s administration paid more attention to the Federal Pact than that of his predecessor Cardoso, to the extent that the former created the Office of Federative Affairs, which built up a dialogue with the Civil House (the Executive Branch). Subnational cooperation does not, however have the same impact on other financial economic centres, since the most important Brazilian ones are not located on the border and physical distance plays an important role. At the same time, improving decentralised international ties seeks to promote foreign trade, the search for investments and tourism. Brazil’s new role as an emerging power has also contributed to changing the process in some way, to the extent that municipalities and states have increased their chances of interacting with international actors. The teórica desde la paradiplomacia como heterología”, Estudios Internacionales, vol. 46, no 177. Santiago: Universidad de Chile, pp. 35-64. 128 The historical background of subnational entities within the Mercosur context led to the need to integrate municipalities, federated states, provinces and departments in Mercosur’s institutional structure. The initiatives and projects implemented by municipalities and states in several areas, such as education, physical integration and trade boosted regional integration aims. Therefore, the Consultative Forum focuses on a better articulation and coordination of cooperation initiatives. This forum intends to foster direct participation by helping to consolidate Mercosur as a coherent regional block. Mercosul, Foro Consultivo de Municípios, Estados Federados, Províncias e Departamentos do Mercosul, http://www.mercosur.int/msweb/ portal%20intermediario/pt/fccr/index.html

217

perception that subnational entities can be economic agents provides a critical mechanism for the growing presence of decentralised actors in the international scenario. According to a World Bank report, “Decentralised decision-making can bring governments closer to the people, overcome information asymmetries, enhance transparency and accountability, allow for a better matching of local preferences (especially when these are heterogeneous across locations) and make for a more responsive government through competition between jurisdictions for investment.”129 Despite Chile and Brazil’s similar statuses as two of the most centralised countries in the region, changes to decentralisation occurred in Chile’s policy from the 1990s onwards. The redemocratisation period brought significant changes in terms of the decentralisation mechanisms used for subnational partnerships.130 According to Chile’s constitution, “Municipalities are public-law corporations with a legal capacity and patrimony of their own, whose aim is to satisfy the needs of the local community and ensure its participation in the economic, social and cultural progress of the district.”131 Interestingly, the authoritarian experience not only changed the political elite’s perception of subnational entities, but meant a commitment to organisational shifts that made the country more decentralised in the 1990s. One key element concerning subnational actors’ legitimacy is that some rules allow for greater decentralised processes than others. In general, indirect elections tend to weaken the ties between subnationally elected officials and their constituents. In contrast, direct 129

Kai Kaiser, “Decentralization reforms”, World Bank Resources, p. 2, http:// siteresources.worldbank.org/INTPSIA/Resources/490023-1120 130 Interestingly enough, despite national politicians still having cause to avoid decentralisation in the 1990s, there were divided partisan lines over the subnational changes that Pinochet had introduced. Curiously, the conflict led to a historic aperture to decentralisation as part of an interparty agreement to reform subnational institutions in 1991. Fearing exclusion from the national government, the right sought to bolster regional governments as political entities it could use to create a new democratic environment in Chile. Despite the lack of interest showed by the governing coalition, it acquiesced to these changes in exchange for the right’s support for the reintroduction of municipal elections. Pinochet sought to bolster his regime’s legitimacy and therefore channeled substantial resources towards municipalities. The decentralisation strategy made it politically risky for national political actors to recentralised changes after his government. Kent Eaton, “Designing Subnational Institutions: regional and municipal reforms in post-authoritarian Chile”, Comparative Political Studies, vol. 37, no 2, March 2004, pp. 220-221. 131 Article 107, Constitution of the Republic of Chile, Santiago de Chile, 21 October 1980.

218

elections promote the legitimacy of subnational officials with regard to national authorities, seeking broader bargaining and legal power. Both Brazil and Chile have had to deal with the idea that paradiplomacy leads to a strong commitment from decentralised actors to fitting this activity into the official foreign policy context. The role played by paradiplomacy in foreign policy strategy should not be underestimated, since there is controversy over how to link decentralised diplomacy to national government aims. 132 Not all subnational entities approach international relations in the same way and with a central government scope, meaning the implications of paradiplomacy in traditional foreign policy strategy need further study. At the same time, Brazil and Chile’s regions are already involved in some form of paradiplomacy in accordance with official foreign policy strategy, which has a consolidated process for encouraging subnational interests. The fact that subnational actors have engaged in transborder issues deserves much more attention from history and international relations. According to the public diplomacy approach, “diplomatic communication is only a flimsy part of the dense and multilateral transnational communication processes” (Melissen, 2005: 20). Contemporary foreign affairs embrace a multifaceted approach to deal with the increasing participation of actors that are not state-centric. In Brazil, what guarantees convergence between subnational entities and central diplomacy is the Special Assistance for Federate and Parliamentary Affairs (AFEPA), which is responsible for promoting coordination between the Ministry of Foreign Affairs and the National Congress. In the context of federal issues, AFEPA aims to coordinate between the Ministry, the State and local governments and between states and municipal assemblies to assist them with external initiatives. To encourage dialogue between states and municipalities, AFEPA is aided by Representative Offices of the Foreign Ministry that must coordinate and support local authorities in their 132

Local authorities’ initiatives created the Mercocities as a Mercosur version of the Eurocities in the European Union that demonstrated the significance of local governments in paradiplomatic activities. Latin America states boost the participation of decentralised actors in international affairs, particularly Brazil and Argentina. See Felipe Cordeiro de Almeida (2011), “O Mercosul, a paradiplomacia e as políticas nacionais para atuação dos governos subnacionais no processo de integração regional”, 3o Encontro Nacional Associação Brasileira de Relações Internacionais. http://www.proceedings.scielo.br/ pdf/enabri/n3v2/a08.pdf.

219

areas of jurisdiction. 133 In this sense, AFEPA illustrates the importance of paradiplomacy in contemporary Brazilian foreign policy. The initiative demonstrates a more flexible approach to traditional diplomacy policy strategy regarding decentralised actors. Like Brazil, Chile has the Ministry of Foreign Affairs Regional Coordination Directorate (DICORE), acting in the framework of institutional policy. DICORE supports international activities in the country of origin based on Service Order No 145 from 7th June 2000, which establishes regional coordination mechanisms. The aim of this initiative is to support regional government as they carry out projects in the international field, linking the regions and departments of the Ministry of Foreign Affairs, either in Chile or abroad. In practical terms, DICORE cooperates with regional governments, providing assistance and institutional support to authorities and regional bodies. 134 Paradiplomacy boost subnational development to the extent that decentralised actors demand greater political and economic autonomy as a result of business opportunities in the context of globalisation. Paradiplomacy has a positive effect on development, as do the economic opportunities that emerge from networking with other decentralised entities. Furthermore, decentralised diplomacy can build bridges between politics and the economy, favouring cooperation and connection and creating a more comprehensive political relationship. In this sense, paradiplomacy should be considered as another mechanism for strengthening Brazil-Chile’s relationship from a broader perspective. Moreover, informal networks help strengthen formal international bilateral links, since they contribute to the promotion of several inter-sector partnerships, which can be transplanted into the context of Brazil-Chile foreign affairs. Moreover, informal initiatives have an enormous potential to expand sectors such as tourism, business and trade, for example. Strengthening informal relations brings different sectors into constant dialogue, which is important for sustaining relations. Indeed, informal ties produce multifaceted relationships, creating a significant potential for 133

Assessoria Especial de Assuntos Federativos e Parlamentares, AFEPA, http://www.itamaraty.gov.br/o-ministerio/o-ministerio/afepa-assessoria-especial-deassuntos-federativos-e-parlamentares. 134 Paradiplomacia, Ministerio de las Relaciones Exteriores. http://paradiplomacia. wordpress.com/page/2/

220

strengthening links and promoting closer ties. Informal connections pave the way to easier dynamic relations between both countries and it plays an important role in building up each other’s nation branding perception. 135 The growing importance of paradiplomacy represents a significant step forward in Brazil-Chile cooperation links, since the dynamics of this is relevant to the cultivation of the harmonious scenario in which bilateral ties are shaped. Thus Brazil-Chile cooperation ranges from formal links in terms of foreign policy strategy - carried out by the Ministry of Foreign Affairs to informal networks between Brazilian and Chilean counterparts. Such considerations help explain the endorsement of ‘cooperation twinnings’ in our study in order to elaborate the current scenario in which Brazil-Chile relations existed. The most important aspect of paradiplomacy is the dilemma faced by both countries, on the one hand, the alignment with national governments and close coordination with the Ministry of Foreign Affairs and on the other, the relatively autonomous way in which subnational actors operate in order to meet their specific requirements. Within the bilateral cooperation scenario, economic and trade policies are essential ingredients for Brazil-Chile links. Another important aspect is the role played by foreign direct investment (FDI) in bilateral affairs, as will be seen in the following sections. In this sense, decentralised diplomacy helps attract FDI, luring international companies to a local level. This means that the so-called ‘business diplomacy’ works in congruence with paradiplomacy, targeting profitable local markets to expand investments and producing multifaceted relationships as argued in the context of our study on public diplomacy. Simply put, the authority of subnational actors cannot be separated from that of central governments, since both are critical bridges towards strengthening Brazil-Chile relations.

3.3.5 The growing para-diplomatic approach to Brazil-Chile bilateral affairs Before going further into the construction of Brazil-Chile paradiplomatic 135

An interesting example of Brazil-Chile informal ties is the network of ‘Chilenos en Brasil’, which establishes dialogue between different areas and fosters a mutual understanding of each other’s culture. More information in Chile en Brasil, www.chilenosenbrasil.net

221

ties, some important aspects of the idea of decentralised diplomacy should first be considered. First, the term ‘para-diplomacy’ identifies the generic international relations of municipalities, provincies and states.136 Secondly, Brazil tends to differentiate between federal foreign policy and federal diplomacy since the former refers to federal governments and the latter highlights the autonomy of subnational governments. On one hand, the study of federal foreign policy requires the parameters of democracy, integration and globalisation. On the other, multilateralism played a critical role in municipalities’ in the 1990s. As was pointed out in the previous section, neither are disconnected from national targets and in this way strengthening channels of cooperation and coordination are core elements in the process. Indeed, in the Brazilian context, globalisation and regional integration are not considered sufficient for fostering political discussion about the role of subnational governments in the international system. However, increasing concerns about the influence of decentralised actors in the economy boost a changing perception regarding the flexibility of these entities that enforce international economic cooperation links. The similarities between Brazil and Chile concerning the difficulties of creating a counterbalance to the possible diverging aspects between central government and decentralised entities should be mentioned. In contrast to Argentina, which instituted constitutional reform in 1994 to give federal units a greater international role, Brazil and Chile used political discussion about the importance of the topic to promote regional dynamic dialogue.137 Moreover, strategic decentralised diplomacy led to a beneficial bilateral relationship in the economic-political scenario. 136

In Europe in the 1970s, a new process occurred the emergence of regional groupings. These were defined as the associations formed between regional entities from different states whose aim was to pressure groups in the European institutions. Cooperation was based on common needs, aspirations and interests. More information over the origin of paradiplomacy in Europe in Michael Keating (2013), “Regions and international affairs: Motives, opportunities and strategies”, in Francisco Aldecoa and Michael Keating, Paradiplomacy in action: The foreign relations of subnational governments. London: Routledge. 137 Argentine constitutional reform went beyond re-election aspirations. Martín Dinatale (2014), “La constitución de 1994: una reforma que cambió la política”, La Nación, 22 August 2014. Buenos Aires. http://www.lanacion.com.ar/1720805-la-constitucion-de-1994una-reforma-que-cambio-la-politica.

222

Therefore, Brazil and Chile faced a dilemma about how to legalise subnational government’s foreign policies. Discussion about the participation of subnational governments in international policy refers to changing the law without altering constitutional limits. The Brazilian Constitution of 1987 and 1988 added federalism as an immutable clause. The impossibility of amending the Brazilian Constitution is a core element to understanding the scenario for decentralised diplomacy. However, the already mentioned PEC 475/2005 must be pointed out, which sought to amend Article 23 of the constitution and encourage acts and agreements with foreign subnational actors. The increasing role played by subnational entities in the international context led to new forms of dialogue, even though the pre-existing legal basis did not need any changes. The values of common law served to boost changing elements in domestic legislation (Vigevani, 2006: 14). The ambitious para-diplomatic aspect can be illustrated as a result of isolated initiatives carried out by subnational entities such as the north-east state of Ceará, which is one of the most developed Brazilian states, in terms of its commitment to paradiplomatic issues. The state has been characterised by an extremely dynamic and inspiring performance regarding foreign links, compared to other states. The initiative to foster paradiplomatic links was established during the administration of Tasso Jeiressatti in 1995. Since then, the state has worked to strengthen its international relations with various countries, including Chile. The state of Rio Grande do Sul (southern Brazil) has also established significant para-diplomatic ties with South American provinces. The geographical position of Rio Grande do Sul also favours this kind of initiative, given that it is a border state. Thus, the southern Brazilian state feels the effects of regional integration more intensely, considering that Mercosur’s impact on the production matrix is particularly strong. The state of Rio Grande do Sul has an active relationship with Mercosur members, especially the governments of Uruguay and Argentina. According to Núñez: “In 2011, the government of Rio Grande do Sul began a dialogue with the Chilean province of Coquimbo. The latter already had a connection with the Argentine province of San Juan because of the project of the Black Water Tunnel project. The Argentine-Chilean project paved the way for the feasibility of a bioceanic

223

corridor, which would leave from Porto Alegre/RS reaching the Pacific region of Coquimbo.”138

The fact that other states do not have advisory committees does not mean that they are indifferent to building international links. In any case, many states have boosted their exports and sought to attract foreign investment. Even states without long-term tradition of exports, such as Roraima and Acre, are already focused on programmes in the international area. For instance, Bahia (the state in the north-east) has been significantly dynamic in international political strategy, without having a specific advisory board for international affairs, although not necessarily a lack of foreign links. At the present time, Bahia has cooperation ties with the US, South Korea, Italy, Germany, Portugal, Malasia, Indonesia, Argentina and interestingly Chile. The Bahia International Business Centre part of the Secretariat of Industry, Commerce and Mining, plays an active role in attracting investments and promoting exports (Saraiva, 2004: 53). However, the relations of Brazil’s Federal States are not restricted to business, since the state government has engaged in five areas of international affairs, as Nune highlights: 1) international articulation: maintaining relations with international actors, mostly with an economic, political and cultural focus; 2) attracting productive investments: a policy to explore potential possibilities to attract foreign investment;139 3) fostering trade and tourism: encouraging the export of culture, the 138

Tarson Núñez, Governor Adviser, Coordinator of International Relations. Interviewed on 15 February 2013. See also Mariano Alvarez, ‘Paradiplomacia en las relaciones chilenoargentinas: La integración desde Coquimbo y San Juan’, PhD Thesis, Leiden University, September 2016. 139 In a broad sense, investment is usually understood as a sum of money or other resources – including knowledge or time – spent with the expectation of a future return. Investments may, however, be viewed more narrowly and in different ways, depending upon the context and purpose. Although there are some differences regarding productive investments, some authors have adopted the idea that financial assets purchased by investors are newly issued by firms to raise funds to create productive capacity. In this context, the acquisitions of assets for non-profit purposes not used in production (for example, buying a house) are not considered investment. “Foreign Direct Investment and Transnational Corporations: concepts definitions and measurements”, IIA-International Investments Agreements, UNCTAD – Virtual Institute on Trade and development, pp. 4-7. http://vi.unctad.org/

224

conquest of new markets, support for micro, small and medium-sized local business and their insertion into the international economy, as well as promoting the potential of tourism; 4) international cooperation: a relationship with organisations and international governments to obtain financial and technical resources to support regional development projects and; 5) institutional: defence of regional interests with regards to federal government and support for international actions by other state institutions. The increasing role played by para-diplomacy in regional foreign policy goes hand-in- hand with the current scenario of the interdependence in which foreign affairs are carried out. In this context, subnational entities assume a crucial role in the international reorganisation of the Southern Cone regional ties. The so-called ‘federal diplomacy’, as pointed out at the beginning of this section, recognises the autonomous focus of subnational governments as an important element for conducting regional cooperation initiatives. The idea of para-diplomacy means foreign policy is carried out by non-central actors, which like traditional diplomacy’s foreign policy, are part of the country’s national interest. Combining the interests of states and municipalities with central government targets changes the scope of current foreign policy strategy. Para-diplomacy is an essential mechanism for analysing the Brazil-Chile bilateral approach, insofar as Chile’s foreign policy does not prioritise special links with the regional integration process as an international insertion strategy. Chile’s foreign policy focuses on bilateral agreements with the United States to the detriment of stronger Latin American ties and causing the perception of a lack of interest on the part of the former in regional integration initiatives. Para-diplomatic relations between Chile and Argentina together with the two countries’ closer ties in other areas as has been studied, shows the possibility of strengthening subnational links with other countries like Brazil. The bioceanic corridor project illustrates this point, since the official national governments’ project is combined with decentralised actors engaged in the initiative. Beyond the para-diplomatic standpoint, the increasing participation of the business sector sustains our argument about studying the Brazil-Chile relationship based using a decentralised approach. 225

In contrast to the previous realist theory, which considers the State as central actor in the international arena, the current dynamic international scenario demands a more complex organisation to tackle its elaborate issues. Since contemporary states develop interdependent relationships, the new context endeavours to create a decentralised approach to the emerging international order. From an economic perspective, decentralised cooperation plays a significant role regarding the possibility of attracting foreign investment, increasing trade, investing in infrastructure and accessing markets. Moreover, the increasing importance of subnational actors helps to embrace key concepts such as public diplomacy, nation branding, presidential diplomacy and paradiplomacy, which have all laid the groundwork for an analysis of Brazil-Chile bilateral links.

3.4 Brazil-Chile Relations within the Economic Context 3.4.1 The Brazil-Chile relationship: economic background As mentioned at the beginning of this chapter, hyperinflation in the lost decade of the 1980s caused considerable difficulties for Brazil-Chile cooperation in the business sector. Unstable inflation did not help promote bilateral cooperation efforts, since the lack of a long-term perspective discouraged both countries from building up an entrepreneurial approach or creating ongoing trade links.140 A long-term vision was essential for a transnational corporation to enter a foreign market, therefore hardly any businessmen invested in projects abroad without defining the political economic context of the target country for the next few years. The implementation of policy action by both states to tackle inflation brought strengthening of bilateral links. Chile was the first Latin American country to adopt the ‘inflation target model’ and as a result the country embraced transparency measures, which helped put inflation levels into a steady decline. Brazil is one of the emerging economies that opted to control inflation through the same model used by its Chilean counterpart, even 140

During the late 1980s and early 1990s, the price of goods in Brazil went up several times a week or even a day. Robert Plummer (2010), “Colour-code clue to Brazil’s inflation past”, BBC News, 27 October 2010. http://www.bbc.com/news/business-11477974.

226

though the model varied according to the different domestic policies implemented by each state.141 However, the inflation target model needed more regulation through central banks, which meant important action from the latter with a view to controlling inflation. It should be state that inflation rates do not fall rapidly, but rather steadily and gradually. There are many reasons for a rise in inflation, but the consequences are almost always the same worldwide: a worsening of income distribution and the deregulation of the balance of payments and public finances along with limits to long-term planning, with uncertainty hampering the establishment of bilateral ties between countries and the development of foreign policy strategies. The inflationary period in the 1980s led to difficulties for exports because of the increasing prices of national goods compared to foreign ones. The unfavourable circumstances for exports led to a currency devaluation to promote exports. Indeed, a consequence of currency devaluation is a rise in import prices, which is related to the prices of goods and services, causing an increase in inflation.142 For obvious reasons, regarding Brazil-Chile bilateral links we had at that period the worst context because of the political circumstance combined with unstable economic scenario. The role played by the chaotic economic circumstances in the 1980s and at the beginning of the 1990s in the process of strengthening the BrazilChile partnership cannot be underestimated. Importantly, the economic situation combined with the military dictatorship gave way to a period with an uncertain scenario for the building of bilateral relations. The core element for understanding this in our study is the difficulty in establishing the boundaries between politics and the economy, given the tenuous border line between the two concepts that can lead to misconceptions about their importance when explaining foreign affairs. The stable economic scenario 141

The Inflation Target model was first adopted in New Zealand in 1990. Chile was the second country to adopt the same model in 1991. The implementation of the model occurred in Brazil in 1999 through presidential decree and its mechanisms serve as guidelines for monetary policy. José Claudio Securato, Economia brasileira: história, conceitos e atualidade. São Paulo: Saint Paul Editora, 2011, p. 88. 142 During the second half of the 1980s, fiscal accounts in Argentina, Brazil and Peru did not show any significant improvement. The core element for hyperinflation is the loss of the government’s decision-making capacity in driving economic policy. Gustavo H. B. Franco (1993), “Brazilian hyperinflation: The political economy of the fiscal crisis” in Maria D’Alva G Kinzo, Brazil: The challenges of the 1990s. London: British Academic Press.

227

boosts initiatives that seek to establish ties and a long-term bilateral relationship.

3.4.2 The shifting scenario of the 1990s and the emerging power of the business sector The favourable economic context laid the groundwork for the increasing participation of business actors in foreign policy strategy. In Chile, businessmen began to organise themselves in order to address the opportunities that arose during negotiations associated with the transition from LAFTA to LAIA. They started to attempt to influence foreign policy strategy, taking on a substantial role in the negotiation process. In this way and since the Treaty of Montevideo (1960), the business sector has had a different perspective to regional development regarding the visible benefits of increasing trade (Direcon, 207). In Chile, it was obvious how the publicprivate sector interacted to promote the country’s interests abroad, as already studied and cooperation became visible particularly regarding the Chilean nation branding strategy. Better public-private collaboration embraced the cooperative idea of public diplomacy to respond to the dynamic international scenario. In Brazil, the perception of the need for public-private interaction did not arise particularly early, but a shift in the context is seen during the administration of President Lula (2002-2010) which brought about the increasing participation of the private economic sector in foreign affairs. Since then, the critical role played by the private sector in that period is congruent with the concept of public diplomacy, which illustrates contemporary international affairs and the development of Brazil-Chile ties. Brazil’s continued integration into the world economy includes the private sector’s more active participation in foreign policy (Oliveira, 2007: 12-13). Moreover, Brazil’s economic success combined with the speed of globalisation and the shifting international agenda demanded the participation of corporate actors as an essential new constituency. The late participation of Brazilian private actors in international policies when compared to Chile can be explained by two points: the monopoly of Brazil’s Foreign Ministry in carrying out foreign policy and the totally 228

different organisation of Brazil’s economic policy in comparison to that of Chile as already stated.143 A parallel study of Brazil and Chile serves to link important public-private sectors. The bilateral relationship embraces complex aspects and mutual respects as important elements. Therefore, the current growing role of the private sector has to do with certain factors: the influence of other ministries beyond the Itamaraty in foreign affairs and the influence of several private sector actors; the need for greater cohesiveness between domestic policies and foreign policy, due to growing international repercussions and the growing networks which expand continuously with the emerging demands of new economic actors.144 Since the international arena has become more dynamic several new topics have emerged and nowadays today transnational matters are accompanied by a high flux of trade and investment, which urges many actors to interact in order to face contemporary issues. As a result, the way foreign policy is carried out has changed, adapting to the current international scenario. The present context demands public-private interaction to tackle complex issues, hence powerful private sector economic actors with a global reach cannot be relegated to a secondary role in foreign affairs. President Lula’administration understood that private sector actors retained important responsibilities in foreign affairs and therefore, so-called ‘business diplomacy’ tended to play an increasing role in his foreign policy strategy. The absence of studies considering the important role played by the private sector in Brazil-Chile ties is not linked to the present scenario, whereby the two countries’ private sectors exert influence on how foreign 143

Only a comparison between Brazil and Chile’s different business environments allows for an understanding of Chile that encompasses a much more efficient investment environment, compared to that of Brazil. Chile has moved to deregulate the economy, attempting to rationalise prices, taxes and labour regulation and deregulation and privatise the financial sector. Chile has created the nation brand image of a liberal economy. Given the complexity of Brazil’s formal law, legal and regulatory processes, this country at some point limited the entry and growth of outsiders. The domestic system puts Brazilian industry at a competitive disadvantage compared to nations that have efficient legal and regulatory systems. Andrew Stone, Brian Levy and Ricardo Paredes. “Public institutions and private transactions: a comparative analysis of the legal and regulatory environment for business transactions in Brazil and Chile”. In: Leed J. Alston et al. (Eds), Political economy of institutions and decisions. Cambridge: University Cambridge Press, 1996, p. 102. 144 Joseph Marques. “Brazil: growing pains of an emerging power”. E-International Relations. Editorials. December, 2011. http://www.e-ir.info/?p=15713

229

affairs are conducted. Obviously, the presence of the private sector in foreign policy is much more active in the case of Chile, since its direct influence began early in the 1960s in accordance with the country’s strategy of open regionalism. The lack of explicit participation in geopolitics does not mean that there is no foreign policy or an absence of bilateral links with Brazil. At the same time, it makes little sense to speak of idealism among Chile diplomacy since commerce and economy play an overwhelmingly important role in the country’s foreign policy. As an important exporter and a country with trade agreements worldwide, Chile’s national interest is congruent with how foreign policy is carried out.145 From Brazil’s perspective, the private sector’s more active participation occurred during the term of President Lula, favouring the initiative of a business mission between Chilean-Brazilian private actors. The bilateral relationship cannot only be observed from a public sector perspective. Importantly, private actors cannot be excluded from Brazil-Chile bilateral relations, given the growing trade and flow of investments in the last few years between the two countries and investment and trade activities account for a significant share of the two countries’ links. Thus, the Brazil-Chile business mission, a platform for integration’ project was launched between 1st-3rd April 2009 to promote the expansion of bilateral trade, with Brazil recognizing the role of Chile as a natural export platform for Brazilian products. The existing Chilean bilateral FTA worldwide had a clear set of benefits for Brazil’s economy in its quest to ensure the diversification of exported products and expand its destinations. The majority of these Chile FTAs are still in force while a few are still being negotiated. Aperture to trade has long been considered key element for local and multinational firms to be able to export goods and services to foreign countries while benefitting from the country’s FTA. 146 As we will see in the 145

Among the Chilean international agreements, the Canada-Chile Free Trade Agreement includes sanitary and phytosanitary measures. Since it came into force in 1997, trade has more than tripled and Canada has become the largest source of new direct investment in Chile. Foreign Affairs, Trade and Development Canada (2015), “Canada-Chile Free Trade Agreement”. http://www.international.gc.ca/trade-agreements-accords-commerciaux/agracc/chile-chili/index.aspx?lang=eng. 146 It should be highlighted that products exported from Chile do not have to be completely made in Chile to benefit from these agreements. The aim of using Chile as a platform includes the possibility that companies can import products from one country under preferential tariff conditions, add value to them in some way and afterwards export them to

230

following sections, the benefits for Chile of acting as a platform go hand-inhand with its policy of attracting foreign investment, paving the way for economic growth and employment. Indeed, the fact that Brazil is the only BRIC country without access to the Pacific demands physical infrastructure to be built, given that the largest flux for trade is located on the Pacific Rim. Like Chile, China is Brazil’s main trade partner and beyond facilitating access to the Chinese market, improvement to transport infrastructure between Brazil and Chile is key to enhancing physical links and strengthening bilateral ties. In this sense, physical integration between the two states seeking pragmatic links is carried out regardless of the political circumstances. This means that harmonising infrastructure is a critical mechanism for increasing access to regional and global markets. Chile, for its part, benefits from the huge Brazilian market, strengthening its export capacity. Given the impressive economic development of Brazil in the last few years and its market dimensions, the country has become an important market for Chilean products, such as copper, salmon, wine, fruit, cellulose and nitrates.147 For Brazil, Chile’s domestic market benefits several sectors of Brazilian industry, such as food, metals and industrial equipment. Moreover, Brazil can take advantage of the phytosanitary agreements already signed by Chile. Technical discussions aside, the prospects for the expansion of Brazil and Chile’s export market are encouraging and are part of a joint effort between the private and public sectors to boost bilateral trade relations and resize their strategic partnerships.148 In addition, the coordination of bilateral partnerships favours Chile other countries. Multinational firms that comply with the rules of origin in Chile’s export markets can take advantage of zero or low import duties in many countries. Nora Balzarotti, “Platform Chile”, Magazine Business Chile, August 2010. http://www.businesschile.cl/ en/amcham/enfoque/platform-chile 147 Since the restoration of democracy in both countries, it must be stressed that BrazilianChilean trade has increased remarkably, especially in 2007 and 2008, when trade reached US$ 111.635 and US$ 124.065 million dollars. See Banco Central de Chile, Series de Indicadores. Accessed on 10 December 2012. http://www.bcentral.cl/estadisticas-econo micas/series-indicadores/index_se.htm 148 See “Parceria Brazil-Chile requer análise das regras de origem”. International Centre for Trade and Sustainable Development. Pontes Quinzenal vol. 4, número 6, April 2009. http://ictsd.org/i/ news/pontesquinzenal/44935/

231

finding new trade partners through Brazil, such as Africa. In this sense through close relations with Brazil, Chile improves relations with other Latin American countries and gains access to African markets.149 As stated earlier, an important factor that contributes to developing closer ties between Latin America and other countries is the continent’s regional stability. 150 From a Brazilian standpoint, Chile’s market dimensions are not attractive, although Chile’s preferential trade agreements worldwide serve as a bridge for Brazilian exports. In this way, Chile can be used as an export-platform for Brazilian trade (López and Muñoz, 2008: 28). Although the idea of Chile as a Latin American export platform is not new, the recognition of Chile as an export platform is illustrated through the initiative of the business mission organised by the Ministry of Development, Industry and Foreign Trade. With the aim of strengthening business ties between both countries and exploring new partnerships, the mission in Chile also seeks greater market diversification as a way to mitigate the effects of the crisis as well as to decrease the effects of stoppages by the World Trade Organisation. A Brazil-Chile partnership in the business sector creates alternative markets for Brazil’s exports.151 At present, the liberalisation of the flow of trade and investment, 149

Even though there is not a consensus that Chilean foreign policy seeks access to African markets through Brazil, some studies are being developed within academic circles that explores Chile’s interest in Africa. Despite the lack of studies regarding this issue, the possibility of widening ties with Africa has begun to be explored within Chile’s international relations field. 150 Current foreign policy in the continent should be compared with the constant occurrence of conflicts in the past in order to observe that today there is much more consent in diversified areas, even if each country has its own targets. One way to understand how Latin American foreign affairs became more stable is to examine the continent’s geopolitics from a historical perspective. Argentine’s security measures in the past to avoid simultaneous troubles with Chile and Brazil and Brazil’s attempts to construct the ‘informal alliance’ with Chile as a way to constrain Argentine power demonstrate the development that cooperation initiatives have acquired. More detail in: Luiz Alberto Moniz Bandeira. Conflito e integração na América do Sul: Brasil, Argentina e Estados Unidos, da Tríplice Aliança ao Mercosul. Rio de Janeiro: Revan, 2003. 151 The delegation headed by the Executive Secretary of the Ministry of Development, Industry and Foreign Trade, Ivan Ramalho, was partnered with the Ministry of Foreign Affairs, the Brazilian Trade and Investment Promotion Agency and the Federation of the Industries of the State of São Paulo. Chile occupies the eighth place in the ranking of Brazilian market targets. http://www.mdic.gov.br/sitio/interna/noticia.php?area=5¬ici =8907

232

economic competitiveness, technological changes and the intense search for new platforms for production and export are important features of the international business context (Veiga, 2004). In this sense, companies from different countries seek to make gains in efficiency, either in their main activities or by outsourcing specialist posses or internationalising their operations. It is important to highlight that, in order to reduce costs and achieve scale economies, the flow of foreign investment has increased in different areas of the world. The rising influence of other actors in the international arena as introduced in the first chapter can be recognised when discussing the concept of public diplomacy. Besides the multi-level cooperation implied in the concept, this trend will come to exert even more influence over foreign affairs in the foreseeable future. According to public diplomacy, foreign policy cannot be understood solely as a state activity and in turn a broader coalition should be encouraged between diplomats and other government officials in combination with non-official agents. Despite the expected growth of the role played by diverse actors in foreign affairs, it can be stated that the balance between the state and business has already strengthened bilateral cooperation. With the increased internationalisation of firms, there is a greater probability that important economic actors affect the country’s external policies, with it becoming increasingly difficult to maintain the line between public and private influence on foreign affairs. It should be pointed out that emphasis on the business sector played a major role during President Lula’s term, more so than under the previous government of President Cardoso. Lula’s term brought with it a closer dialogue between the two countries’ business areas. In contrast to the term of President Cardoso, whose foreign policy focused on regional negotiations, Lula’s government stressed the internationalisation of Brazilian industries (Oliveira, 2006: 405). Moreover, the growth of Chile’s investments in Brazil is also inter-related to the economic growth experienced under President Lula’s administration, which maintained the previous administration’s low rates of inflation combined with a positive evaluation criteria of country risk. 152 152

Country risks refers to the economic, political and business risks that are unique to a specific country and that might result in unexpected investment losses. Usually investors consider two factors: the economic risk which refers to a country’s ability to pay back its

233

This means that the private sector was now more clearly interconnected with government policies than it had been in the past. However, this does not mean that TNEs did not play an important role in Brazil-Chile bilateral relations in previous administrations as will be seen in this section. Instead, business partnerships are now much more fruitful than in the past, as illustrated by ‘the Brazil-Chile business mission, a platform for integration’ in 2009. Furthermore, the increasing participation of the business sector in diplomacy does not mean giving up traditional prerogatives to the detriment of the private sector, but rather that international affairs in the twenty-first century requires much more public-private coordination than in the past.

3.4.3 The growing influence of foreign direct investment on bilateral affairs Foreign direct investment cannot be relegated to a secondary position in Brazil-Chile links, since economic ties do not only involve imports and exports. Several actors come into play in bilateral economic-political relations. In this respect, our main line of thought argues that the role played by non-state relations in diplomacy is growing and therefore transnational companies can be important partners in the context of strengthening BrazilChile bilateral ties. Transnational companies play a crucial role in current foreign policy strategy, helping to increase the openness of borders and foster bilateral links. The development of specific mechanisms favours bilateral integration to the extent that both countries become attractive to investors after signing trade and bilateral tax agreements153. In addition, debts, with a country with stable finances and a stronger economy providing more reliable investments than a country with weaker finances or an unsound economy; and the political risk which refers to the political decisions made within a country that might result in an unanticipated loss for investors. Even if a country’s economy is strong, if the political climate is unfriendly to outside investors, the country may not be a good candidate for investors. “Evaluating country risk for international investing”. Investopedia. 22nd October 2008.http://www.investopedia.com/articles/stocks/08/country-risk-for-international-invest ing.asp#axzz1juk7FloR 153 On 2nd October 2003, Brazil and Chile passed an international agreement in which labour income received in one of the contracting states would be exclusively taxable in the country where it was performed. In Brazil, this was issued as Decree 4853. Ricardo Alexandre (2009), Direito Tributário. Rio de Janeiro: Forense, p. 211.

234

economic closeness between the two states reflects a strong confidence in both business areas that cannot be separated from the political context. However, certain initiatives should be taken into account when considering the reasons for the possible influence of FDI on Brazil-Chile relations. In this context, the growing impact of FDI on bilateral ties suggests that falling transports and communication costs help strengthen links. Indeed, such investment tends to rise in accordance with the market size of partner states and the possibility of reaping scale economies. Moreover, participation in free-trade areas also plays a crucial role in explaining private investment initiatives. In this regard, the gigantic Brazilian market combined with Chile’s FTAs worldwide promotes the creation of scale economies. Indeed, the importance of internationalisation, particularly that of Brazilian companies to Brazil-Chile ties should not be underestimated in the study of the initial steps taken towards mutual investment networks. The time when companies were only marginal players in the global economy has passed and internationalisation is becoming relevant to companies’ strategies. However, internationalisation is not an automatic process, since it occurs when the company gets more involved in international commerce, distribution and production.154 On the one hand, direct investment depends on market imperfections in the host country. On the other, the company must have certain skills and advantages over its competitors in order to justify direct investment. Among other things, the effects of FDI depend on the features of the country on the receiving end and, in this sense, it relies on the circumstances of Brazil and Chile’s domestic markets. FDI has a significant effect on both the receiving economies, since it increases output and the volume of investment and on the sending economies, since it reduces export costs, sustains internal advantages abroad and provides knowledge of the other market. In practical terms, most Brazilian companies first develop their competitive advantages in the domestic market and then, after several years, move to international markets via exports. Usually, companies opt to first 154

This involvement is usually based on the knowledge acquired after experiences that involve a lesser commitment, such as exportations or licences. “Brazilian companies’ internationalisation: Brazil’s multinationals corporations cases and challenges”. São Paulo, SP, July 2007, p. 23. www.factordesolucao.com.br

235

enter similar markets, for instance in Latin America, which shares similar features such as culture, economic values, administrative aspects and geographic facilities. In this scenario, the internationalisation of companies has been carried out autonomously by Brazilian enterprises, paying special attention to the federal government’s interests.155 In most cases, the internationalisation process is slow and gradual and depends on the interaction of various sectors, as well as a commitment to a particular foreign market. The internationalisation of companies demands a politicaleconomic partnership such as the participation of the Ministry of Foreign Affairs combined with the Ministry of Finance, which is a core element for creating a business cooperation network.156 Although this recent phenomenon emerged in the 1990s, it has played a major role in the twenty-first century. As mentioned above, there are several reasons for this: (1) the relative size and ability of scale economies to explore other markets, and (2) government support of a political and strategic nature, through special forms of financing from the National Bank of Economic and Social Development (BNDES), combined with logistical and intelligence support from the Ministry of Foreign Affairs. Internationalisation begins because of business interests, although the decisive role played by state interests cannot be ignored. In this context, large companies shaped by the public sector now belong to the private one, as in the case of Vale do Rio Doce, now called Vale. Internationalisation occurred either through direct funding or through external support. To illustrate this point, the case of the large construction companies that received funding from BNDES should be noted.157 155

In fact, Brazil’s economic aperture began in 1992 during the administration of President Collor de Mello, who implemented a plan to gradually reduce the State’s role in the economy. His administration began selling off state-owned enterprises, dismantling protectionist trade policies and opening up the domestic economy to the world. Pran Tiku. “O brilho dos emergentes: obtenha lucros investindo no Brasil, Rússia, Índia, China, Coréia do Sul e México”; traducão Cid Knipel – Rio de Janeiro: Elsevier, 2009, p. 32. 156 The Office of International Affairs is an agency linked to the Finance Ministry that handles matters involving the economy, trade, financial negotiations with other countries and participation in negotiations on safeguards, antidumping and countervailing duty under trade agreements, the WTO and other international bodies. SAIN (Secretaria de Assuntos Internacionais- Ministério da Fazenda), http://www.fazenda. gov.br/sain/sobre_sain/ atribuicoes.asp 157 Ibid.

236

There is a consensus on the part of the federal government regarding the relationship between the internationalisation of Brazilian enterprises and the growing emergence of the country on the international economic scene.158 In today’s environment of market and trade liberalisation, the importance of private enterprises in emerging economies as an engine of outward-oriented growth is increasing, to the extent that they become core actors in international affairs. Once domestic companies establish themselves as investors abroad, financial vulnerability decreases due to the repatriation of profits and gains related to overseas operations.159 The internationalisation process also contributes to building a nation brand, since it allows Brazil to communicate a positive economic context in the international arena, similar to that of Chile. Both public diplomacy and nation branding portray the new context in which traditional diplomacy turns dynamic. In the Brazil-Chile bilateral context, it should be remembered that FDI also measures a country’s competitiveness in infrastructure, macroeconomic stability and education. Therefore, it accounts for closer Brazil-Chile financial and economic ties, since both countries have to work out new ways of relating to each other. In contrast, Chilean companies entered the region sooner than their Brazilian counterparts, taking advantage of physical proximity and benefitting particularly from the huge Brazilian market. A limited Chilean market explains the rapid saturation of the domestic environment, which means the country needs to expand abroad. Therefore, the search for larger markets came to be a priority in the business sector, even though several factors played an important role in consolidating transnational firms, such as a consistent, good climate at home in combination with a stable macroeconomic context and the country’s endowment of natural resources. These factors served as key elements to domestic growth and allowed the country to acquire the skills needed to penetrate other markets.160 158

The first Brazilian who aspired to present Brazil as an international player was the Baron of Maua (Irineu Evangelista de Souza) who lived from 1813 to 1889. Afonso Fleury and Maria Tereza Leme Fleury (2011), Brazilian multinationals: Competence for internationalisation. Cambridge: Cambridge University Press. 159 Although greater economic interaction with the rest of the world means that the country is more vulnerable to shocks from outside and swings in the sentiment of investors. Dean Croushore (2007), Money and banking: A policy-oriented approach. New York: Cengage Learning, p. 14. 160 Karen Paniachik, “Chile’s FDI policy: past experience and future challenges”. OECD

237

However, Chilean and Brazilian firms adopted similar strategies to access the foreign-partner market, based on a strategy for expansion through exports, with increased market knowledge and escalating commitments in the form of more investment. Entering regional markets has similar characteristics, such as proximity to consumer markets and similar cultural aspects. Furthermore, the lesser physical distance between regional partners is recognised as an important step towards managing the experience and gaining a competitive advantage. With the goal being goal to internationalise and compete in foreign markets, Chilean-Brazilian companies take advantage of geographical proximity before adventuring into more distant markets. 3.4.4 Nation branding within the foreign direct investment environment Before getting into an analysis of Brazil-Chile foreign direct investment (FDI), the importance of nation branding in their bilateral ties should be taken into account. According to the first chapter, a successful nation brand can attract and sustain foreign investment, creating a wave of economic benefits. Along with public-private partnerships, the nation brand is related to how the country is seen and how it sees itself. Beyond the importance of other countries’ perceptions, nation branding must describe the country’s reality in order to achieve tangible gains. At the same time, it has to make the country unique and express its dynamic and modern aspects, combining different kinds of elements. On the contrary to the nation image analysed as a result of the question raised in the first chapter, which led to a stereotypical model of different groups of Brazilan and Chilean citizens, the business view of nation branding is the focus in this section. Instead of pointing out superficial perceptions of each nation’s image, the nation branding approach leads to a careful evaluation of the advantages of the country’s image building. It seeks objective goals, whereas citizens’ opinions refer to generalised perceptions. Global Forum on International Investment, Shanghai 5th-6th December 2002, p. 3. www.oecd.org/dataoecd/54/27/2764423.pdf

238

In sharing positive views on each other, Brazil and Chile’s nation brands are associated with stable, dynamic and rapidly growing economies, favouring closer economic dialogue between both states. From Brazil’s perspective, Chile is considered an example of a sustainable economy that acts rigorously regarding public accounts. Chile’s good reputation among foreign investors shows that the country has both a complete and advanced nation brand. According to the majority of Brazilian executives, “Brazil has yet to create any contingency plans like the ones recently adopted in Chile.”161 When considering the structural plan for dealing with any kind of conflict, Chile’s image as the region’s Asian Tiger is clearly associated with its pragmatic administration and we are reminded that it is an example of a reduction in public spending that led to effective and long-lasting results that helped tackle periods of crisis. Beyond Brazil’s nation brand that sells any product oriented at youngsters, holding two highly visible international events the 2014 World Cup and the 2016 Olympic Games has guaranteed overwhelming exposure for the country per se. This visibility has opened up an enormous market for several sectors. Nevertheless, the World Cup and the Olympics cannot be considered the only reasons for the fast-growing business environment, since the current good economic performance has also played a major role in the increase in foreign investment. Despite global turmoil in 2011, Brazil has settled itself into the international scenario and has shown great sensitivity when dealing with the global crisis (Cruz and Stefano, 2011: 36). Since Chile and Brazil consider each other as countries that share common values and similar features, such as democracy, human rights, peace, stable diplomacy, orderly economic growth, political stability, independent judiciaries, trade facilitation, competitiveness and the capacity for regional economic negotiations, the perfect scenario exists for boosting closer economic bilateral ties. The fact that both countries have positive perceptions of each other through their nation brands guarantees a favourable environment for strengthening bilateral relations. In this respect, the ACE No 35 signed between Chile and Mercosur 161

The contingency plans adopted by Chile in December 2011 included measures to boost employment and investment as ways of dealing with the crisis. “Chile põe em prática plano de contencão para enfrentar a crise econômica internacional”. O Hoje. Goiânia, 14th January 2012. http://www.ohoje.com.br/mundo/30-12-2011-chile-poe-em-pratica-plano-decontencao-para-enfrentar-a-crise-economica-internacional/

239

represented the most important step in bringing Chile closer to regional partners. The ACE No 35 can be considered as an essential mechanism for strengthening Brazil-Chile ties. Another important instrument for improving Brazil-Chile relations was the agreement signed on 24th October 2004 to avoid double taxation between Chile and Brazil, representing a significant step towards facilitating business.162 The Brazil-Chile tax agreement also served to encourage investments whilst promoting the abolition of double taxation. This tax agreement is congruent with the need for import-export sectors and in this way the absence of double taxation may favour gains from additional investments. The Brazil-Chile agreement to avoid double taxation demonstrates the increasing importance of bilateral relations, insofar as Brazil does not have a double taxation agreement with every Latin American country. Although signing an agreement to avoid double taxation has several benefits, the main interest lies in attracting and increasing a flow of foreign investment into the country. Having signed the agreement, Brazil and Chile not only had the task of preventing tax evasion, money laundering, corruption and mispriced commercial transactions among others, but the signing of this tax treaty also means enhancing economic relations between both states. It also meant that a person who provided services in one country was not taxed twice because of the Brazil-Chile agreement to avoid double taxation. 163 In this economic context, Brazil and Chile began to establish long-lasting ties from 1985 onwards, when both countries’ economies grew. It should be pointed out that the trade balance has always been unfavourable to Chile, because the goods imported by Chile from Brazil basically consist of heavy machinery and highly industrialised products with a high added value and amount. However, from Chile’s viewpoint, the Brazilian market had always been considered extremely important not only because its export value, but also due to certain comparative advantages. For instance, the gigantic Brazilian market has common borders with other Mercosur members and little demand for sophistication compared to developed countries. Indeed, the percentage of value added to export goods 162

Doing Business in Brazil, “Double Tax Treaty Brazil and Chile. http://dbinbrazil. com/international-tax-treaties/double-tax-treaty-brazil-x-chile/. 163 Brazil signed the treaty preventing double taxation, inspired by Article 7 of the OECD Convention. Ricardo Lobo Torres (2013), Planejamento tributário: elisão abusive e evasão fiscal. Rio de Janeiro: Elsevier, p. 70.

240

demonstrates that the use of technology and skilled labour directly favours the development of domestic economic activities. The importance of nation branding building must not be underestimated in the FDI scenario, since the value of the brand as an asset is an important indicator of the amount of foreign investment. Increasing bilateral FDI means that good image promotion contributes to attracting and sustaining foreign investment and therefore nation branding aspect plays a critical role in the process. The high-speed growth experienced by Brazil and the idea of Chile’s liberalised market go hand-in-hand with the policies of attracting investment. Being able to launch and maintain a positive national brand is a decisive element for increasing bilateral FDI.

3.4.5 FDI and the multi-faceted approach in bilateral affairs Although the focus of this study is on the historical-political angle of BrazilChile bilateral relations, the economic field is important in terms of strengthening the countries’ ties to the extent that it cannot be separated from the historical standpoint. In this scenario, the interaction between the public and private sectors serves as a bridge to help understand their bilateral affairs. Trade and market liberalisation policies have made it imperative for firms to look for foreign markets when seeking to enhance their opportunities through economic dialogue. Being able to round up cooperation in diverse areas has strengthened bilateral links, since no country wishes to have political problems with a strong economic partner. Nation branding highlights the relevance of the country’s image to attracting trade and investments and serves as a central concept when analysing Brazil-Chile bilateral relations. FDI is one of the most controversial topics in international political economics, so it is the first that should be defined: FDI means that company shares or quotas in a country become the capital of non-residents. In other words, one of the main features of FDI is the partial or total take over of the company receiving the capital from foreign investors. Regarding FDI, maintaining foreign capital tends to occur in the long run in order for participation in productive ventures. Due to uncertainty about the returns of invested capital and the time needed for this to occur, FDI is to a certain 241

point considered risky. 164 In this regard, two important facts should be explained: firstly, transnational enterprises (TNEs) are considered the main agents for carrying out FDI; secondly, TNEs have extraordinary sources of economic and political power. Among other things, the high capability of TNEs to mobilise resources on a global scale and their maintaining of close links with the governments of their countries of origin should be stated (Gonçalves, 2005 Reinaldo: 181). Moreover, both in developed and developing countries, FDI plays an important role on the political agenda. 165 This means that FDIs are not only in state of flux among developed states, investment flows among developing countries also show growth worldwide.166 The direct investor may be an individual, an incorporated or unincorporated private or public enterprise, a government or an associated group of individuals or enterprises.167 Ownership of 10% of ordinary shares or voting power is the main criteria for determining the existence of a direct investment relationship. 168 Direct investment enterprises may be 164

Ministério da Fazenda, Banco Central do Brasil. Censo 2006 de Capitais Estrangeiros no País, p. 7 http://www.bcb.gov.br/rex/censo2005/port/ManualCenso2005.pdf. 165 According to the IMF, a direct investment enterprise is an incorporated or unincorporated enterprise in which a direct investor who is resident of another economy has 10% or more of the ordinary shares or voting power (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise). As UNCTAD statistical reports shown, global FDI flows to developed countries rose by 37% in 2005 and those to developing countries went up by another 22%. In percentage terms, developed countries attracted 59% of global FDI and developing countries attracted 36%, UNCTAD, “Global FDI inflows rise for second consecutive year”, UNCTAD/Press/PR/2006/026/16/10/06. http://www.unctad. org/Templates/webflyer.asp?docid=7456&intItemID=1528&lang=1 166 The strong competitive pressures generated by the globalisation process forced firms to internationalise increasingly early, sometimes even when they were first established. Therefore the idea of being born global is an important concept that must be paid attention to in the following years. Karl P. Sauvant, Wolfgang A. Maschek, and Geraldine McAllister. “Foreign Direct Investment by emerging market multinational enterprises, the impact of financial crisis and recession and challenges ahead”. OECD Global Forum on International Investment, p. 4. www.oecd.org/dataoecd/9/2/44246197.pdf 167 A point made earlier on this topic is that the difference between financial investors and non-financial investors should be highlighted. That said, while the financial investor allocates resources marginally assigning risk ratings in Brazil, the non-financial investor the TNEs - consider the country a preferential destination for investment. Franco, Gustavo, H. B. Franco (2006: 18). 168 International Monetary Fund, “Foreign Direct Investment Statistics, how countries

242

subsidiaries, associates or branches. A subsidiary is an incorporated enterprise in which the foreign investor controls, either directly or indirectly (through another subsidiary) more than 50% of the shareholders’ voting power. An associate is considered an enterprise in which the control of the direct investor and its subsidiaries varies, going from 10% to 50% of the shares with a vote. A branch is a wholly or jointly-owned unincorporated enterprise. The choice between setting up either a subsidiary/associate or a branch in a foreign country depends on the existing regulations in the host country (Duce, 2001: 3). However, considering the role played by TNEs in terms of international investment, Dunning describes the integrated development of diverse constraints as the foremost agents for carrying out FDI instead of the TNEs. Continuing in this vein, Dunning’s eclectic model is based on the juxtaposition of three things: (1) the ownership advantages of existing or potential companies; (2) country location advantages and (3) internalisation advantages combined with external assets of the recipient country through FDI. Therefore, according to Dunning’s model, advantages concerning ownership are classified as specific advantages of the company itself, while location advantages are designated as specific advantages of the FDI recipient country (Amal and Seabra, 2007: 2). In this way, foreign investment strategies cannot be solely attributed to TNEs, but, more significantly to the combination of the diverse dynamics at play, such as ownership and location advantages as well as the capacity to form partnerships with local companies.169 Today, TNEs would rather focus their entry strategies into other markets on the acquisition of already operating local businesses. By acquiring local firms that have a consolidated position in the domestic market, a more favourable investment atmosphere is created (Lacerda, 2000: 130). Another idea is that multinationals help the economy access specialised intermediate input, which tends to be produced in developed economies and acquired abroad through multinationals. As a result, labour and other factors of the host economy become more productive. measure FDI”, p. 24, http://www.imf.org/external/pubs/ft/fdis/2003/fdistat.pdf 169 Today’s FDI is quite different to that of previous years, in that is much more concentrated on the service sector. For example, it includes many acquisitions of existing companies whereas the old way considered entirely new ventures, such as FDI. Franco, Gustavo H. B. p. 16- Antonio Corrêa de Lacerda.

243

Gonçalves points out two different aspects of FDI the objective, anchored by the power of the FDI itself and the subjective, which implies a conflict of values. The subjective perspective imposes the importance of nationalism as a significant political aspect, either in terms of interstate relations or disputes among the states in the FDI scenario (Hobsbawm 1998: 181). Indeed, the domestic benefits of multinationals should be considered since they increase competition for local firms, therefore helping to redistribute income, the new technology that is brought to the host economy also favours job training for local firms. However, before deciding to promote FDI it is essential to evaluate possible sources of market failure associated with TNEs.170 Another important point to consider is the need for symmetrical information between domestic and foreign investors, promoting interaction between diverse actors from both countries. With this in mind, both FDI and TNEs play a significant role in ChileBrazil bilateral relations, since both countries share similar features regarding progress in the liberalisation, deregulation and privatisation processes. As mentioned in the first chapter, it is not that public diplomacy is a new paradigm in international relations, although it does help analyse foreign affairs from a dynamic standpoint instead of the state-centric focus. The significance of public diplomacy encompassing public-private cooperation in Brazil-Chile relations has become a core element to understanding the two countries’ bilateral links. Public diplomacy combined with nation branding fosters exports, attracts investments, promotes the country’s image and determines the relevance of decentralised actors in contemporary foreign affairs.171 However, the specific features of each country should be examined. FDI is a key element to help understand the process of building up the real economy, facilitating the transfer of technology and the management 170

Gordon H. Hanson. “Should countries promote foreign direct investment?” United Nations Conference on Trade and Development, United Nations Publication, no 9, February 2009, Centre for International Development Harvard University, pp. 9-10. www.unctad.org/en/.../pogdsmdpbg24d9.en.pdf 171 The significance of FDI goes back to the late 1980s, when it became a key component for financing international current account imbalances. According to Graham and Krugman, “in 1989, nearly half of the US current account deficit was financed by inflows of direct investment”. Edward M. Graham and Paul R. Krugman (1993), “The surge in foreign direct investment in the 1980s”, in Kenneth A. Froot, Foreign Direct Investment. Chicago: The University of Chicago Press, p.14.

244

capacity of the two states. In many respects, it establishes links – whether direct or indirect, commercial or financial – with the global economy overall and last, but by no means least, regarding creation and production capacity (Franco, 2006: 13). In contrast to speculative capital associated with volatility, the high probability of loss and short-term investment horizons, FDI potentially increases the recipient country’s savings and investments. For this purpose, Brazil-Chile cooperation within a FDI context is an important mechanism for establishing ties and strengthening the relationship.

3.4.6 Brazil’s FDI in Chile The degree of internationalisation of the companies in the business sector in Chile and Brazil can be measured by the flow of foreign direct investment abroad. Increasing bilateral business ties demonstrates the important role played by decentralised links in bilateral affairs. With this in mind, the firms that invest possess specific advantages that enable them to operate in foreign markets where domestic companies already have the advantage of better knowledge of the local market. Brazil aims to exploit Chile’s liberalised market advantages and infrastructure support, providing an export platform for the Asian market, with Brazil’s interest in international expansion requiring more intense regional cooperation initiatives. At the present time, Brazil is considered one of the countries with the highest levels of production internationalisation. As a result of the liberalisation process circumscribed by a series of measures such as privatisation and deregulation, Brazil has witnessed an extraordinary increase in the internationalisation of its production. In the international scenario, this increase can be attributed to the re-establishment of world economic growth in 1993, which led to a global economic surplus and the expansion of FDI on an international scale (Gonçalves, 2005: 182). A shift in the world economy affects how the world’s economic surplus is distributed among countries and therefore their possibilities of carrying out FDI. Brazil’s participation in the set of FDI receiving countries increased in the mid-1990s, largely due the privatisations. Nonetheless, like Chile, investments were not continuous and there have been many ups and downs

245

in terms of the foreign investment flow.172 Thus, the reception of FDI in Brazil has followed international standards and it can be seen that the main form of income in recent years has been through mergers and the acquisition of companies. There are parallels between the entrance of FDI and the volume of mergers and acquisitions involving non-residents, which have generally been as purchasers of domestic companies. This context shows that the evolution of FDI incomes has strong links with exogenous components and as a result the entrance of FDI to Brazil goes hand-in-hand with international fluctuations. One key fact to understanding the entrance of FDI in the country is that it consisted mainly of the transference of ownership from residents to non-residents (Gonçalves, 2005: 187-8). When analysing the proportion of Brazilian and Chilean FDI for each country, the circumstances that sharply differentiate the two countries should be studied. Brazil is Chile’s second direct investment destination in the world, while Brazilian investment in Chile does not reflect the same. Despite the increase in the flow of foreign capital towards Chile in recent years, as already stated in the first chapter, Brazilian investment is limited to a few sectors.173 This can be attributed to the following factors, in the first place, the restricted size of the Chilean market goes hand-in-hand with its lack of attraction for Brazilian companies. Secondly, Chile’s comparative advantages in terms of natural resources and geographical location have not attracted the interest of large Brazilian companies. Furthermore, all Latin American countries are classified as late investors due to the 1980s crisis and the costs that recovering from this crisis implied.174 At certain point, 172

During the 1990s in Chile, FDI represented an annual average of 8% between 1995 and 2000. After this surge, the amounts entering Chile dropped significantly. However, this did not reflect a change in Chile’s competitiveness but was the consequence of a sharp downturn in international economic conditions, which affected FDI in almost every country, with the exception of China. Foreign Investment Committee. 23rd August, 2009. “Foreign Investment in Chile/FDI Trends.tp://www.cinver.cl/english/ clima/inversion_ inversion.asp 173 To illustrate this point, it can be seen that both Chile and Brazil’s foreign direct investment did not include, in most cases, the transport sector. Therefore, the transport sector is not taken into account when analysing the FDI situation in both countries. Rolando Avendaño, Gøril Bjerkhol Havro and Javier Santiso. “Oportunidades na Ásia? Perspectivas para o comércio internacional da América Latina”. Política Externa, vol. 18, no 3, Dec/ Jan/Feb 2009-2010, São Paulo, p. 164. 174 Latin American governments decided to restrict capital movements seeking to avoid a shortage of foreign currency. In addition to this fact, United States banks decreased the

246

this means that Chile was not a receptive environment for attracting Brazilian enterprises’ investment flows.175 However, the first Brazilian enterprise that saw an opportunity to invest in the Chilean market was the Gerdau S. A. metallurgic company in 1992. Due to the rising demand for steel in the Chilean market, Gerdau S. A. decided to invest in that market by purchasing domestic companies. 176 In this way, the internationalisation process of Gerdau occurred through acquisitions and was motivated by better access to financing conditions in order to avoid Brazilian risks. The investment opportunity in Chile enhanced Gerdau’s regional influence and led to proximity with consumer markets, since inter-sector cooperation in business means a broader network in terms of consumer destination, distribution channels and strengthening bilateral dialogue between the countries.177 Furthermore, other Brazilian companies followed the same pattern of investment and chose Chile as an important partner for business-to-business cooperation. In this scenario, other firms entered the Chilean market, such as Odebrecht, which worked on the tunnel of the Pehuence hydroelectric adduction and in a consortium with other companies, built the new passenger terminal at Santiago airport.178 Continuing along these lines, the Brazilian Vale do Rio Doce mining company, whose work involved transforming mineral resources into essential ingredients for daily use, also

amount of credits available to the region and also the opportunity for Latin American companies to expand. Daniels, J.; L. “Foreign direct investment from Latin America and the Caribbean” apud Dorotea López G. And Felipe Muñoz N. Inversiones Brasilenãs en América del Sur. La perspectiva de los países andinos: el caso de Chile. Universidad de Chile, Santiago, 2008, p. 22. 175 Another important point to consider is that a significant number of Brazilian enterprises carry out transactions involving investment in fiscal paradises. Therefore, many projects developed with Brazilian capital do not account as Brazilian investment through receiving countries. As a result, it is difficult to quantify and measure the presence of Brazilian capital in such transactions. Dorotea López G. And Felipe Muñoz N. Inversiones Brasilenãs en América del Sur. La perspectiva de los países andinos: el caso de Chile. Universidad de Chile, Santiago, 2008, p. 23. 176 Gerdau (Chile), http://www.gerdauaza.cl/Empresa_Grupo.asp 177 “Brazilian companies’ internationalisation: Brazil’s multinationals corporation cases and challenges”. Kline affiliated company, São Paulo, SP July 2007, p. 11, www. Factor desolucao.com.br 178 “A organizacão internacional”, Odebrecht. http://www.odebrechtonline.com.br/ mate rias/00201-00300/249/

247

started to develop mining projects in Chile. 179 Unlike Gerdau S.A. and Vale do Rio Doce, however the Itau Bank is not considered an interesting example of FDI, since it is not related to traditional investment. In fact, Itau’s business operation does not involve the direct participation of Brazilian capital in the Chilean market. Despite Itau Bank’s appearance on the Chilean market, its expansion throughout Latin America has been carried out in conjunction with the Bank of America. In order to materialise Itau Bank’s expansion targets, shifting the control of their operations from the Bank of America to the Bank of Boston in Brazil, Chile and Uruguay was allowed. Whereas Itau Bank manages its operations throughout the region, the Bank of America co-participates with a percentage of the shares. The most important Brazilian company, Petrobras, strategically concluded the process of acquiring the distribution and logistics of ExxonMobil in Chile, paying $ 400 million net in cash and cash equivalents for the companies purchased. With this acquisition, Petrobras guaranteed its participation in the Chilean fuel distribution market, with a network of around 230 service stations, its presence in 11 airports, an interest in six distribution terminal, (four of which are their its own and two of which are joint ventures), a 22% interest in the Sociedad Nacional de Oleodutos and a 33.3% interest in the Sociedad de Inversiones de Aviación.180 One of the most remarkable aspects of business-to-business cooperation between the two countries is the creation of LATAM, the company with the most market value in the Americas. As argued, public diplomacy cannot be separated from the business sector, since public-private cooperation is a core element of Brazil-Chile relations. This airline was born as a result of the fusion between the Chilean LAN and the Brazilian TAM. The fusion between LAN and TAM occurred in August 2011 and generated a civil aviation giant with revenues of $ 8.5 billion and flights to 23 countries. LATAM will consolidate its position as the leader in passenger air transport in the Latin America market. In fact, in the company, LAN holds 79.6% of group’s shares and TAM has the other 20.4% informs a source close to the

179

Vale do Rio Doce. http://www.vale.com/vale_us/cgi/cgilua.exe/sys/start.htm?sid=6 “Petrobras in Chile”, Wikinvest, 19th November 2009. http://www.wikinvest.com/stock/ Petrobras_%28PBR%29/Chile 180

248

Brazilian company. 181 In brief, LAN’s share is larger than TAM’s. After being approved by the Chilean body that regulates monopolies the fusion still had to be evaluated in Brazil. The deal was authorised, although 11 conditions were imposed to ensure fair competition in Chile’s air transport market. In Brazil, the Secretariat for Economic Monitoring (Seae), the Ministry of Finance and the Secretariat of Economic Law of the Ministry of Justice (SDE) were involved in authorising the deal.182 The Vice- President of Finance of LAN, Alejandro de la Fuente, argued that “to be a major player in the sector, Chile must have a presence in the passenger business in Brazil”, explaining that TAM was the best option in this country because both companies had cargo operations, among other things.183 López and Muñoz state that the process of transnationalising foreign capital is something relatively new in Latin America. Putting this into perspective, at the beginning, the increase in investments was related to physical proximity rather than the consequence of a strategy to attract the same. Furthermore, despite Brazilian investments adding up to a low amount of the total, they had occurred in strategic economic sectors, such as mining, building, chemicals, energy, rubber and plastic among others. Brazilian investments come from companies of all different sizes. However, in the last few years Brazil’s presence in the Chilean market has increased and should not be underestimated. However, although at first glance the Chilean market’s small size did not appeared to be attractive, Brazilian companies thought that they could take advantage of Chilean preferential trade agreements by using this country as an export platform. Given Brazilian companies’ internationalisation aims, Chile became an important ally in the region, supporting this process. Nonetheless, another way of explaining the lack of investment is that Brazilian companies looked to increase their market share, achieve scale economies or explore natural resources. The precarious physical connection 181

“Latam é a aérea mais valiosa das Américas”, Estadão-Economia e Negócios, 14th August 2010. http://www.estadao.com.br/noticias/impresso,latam-e-a-aerea-mais-valiosadas-americas,594868,0.htm 182 “Restricões do CADE não surpreendem a LATAM; aviacão decisão do Brasil seguiu posicão já anunciada no Chile”, Valor Econômico-Empresas e Servicos, Thursday, 15th December 2011, B5. 183 “Junta extraordinaria de accionistas de LAN aprueba fusión con aerolínea brasileña TAM”, Emol-Economía. http://www.emol.com/noticias/economia/2011/12/21/518137/ac cionistas-de-lan-aprueban-en-junta-extraordinaria-la-fusion-con-brasilena-tam.html

249

between both states has also contributed to hampering cooperation policies. In this regard, physical connections function as a prerequisite for transforming Chile into a platform for Brazilian exports towards Asia (López and Muñoz, 2008: 30). Physical cooperation constitutes a significant form of engagement beyond traditional diplomatic links with public-private connections playing a central role in Brazil-Chile links, as pointed out by public diplomacy. Chile’s stable and liberalised market conditions, accompanied by access to the Pacific laid the groundwork for the increasing presence of Brazilian firms in the country. 184 Given that internationalisation activities generally emerge in markets that are culturally and geographically close, Chile is the natural market for FDI by Brazilian firms. Moreover, FDI demands a longterm partnership to strengthen business-to-business dialogue and encourage bilateral cooperation ties. The firm’s relationship with other actors provides a broader framework for opportunities in diverse sectors in Brazil-Chile. The network approach infrastructure cooperation is congruent with the decentralised perspective of public diplomacy and the importance of nation branding to attracting business.

3.4.7 Chile’s FDI in Brazil On the one hand, Chile is widely recognised by its policy of attracting FDI, favoured by its stable and transparent policy framework. On the other, Chile’s good domestic business climate has allowed the country to amass the capabilities required for investing in other countries. Chile’s territorial limitations mean that companies reach a saturation point fast, therefore a real need for growth and an excess of profits paved the way for investment abroad. The competitive advantage of physical proximity favours the entry of Chilean companies into countries like Brazil. The huge Brazilian market is obviously attractive to Chilean companies, since the possibility of developing scale economies and gaining access to the consumer market is clear. 184

The past decade was extraordinary for Brazil, considering the rapid growth in revenue of most sectors of Brazil’s economy. See Masao Ukon et al. (2012), “Brazil: facing the productive challenge”. The Boston Consulting Group.

250

Chilean firms pursue a high level of outward investment that can be compared with economies such as Brazil. Chile has been one of the top three sources of FDI outflows in the region, joined in the ranking by Brazil and Mexico. Chile is also a major recipient of inward FDI, usually in third place in the region after Brazil and Mexico. The fact that neither Brazil nor Chile suffered dramatically during the international financial crisis of 20082009 created a more favourable scenario for continuing with and increasing bilateral FDI flows. Another aspect is that most of the Chilean TNEs that invest in the Brazilian market are restricted to sectors that did not directly suffer from the effects of the financial crisis, such as food, forestry and beverages. Among many Chile TNEs that direct their investments towards Brazil, the most significant firms vis-à-vis the Brazil-Chile business dialogue should be mentioned. In this scenario, the wood-sector is increasing its investment in the Brazilian market, especially the CMPC and Arauco companies, part of the COPEC conglomerate that has replicated a model similar to the Chilean one in Brazil. It acts in a vertically integrated structure that handles forest management and processing wood into products. The wood is either sold in the host market or exported to other markets.185 The Cencosud is another important Chilean investor in the Brazilian market, given that the supermarket chain has superstores in north-eastern Brazil and 46 stores, distributed between the states of Bahia, Alagoas and Sergipe. This operation involved the transfer of all the companies’ shares and the acquisition of the companies’ capital assets, stock, personnel, marketing rights, brands and all assets guaranteeing the firm’s proper management.186 Between November 2007 and November 2011, Cencosud invested 3 billion reales in Brazil, buying 7 Brazilian retail chains ranked 185

CMPC is one of the largest Chilean companies with annual sales in 2010 of US$ 4.219 million and a market value of US$ 11.700 million. The company planned to invest US$ 600 million between 2011 and 2012, but that number ended up being more than double at US$ 1.300 million. The firm’s investment plan is very dynamic and includes pulp mills, paper and tissue in Chile, Brazil, Peru and Mexico. Entry into the Brazilian market was a very important step for the company, since it allowed it to double its production and in the tissue sector, represented an opportunity to access new markets. The company recently installed a new paper conversion plant in Guaíba, which facilitates market access to the south of Brazil. “CMPC: muchos productos del hemisferio norte no son viables”. El Mercurio, Economía y Negocios. B7, 10 August 2015. 186 Cencosud. Business Units. http://www.cencosud.cl/eng/unidades_gbarbosa.htm

251

fourth among supermarket chains.187 In line with Chile’s increasing entry into the Brazilian market, the Chilean company Embotelladora Andina has also consolidated its presence in the Brazilian beverages market. Interestingly and unknown to most Brazilians, Embotelladora Andina holds 57.5% of the market share of soft drinks in Rio de Janeiro. Its operations in the Brazilian market have enhanced the company’s standards of quality, whilst guaranteeing its commitment to efficient processes.188 In technology, Sonda is an emerging actor in the Brazilian market. Chile’s Sonda has operated regionally as a system integrator and IT service provider. Its products and services include outsourcing, projects and systems integration, software solutions, servers, PCs and specialised consultancy and advice among others.189 According to Brazil’s Secretary of Economic Monitoring (SEAE), the Sonda company holds more than 5% participation in the social composition of companies operating in Brazil and Mercosur. In the Brazilian market, the Sonda group, which controls the Huerta company, provides solutions and services in the information technology sector aimed at the development, implementation and commercialisation and sale of hardware for companies.190 Transportation includes the Chilean company, Compañia Sud Americana de Vapores (CSAV). Despite the difficulty in determining the geographical location of their assets in the transportation sector, the company can be considered part of the Brazil-Chile business cooperation dynamic for fostering private partnership. Active communication within the transport area, through the provision of haulage and freight services by sea to major markets, should be considered as the infrastructure that led to proximity between the two actors.191 Instead of considering business as an institution isolated from the bilateral context, the Brazil-Chile cooperation ties are sufficiently diverse so as to address the needs of the multi-criteria, more 187

The real is Brazil’s currency. See Thiago Bronzatto and Ana Luiza Leal. “Em quatro anos, o varejista chileno Cencosud gastou 3 bilhões de reais em aquisições no Brasil”. Revista Exame, 30th October 2013. Editora Abril, pp. 64-66. 188 Embotelladora Andina. http://www.koandina.com/ 189 Sonda S.A., Business News Americas. http://www.bnamericas.com/companyprofile/en/Sonda_S,A,-Sonda 190 Parecer no 06797/2010/RJ COGCE/SEAE/MF, Ministério da Fazenda Secretaria de Acompanhamento Econômico, 17 September 2010, pp. 3-4. 191 CSAV, http://www.csav.cl/index_en.htm

252

flexible approach of the study. From the 1980 onwards, due to the reduced size of the country, Chilean firms have concentrated on looking for other markets. As part of this process, Chile’s natural resources provide a competitive advantage over foreign competitors. Furthermore, the good domestic climate has helped attract foreign investors, facilitating domestic firms’ development and contributing to their expansion abroad. Along these lines, the well-achieved entry into the Brazilian market is an important step towards achieving scale economies, gaining more consumers and functioning as a platform for Chile’s expansion in to other markets, for example Africa. Therefore, the FDI bilateral approach between Chile and Brazil has led to long-term benefits such as the transfer of technology, an increase in exports and the fostering of regional integration and domestic competition. Bilateral cooperation in different areas demonstrates the far-reaching focus of public diplomacy when studying Brazil-Chile links, since bilateral ties go beyond the state-centric approach.

3.4.8 The economic and historical FDI perspective Although most studies focus on either the economic or historical perspective without developing an interrelated dialogue between the two, a separate analysis suggests that neither sector exerts influence on the other. Therefore, they are not considered in most of the studies. However, the economic context has social and historical roots which cannot be underestimated, to the detriment of one of the focuses’ perspectives and a lack of sensitivity regarding the historical influence on FDI, the tax system, imports and exports, and the economy in general. 192 This study endeavours to understand the history of Brazil-Chile bilateral affairs, given that historical background is an important element for understanding public diplomacy and nation branding concepts. The increase in mutual foreign investment experienced by Chile and 192

The tax system important for understanding the pragmatic approach to Brazil-Chile relations. In her second term, President Michelle Bachelet promised to implement a tax reform. The government’s target was to raise an extra 3% of GDP to be spent on education. “An agreement on tax reform mars a turning-point for Chile”, The Economist, 19 July 2014, vol. 432. London, p. 32.

253

Brazil since the 1990s enforced the international tendency for developing countries to become sources of foreign investment instead of mere recipients of it. The lowering of barriers to foreign investment also played a significant role in facilitating the flow of investment. Since Brazil and Chile have strong historical institutions, both democratic regimes and social stability help to provide a favourable scenario for mutual foreign investment. Moreover, Chile is taken as an example of public accounts, while Brazil has become a centre of international attention. In this context, strengthening ties favours both countries’ economies and further strengthen partnerships in other areas, such as cooperation in terms of macrocooperation (policy) and microcooperation (cooperation between Brazilian and Chilean cities as socalled paradiplomacy). When analysing a country like Chile, it is expected that the majority of FDI focuses on the exploitation of natural resources, particularly in sectors with major comparative advantages such as copper mining.193 At the same time, the majority of the FDI of countries with larger domestic markets, like Brazil, are supposedly to have most of their FDI orientated towards production for the supply of their own market (Zabala, 2008: 19). The following considerations endeavour to answer these assumptions. Despite Brazilian tax system being complex and unfair and demanding urgent reforms, this has not jeopardysed Chilean investments in the longrun. However, the first attempts at Chilean investment faced certain difficulties about how the Brazilian system of tax collection worked. For instance, the companies Iansa and Farmacias Ahumada faced several obstacles when trying to carry out a long-term investment strategy.194 As Camargo points out: “The withdrawal of certain Chilean enterprises has to do with the difficulties of recovering credit for the Brazilian tax on the circulation of goods and services. The

193

Between 1974 and 2008 in Chile, 27.1% of the net accumulated FDI corresponded to the mining industry, followed by services (22.5%), electricity, gas and water (22.1%), transport and communications (12.5%) and manufacturing (11.4%). Foreign Investment Committee. 23rd August 2009. “Foreign Investment in Chile/Net accumulated DL 600 investment”. http://www.cinver.cl/english/clima/inversion_600.asp 194 Iansa is one of the principal agro-business groups in Chile and specialised in the sale and production of sugar and sugar-beet-subproducts. Iansa, “Our company”. http://www. iansa.cl/index.php/nuestra-empresa/?lang=en

254

complex Brazilian tax system in which certain taxes are levied by the federal government, others by the state government and others by municipalities demands a certain degree of understanding on behalf of the taxpayer. The Brazilian taxation system complies with many taxpayer obligations and needs cautious analysis.”195

Although a discussion of Brazil’s complex tax system is the scope of this study, it should be highlighted that even Brazilian companies that seek internationalisation face the same problem. The major transformation that international affairs have undergone creates a contemporary scenario in which new topics and forms of interaction between diverse actors emerge.196 In this sense, the state-centre relationship has changed. Not only with regard to the sectors directly involved in foreign affairs but also subnational authorities have led a decentralised relationship between countries. This means that decentralisation initiatives have allowed new actors to participate in foreign policy, shifting the focus of bilateral relations somewhat and encouraging an increase in more flexible network links. With this in mind, cities, states and provinces also become critical actors in the international arena. The decentralised approach goes hand-in-hand with the idea of public diplomacy and paradiplomacy, given that both concepts highlight the significance of decentralised actors in foreign affairs. The Brazil-Chile bilateral approach encompasses a multi-criteria context in which flexibility is a core element to understanding the relationship between the two countries. Analysis from a political-economic perspective has a significant potential to help understand that Brazil-Chile links go beyond traditional diplomacy and that dynamic private sectors also play an important role in bilateral affairs. Insofar as official actors are not the only decision-makers in contemporary international relations, decentralised networks become relevant mechanisms for conducting foreign affairs. Moreover, Brazil-Chile relations provide a different picture of how diplomacy works, given the relevance of economic sectors in bilateral links. Another crucial point that must be considered is the importance of taxes in bilateral affairs, since trade is an important sector in bilateral relations. In 195

Álvaro Camargo, Director of ProChile in Brazil. Interviewed on 13 February 2014. More information available at: Deloitte, “Overview of the Brazilian tax system”. Accessed on 6th May 2013. http://www.deloitte.com/assets/Dcom-Brazil/Local%20Assets/ Documents/Ind%C3%Bastrias/Petr%C3%B3leo%20e%20G%C3%A1s/ OverviewBrazilian Taxation.pdf 196

255

this sense, initiatives that seek integration through the tax system and the search for economic similarities between both countries’ values encourage more efficient and effective tax collection procedures. In addition to economic cooperation efforts, investment in infrastructure in order to bring the countries into physical proximity produces clear benefits for bilateral relations. This approach recognises other elements as critical when bringing up broader cooperation between the two. The emerging role of non-official actors is considered an essential argument of the public diplomacy concept, which provides the central idea for understanding the Brazil-Chile decentralised approach. 3.5 Brazil-Chile Ties during the Administrations of Presidents Rousseff and Piñera The persistent scepticism about Brazil-Chile relations during the term of the Brazilian President Dilma Rousseff and the Chilean President Sebastián Piñera compared to the previous governments of President Lula and President Bachelet, in which a more consistent dialogue was achieved led to misconceptions about how bilateral links were conducted. As observed in previous chapters, Brazil-Chile bilateral relations are not as intense as the relationship both states have with their common neighbour Argentina. At the same time, the Brazil-Chile relationship is not the most important bilateral partnership for either Brazil or Chile. In terms of foreign policy goals, President Piñera focused on the Pacific Alliance as part of his government’s platform. Brazil, on the other hand, prioritised its role as an emerging global player, as well as a continental leader. Piñera has defended the fact that the country’s foreign policy aim was the Pacific Alliance. This ambitious project aimed to coordinate trade policies of the Pacific Basin countries seeking better access to the Asian market. Linking Chile, Peru, Colombia and Mexico, the project also aimed at including Panama, Costa Rica and other Central American countries. The targets of its members were set out in the Lima Declaration on 29th April 2011, in which the presidents of the four states expressed their commitment to progressively moving towards the goal of achieving the free movement of goods, services, capital and people.197 Its position as a regional leader and as 197

Infolatam, Información y análisis de América Latina, “A Aliança do Pacífico: o

256

an emerging global player and considering the structural changes that have marked the country since the beginning of the 1990s, Brazil employed diplomatic actions to achieve these aims. Brazil’s weight on the international scenario led to its increasing participation in multilateral forums and a foreign policy orientation that reflected its new role. However, as argued in this study, the fact that Brazil and Chile did not develop strong diplomatic ties does not indicate lack of bilateral relations. On the contrary, during the administration of Presidents Rousseff and Piñera, both countries signed agreements to share a military base in Antarctica. According to the agreement signed on 26th January 2013, Brazil was able to use the facilities provided by Chile’s military base while rebuilding its base, destroyed by fire in February 2012. As part of the announcement, Rousseff stated that this was a good opportunity to encourage closer links between the two nations.198 Furthermore, the two countries signed a memorandum of understanding between their Ministries of Education, which allowed for exchanges at graduate level and in higher and technical education, encouraging the learning of Portuguese and Spanish. President Piñera pointed out the possibility of cooperating in the bioceanic corridor project and in the area of generating ‘clean energy’. 199 The possibility for cooperation among various sectors provided the circumstances for broadening and strengthening coordinated action. A diverging diplomatic focus does not interfere with the possibility of undertaking bilateral cooperation initiatives. The Brazil-Chile approach goes beyond traditional diplomacy, with the interaction of private groups in the two states, as well as of the new actors that emerged within the bilateral relationship, who demanded a new way of studying current bilateral ties. Public diplomacy encompasses the different dimensions in which bilateral relations develop. The increasing domestic relevance of foreign policy in the last few years shows that internal debate over foreign affairs has become nascimento de um colosso”. Madrid, 5th June 2012. http://www.infolatam.com.br/2012/ 06/06/a-alianca-do-pacifico-o-nascimento-de-um-colosso/ 198 R7 Noticias, “Brasil e Chile assinam acordo para compartilhar base na Antártida”. Accessed on 26th January 2013. http://noticias.r7.com/brasil/brasil-e-chile-assinam-acordopara-compartilhar-base-na-antartida-26012013-4 199 Emol.Chile, Felipe Vargas. “Presidentes de Chile y Brasil firman acuerdos bilaterales en Educación, Cultura e Investigación”. Saturday, 26 January 2013. http://www. emol.com/noticias/nacional/2013/01/26/581050/presidente-pinera-y-dilma-rousseff-firmanacuerdo-de-cooperacion-educacion.html

257

relevant in Brazil and that the importance of foreign policy in domestic politics demands a multifaceted approach. Strengthening Brazil-Chile dialogue will occur in the coming years through bilateral links and in multilateral forums. Furthermore, the two countries share the same values in the international arena and both want to maintain their support for key issues in the United Nations Security Council. The mutual perception they have of each other as stable allies provides the context in which Brazil and Chile have developed their relationship from the 1990s onwards. Public diplomacy, nation branding, presidential diplomacy and paradiplomacy sustain the multi-sector approach necessary to understanding the Brazil-Chile relationship. The growing participation of other actors beyond traditional diplomacy and the emerging role of transnational topics have demanded new mechanisms for studying foreign affairs. Considering Brazil’s huge dimensions, the nature of the country’s role in Brazil-Chile relations is of great importance. As long as Brazil exerts regional leadership, it will be easier to strengthen bilateral relations with Chile, since the latter will see solid benefits from the partnership. However, it should be argued that important steps towards the development of bilateral ties have already been put into action, through bilateral cooperation in diverse sectors, as demonstrated in this chapter. Brazil’s emerging role as a global player change Chile’s approach to the country at some point, insofar as the latter recognised the need to strengthen ties.

258

Chapter 4 Brazil, Chile, the United States and Argentina Managing their Nation Brands The expansion of multi-level cooperation between states, as well as newly emerging topics on the international agenda and the emergence of new actors in the international community have produced a change in the focus of international studies. The three topics described in the first chapter have gone beyond the limits of traditional diplomacy. Today’s message to think and act globally has become a key element to promoting a better understanding of international affairs. Since there are increasingly interrelated issues facing governments worldwide, traditional diplomacy has proven to be ineffective when dealing with current international relations. Diplomacy cannot be restricted to a state’s activity, so the focus has shifted from the exclusive campaigns of state actors to inclusive participation and the increasing engagement of non-state actors. Foreign affairs increasingly stems from horizontal links, to the extent that not only is the Brazil-Chile relationship built on a decentralised base but the United States and Argentina cannot be studied exclusively from a traditional diplomacy perspective. The interaction between private groups should not be underestimated in the context of the ties between the United States-Brazil and the United States-Chile, as well as those between Argentina-Brazil and Argentina-Chile. Public diplomacy and nation branding are a two-way process in which the participation of citizens increases and it is not only official actors who play an active role in foreign affairs. It should be taken into account that both concepts highlight a deepening public-private interaction. Indeed, public diplomacy and nation branding is top-down perception, setting the stage for a broad-based dialogue. The importance of inter-sector participation cannot be underestimated, since mutual support plays a decisive role in creating greater cohesion between public diplomacy and nation branding, converging long-term aims (Guitian, 2013: 17). Along with Brazil-Chile bilateral relations, Argentina has always played a key role in determining whether the two actors strengthen their ties or 259

distance themselves from each other. For instance, at the beginning of the War of the Pacific, boundary disputes between Argentina, Chile and Brazil played a decisive role in bilateral relations. The disputes between Chile and Argentina over the region of Patagonia and the Tierra del Fuego archipelago raised concerns in Chile (Canaveze, 2008: 3). Indeed, Brazil and Argentina’s past rivalry encouraged Brazil-Chile long-term links. The need to contain their common neighbour, Argentina, sustained an unwritten partnership between Chile and Brazil the so-called ‘friendship without limits’, ‘traditional friendship’ or ‘friendship without examples’. All these terms serve to create a favourable atmosphere for further developing diplomatic relations between Brazil and Chile. Friendship was important for both states. From Brazil’s perspective, Chile was an important ally against Argentina. In Chile’s view, Brazil-Chile links helped maintain the balance with Buenos Aires, while facilitating the relationship with Bolivia and Peru (Soto, 2012: 17). For both partners, the alliance served as an important element for maintaining geopolitical balance in the Southern Cone. Another central actor in Brazil-Chile relations was the United States, particularly during negotiations with Mercosur. In this respect, the United States was considered one of the main obstacles to Chile joining the regional integration initiative. United States foreign policy has had a tremendous impact on Brazil-Chile links, especially considering the consequences of the United States-Chile Free Trade Agreement (FTA) that came into force on January 1st 2004 (Murphy, 2005: 160). For obvious reasons, the FTA with the US reflected Chilean foreign policy’s priorities to the detriment of Mercosur integration. The Mercosur Summit on 14th-15th December 2000 in Florianópolis (Brazil) illustrated this point, since Chile left the summit early to engage in bilateral free trade negotiations with the United States. The fact that President Cardoso was not officially informed of this by his Chilean counterpart caused discomfort in Brazil-Chile relations. Like Argentina, the United States is a fundamental actor that affects Brazil-Chile bilateral ties.1 Brazil and Chile have changed their bilateral links with the United States over the years, since the increasing participation of new actors demanded a multifaceted approach to reporting the impact of Argentina and the United 1

See United-States-Chile Free Trade Agreement Implementation Act. 29th July 2003, p. 36.

260

States on Brazil-Chile bilateral affairs. Dynamic international relations demand a network approach like that provided by the concept of public diplomacy. Insofar as investments and trade play a relevant role in foreign affairs, public diplomacy supports Brazil-Chile links with the United States and Argentina. For instance, the United States-Chile FTAs involve important aspects such as reducing trade barriers for services, protection of intellectual property and nondiscrimination in the trade of digital products.2 Brazil has also enjoyed strong relations with the United States, consisting of the signing of ten bilateral agreements in March 2011, five more in April 2012 and 11 in June 2015. For example, Brazil and the United States’ private sectors are institutionalising their defence engagements in order to exchange information and ideas.3 Although commerce is an important element for Brazil-Chile relations with the United States, the relationship between them is not constrained to trade flows and investments. The relationship between Brazil and the United States is much broader, as explained by the public diplomacy concept. From Brazil’s standpoint, the United States has become important in terms of being an export market for Brazilian commodities. Losing its position as the main market for China has not diminished the United States’ status as a significant player in Brazil-Chile bilateral ties. The Free Trade Area of the Americas (FTAA) is an important example of the United States maintaining an ambitious platform for Latin America (Schott, 2005: 2). Despite 34 countries opting to abandon the project and the harmonisation of trade policies in 2003, Chile’s interest in negotiating free trade agreements with the United States guided its foreign policy and did not favour Brazil-Chile links at that time. However, the fact that these countries share common fundamental international values and a long-term historical friendship demands a broader approach to help understand the two countries’ unique relationship. The economic crisis of 2008-2009 favoured the emergence of protectionist policies and led to what some actors called a lack of agenda 2

See Office of the United States Trade Representative, “Chile Free Trade Agreement”. https://ustr.gov/trade-agreements/free-trade-agreements/chile-fta. 3 See US Department of State, “U.S. relations with Brazil”. 29 July 2015. http://www.state.gov/r/pa/ ei/bgn/35640.htm.

261

between Brazil and the United States .4 The decreasing importance of the United States as an export market and imports supplier did not mean a lack of cooperation between Brazil and the United States. In this sense, the decrease in trade activities cannot be related to a lack of bilateral dialogue, since foreign policy encompasses a multifaceted context for interaction. New kinds of bilateral links emerged between the United States and Brazil, given the increase in the export of primary products to and Brazilian investments in the United States (Meyer, 2016: 12). Increasing horizontal links within bilateral ties is aligned with strengthening the role of political actors and the business sector to thus improve the dialogue between the two states. Moreover, strengthening civil society’s participation of civil society is fundamental to increasing the dimensions of international relations beyond traditional diplomacy. The emergence of a United States-Brazil global partnership dialogue to the detriment of the previous perception of Brazil as restricted to regionallocal player has changed the nature of their bilateral relations. The United States only recognised Brazil as a prominent global player in lesser politic topics such as trade, finance and climate change, thus Washington did not back Brazil’s aspirations for a permanent seat on the UN Security Council. 5 In 2008, the target for bilateral trade volume was US$ 53 billion. Until that year, the United States had been the largest export market and largest import supplier to Brazil since 1989. By 2009, China has become Brazil’s dominant trading partner. Although the United States has been the largest provider of foreign direct investment (FDI) in Brazil, particularly in financial services, the chemical industry and oil and gas, a growing interest in agro-business provided new opportunities for bilateral dialogue (Almeida, 2008: 7). As Chapter 5 intends to show, energy and particularly ethanol encourages bilateral dialogue between Brazil and the United States.6 Energy and ethanol 4

The absence of a formal economic agenda led to the forced addition of several specific issues not directly related to the attempt to create a coherent agenda in the economic area. The two countries’ foreign policy focused on facilitating trade and investment without aperture to mutual markets or harmonising broader policies. Diego Zancan Bonomo (2011), “As relações econômicas Brasil-EUA”, in Política Externa, vol. 19, n o 4. São Paulo: Paz e Terra, p. 100. 5 See Mercopress, “Obama praises Brazil, but falls short of backing bid for UN Security Council”. Sunday 20th March 2011. http://en.mercopress.com/2011/03/20/obama-praisesbrazil-but-falls-short-of-backing-bid-for-un-security-council. 6 Although Brazil-United States decreased the two countries maintained strategic

262

are not only significant to bilateral affairs, energy is also a central component for Brazil nation branding strategy. The countries differ considerably concerning the development of their nation brands. Whilst Chile promotes itself as an efficient and transparent country in which to do business, Brazil focuses on its sustainable and renewable energy matrix. As has already been said in the first chapter, small countries tend to devote more time and effort to projecting a positive nation branding to distinguish themselves in the international arena. However, the increasing importance of nation branding worldwide has also had a significant impact on Brazil’s image projection, to the extent that its nation branding is not restricted to stereotypical images such as soccer, ‘samba’, ‘mulatas’ and ‘carnival’ and the country has launched energy as its most visible brand (Niesing, 2015: 12-13). Compared to branded countries, Brazil has almost no commercial international brands although, ironically, it is one of the most strongly branded countries in the world. Curiously, the Brazil brand per se says a lot by itself, with people immediately associating it with samba, carnival, sex, soccer and beaches. In fact, these images are much more easily related to tourist attractions than the destination that targets business. The definition says much more about how stereotypes are understood, in other words the features – whether good or bad - that differentiates one group from the other. Indeed, for the average Brazilian, these may be even insulting clichés. However, it should be recognised that these stereotypes do help sell many kinds of product. As Anholt highlights, “After all, strong brand is a rich brand and richness implies a complex and satisfying mix of many different elements” (Anholt, 2010: 30). In contrast, America has been one of the most expensive market brands in the past century compared to the rest of the world, which means it is defined as the world’s leading nation branding. In this respect, America is referred to as a megabrand, whose image is so powerful and positive that is hardly necessary for it to be rebranded, with Hollywood as its exclusive advertising agency and NASA as an agency to help promote and spread America’s all-pervasive image (Anholt, 2010: 27-29). Even though brand images of the United States also contain negative elements, they are not partnership. See Matthew Schewel (2009), “Brazil’s Rousseff makes push for biofuels”, Inter-american dialogues, 22 July 2009. Washington, D.C.

263

enough to diminish its attraction in practical terms.7 Argentina’s dramatic economic situation led the country to reformulate its nation brand, with long-term national image strategy. For most people, Argentina has long been linked to the Falklands dispute and the lessons learned from its default in 2001. However, Argentina has a very strong nation branding in terms of tourism and cultural attractions. 8 The bestknown and most emblematic Argentine symbols are the ‘tango’, the legendary ‘gauchos’ and its passion for soccer. This multifaceted tourism has been linked to slogans such as ‘Argentina beats for you’, ‘Argentina, more than one reason’ and ‘Argentina, a serious country’ (Foster, 1998: 153). The country is particularly famous for its sporting potential, especially in soccer, tennis and basketball as illustrated by the success of stars such as Lionel Messi, Juan Martin del Potro and Emanuel Ginoboli, who have all participated in major advertising campaigns. How it is perceived politically has also improved somewhat. As Macmillen points out, “international respect has been shown for its attempts to try those responsible for the egregious human rights abuses of the last military dictatorship and the legislation to legalise same-sex marriage in 2010 displays a burgeoning liberalisation that is positively viewed abroad (Macmillen, 2011).”9 Its nation branding policy is a coordinated effort between the government supported by the Strategic Country Brand and the Inter-Ministerial Commision that seeks to export the ‘Argentina’ brand abroad. Brand activities have converged to coordinated bilateral efforts between Argentina and Brazil for the Iguazu Falls to become one of the new Seven Natural Wonders of the World. This joint campaign has had positive

7

The Iraq War, entered into despite opposition from public opinion worldwide, could not be justified by means of public diplomacy. Guantano Prison is another example of the lack of legitimacy in sustaining public diplomacy targets, given the doubtful legality of imprisoning people there. Peter van Ham (2005), “Power, public diplomacy, and the Pax Americana” in Melissen, Jan, The new public diplomacy: soft power in international relations. London: Palgrave Macmillan. 8 See Daniel de Castro Linhares and Isaak Newton Soares (2012), “Marca país: a logo como um recurso mercadológico dos países latino americanos”, Percurso, vol. 12, n. 1. Curitiba: UNICURITIBA. 9 Macmillen, Dmitri. “Nation Branding in Argentina: Twenty years on rebranding Argentina”.http://www.culturaldiplomacy.org/culturaldiplomacynews/content/pdf/Cultural_ Diplomacy_Outlook_Report_2011_-_04-01.pdf

264

results since voting led to a provisional win for the Falls. 10 Whereas Argentina’s image has vastly improved in the past decade, a better international insertion strategy to tackle domestic problems requires further initiatives to improve the country’s image after the largest debt default in its history in December 2001 (Anholt, 2010: 27-29). Furthermore, the entire political class lacked popular support, the currency was dramatically devalued and there was rampant inflation and doubts about debt restructuring and bond repayments. All these elements led to an uncertain economic and political scenario that did not attract foreign investments. The difficult relationship between Argentina and the IMF due to the country failing to provide adequate statistics led to a difficult economic scenario in the following years.11 This instability made it difficulty to conduct business internally and the economic interdependence between Brazil, Chile and Argentina suffered the effects of the chaos in Argentina. The current level of interdependence between the three actors is on the increase, because the effects of the economic policies put into practice in one country are transferred to the others, given that Brazil, Chile and Argentina are macro-economic trading partners. In contrast to Brazil, Chile has made consistent efforts towards a longterm nation branding strategy to attract foreign direct investment. In this sense, Chile has focused on the macro-economic fundamentals of its economy, its commitment to economic liberalisation and free market policies as the best ways of communicating its message. The Chilean nation branding strategy has clearly positioned itself in the market sector to boost inward investment. International marketers have begun to understand the added benefits of managing their brands and brand management has become a critical aspect for attracting global capital (Anholt, 2010: 28). The increasing importance of nation branding policies has led to the fact that almost every country implements a nation building strategy in one way or 10

Official confirmation of Iguazu Falls as one of the New Seven Wonders of the World was given at the Brazilian Embassy in Buenos Aires. The coordinated campaign between Brazil and Argentina ended on 11th November 2012. “Iguazu Falls officially confirmed a Wonder of Nature”, World of New 7 Wonders. http://world.new7wonders.com/2012/ 02/23/iguazu-falls-officially-confirmed-a-wonder-of-nature/. 11 Jaime López (2014), “Argentina intenta hacer las paces con el FMI, necesita de un préstamo de 10.000 millones para evitar la suspensión de pagos”, El Mundo, Economía, 26/02/2014.

265

another. Chile has devoted significant efforts to building up a well-consolidated nation branding as part of its international insertion strategy and the importance of nation branding has also increased in Brazil. Therefore, Brazil-Chile bilateral ties cannot be studied without taking into account the nation branding concept. Chile’s nation image has key consequences for Brazil-Chile relations given that, beyond traditional diplomacy, so-called ‘business dipplomacy’ also plays an important role in bilateral links. This means that not only are government representatives important actors in bilateral relations, but non-governmental stakeholders are also crucial to explaining bilateral ties (London, 1999: 10). The study of the process of branding a nation serves as a key element to understanding interstate relations, particularly in the context of the Brazil-Chile relationship. 4.1 Chile’s Reformulated Nation Branding Although nation branding is a new concept that dated from 1996, the idea of rebranding a nation’s image is not completely new. From Chile’s view, the concept of nation branding links a market perspective with business diplomacy. It means that a nation branding strategy is an important way of projecting Chile’s image as a new ‘tiger’ country. Pragmatic economic policies, together with the demands of promoting exports, have become a defining feature for success in the current economic context. As already observed and discussed in Chapter 3, the nation brand allows a country to attract greater foreign direct investment (FDI), insofar as it encourages investor interest in the opportunities available in a country. Increasing investments provides income streams and helps insert national products into the world market.12 Nation branding is not restricted to the economy, with other dimensions playing a relevant role, such as the tragedies that hit Chile in 2010. The disastrous earthquake and the cave-in of a mine and subsequent rescue operation of the 33 miners trapped in the Atacama region demonstrate that

12

See CEPAL, “La inversión extranjera directa en América Latina y el Caribe”. http://repositorio.cepal.org/bitstream/handle/11362/38214/S1500535_es.pdf;jsessionid=174 B5168F56F2CEE4FBDD94403D0C2FA?sequence=4.

266

tragic incidents change the country’s international image.13 Although, impossible to predict, both incidents provided the opportunity for leveraging Chilean national support and brand recognition. Indeed, both episodes brought Chile into the daily news worldwide. Coincidentally, in nearly all of the media coverage shown, the Chilean flag was clearly present with Chileans projecting their product to audiences across the world.14 One way or another, both the benefits of the targets of tourism destination brandings and nation brands policy operate in a very volatile external environment. For example, external factors such as war, political turmoil or even negative media coverage can lead to disastrous consequences in terms of brand image. For small countries with a limited global voice like Chile, even regional instability can have devastating results on the economy. As Morgan and Pritchard remind us, “Although tourists may resume ‘normal’ travel habits after a single terrorist event, it is becoming clear that investors may take longer to return to what they perceive as unreliable business climates” (Morgan and Pritchard, 2010: 62). Therefore, serious efforts are being made to promote Chile’s positive business environment as a successful brand. In this context, Chilean brand managers promote its political stability, the modernisation of the state, its tradition of democracy, its independent judicial system, its social cohesion and its economic freedom. Moreover, the idea of it being an exception, which is a key element to Chile national identity, plays an important role in differentiating the brand from competitors. This point is central to the direction, purpose and meaning of the Chile as a stable, trustworthy and peaceful country in the Latin American continent.

4.1.1 Brazil’s energy brand Brazil has made little efforts to develop its brand, compared to other 13

Larraín, Maria Cristina Prieto. “Branding the Chilean nation, socio-cultural change, national identity and international image”. Universiteit Leiden, 24th November 2011. Accessed on 19 May 2013. https://openaccess.leidenuniv.nl/bitstream/handle/1887/18141/ front.pdf?sequence=16 14 Nicholet. “Chile: an emerging national brand built from the red, white and blue”. Global Marketing: Georgetown University, 2nd July 2011. http://2011globalmarketing.wordpress. com/2011/07/02/chile-an-emerging-brand-built-from-the-red-white-and-blue/

267

countries’ costly and constant investments in the policy of branding a nation. However, the idea that Brazil could develop a global brand is not a distant prospect. The fact that Brazil has hosted two international events of great magnitude, the World Cup in 2014 and the 2016 Olympics (in Rio de Janeiro) will probably accelerate its destination branding. Apart from what is already known about Brazil, such as the visual image of Christ the Redeemer at Mount Corcovado, events such as the carnival and music such as samba, its brand can also propagate a much more complex and diverse mix of new elements.15 Illustrating this point is the emerging brand of Brazilian ethanol, which today is part of the business sector. As an important energy resource, ethanol is an example of the relevance of public-private cooperation in public diplomacy. The development of ethanol as a sustainable energy source has laid the groundwork for a high value Brazilian brand based on renewable energy. The relationship between the strategies of public diplomacy and nation branding in the context of ethanol can be identified.16 Moreover, presidential diplomacy is a central element to promoting ethanol as a renewable energy source. Presidential diplomacy contributes by projecting ethanol’s positive image as a sustainable resource abroad. Actions carried out by the head of the Executive branch have had an important impact on foreign policy strategy. President Lula has been overwhelmingly supportive of projecting ethanol as Brazil’s nation brand. President Lula’s state visits to Finland, Sweden, Denmark and Norway in September 2007 underline this point. Among the topics at official summits, the emphasis on biofuel cooperation and energy efficiency in the field of ethanol cannot be underestimated.17 Furthermore, given the global circumstances, developing countries also benefit from a move towards ethanol exports. From the Brazilian standpoint, potential biofuel development reduces developing countries’ dependence 15

See Sicco van Gelder (2005), Global brand strategy: Unlocking brand potential across countries. London: Kongan Page Limited, pp. 20-21. 16 However, with Brazil’s political and economic crises in 2015 and 2016, ethanol has been one of the hardest hit sectors. See Daniel Gallas (2015), “Brazil’s biofuel industry finds new sweetspot”, BBC News. http://www.bbc.com/news/business-33114119. 17 “Visit of President Luiz Inácio Lula da Silva to the Nordic countries”. Ministério das Relações Exteriores. http://www.itamaraty.gov.br/sala-de-imprensa/notas-a-imprensa/2007/ 06/visit-of-president-luiz-inacio-lula-da-silva-to

268

abroad, besides generating income for their populations. Promoting biofuels as a vector of sustainable development has led Brazil to cooperation agreements with several countries in recent years. In this context, the memorandum of understanding between Brazil and the US to advance cooperation on biofuels, in which they agreed to cooperate on the research, development and deployment of biofuels, deserves a special mention. 18 Brazil is a major player in the world ethanol market and can increase its production of ethanol by expanding into sugar cane. Whereas Brazil has not yet developed an outstanding ethanol branding strategy, its foreign policy has made a significant effort to brand the positive attributes of ethanol and biofuels. To contribute to the discussion, high-profile international activities have been held by Brazil, such as the International Biofuels Conference that took place in São Paulo in November 2008.19 Even if the promotion of renewable energy sources is, to some extent, restricted by the context of foreign policy, the important role played by the projection of ethanol as a leading renewable energy source should not be diminished. Moreover, the official opening of the Panamerican Games in 2007 in Rio de Janeiro was accompanied by the slogan of ‘Viva essa energia’ (Experience the energy), which sought to stress Petrobras’ commitment to developing clean and renewable energy sources. Petrobras’ marketing strategy attempted to use the word energy in both ways, referring to energy as a fuel and, at the same time, to the athletes’ surpassing their limits and achieving their goals. 20 Petrobras has also developed a communication strategy for South America by launching television commercials linking Petrobras, a renewable energy source with Brazil. Brazil has begun to work on a believable global brand, focusing on new sources of energy. To achieve this goal, the establishment of an inter-sector partnership has occurred, associating the public and the private sector. 18

“Memorandum of understanding between the United States and Brazil to advance cooperation on biofuels”.http://www.cfr.org/publication/13132/memorandum_of_under standing_between_the_united_states_and_brazil_to_advance_cooperation_on_biofuels.htm l 19 “Brasil prepara conferência internacional para debater biocombustíveis”. Biodieselbr. com,http://www.biodieselbr.com/noticias/biodiesel/brasil-prepara-conferenciainternacionaldebater-biocombustiveis-10-04-08.htm 20 “5o Seminário de comunicação e marketing, Petrobras e PUC-Rio”, Pensamento criativo, http://www.pensamentocriativo.com.br/seminarios/5_seminario_de_comunicacao_e_marke ting_petrobras_e_puc_rio

269

Several sectors have embarked on the branding process, Petrobras representing private law, presidential diplomacy carried out by President Lula on his state visits and public diplomacy, in which the business sector plays a major role, accompanied by the diplomatic corps.21 Despite the absence of a consolidated agency that carries out Brazil’s branding strategy (Chile has the Foreign Investment Committee), Brazil understands that branding its image can profoundly shape its economic and political destiny. Having understood the role played by new energy resources in sustainable development, Petrobras ceased to operate exclusively with oil and became an integrated energy company in the broader sense. Although not megabrand like the United States with its powerful image, the Brazil brand has gradually been recreated to the point that its well-known clichés are rebranded into something more substantial, fair and true.

4.1.2 Chilean and Brazilian relations with the United States As already discussed, the end of the Cold War redefined the scenario of current foreign affairs in the continent. The new scenario embraced two types of relations: the interstate relations between Latin American countries themselves and the relations of Latin American countries with the United States. It should be remembered that during the Cold War, relations with the United States were fundamentally defined in terms of political and security matters, as the main aim was to confront the threat of communism. With the end of the Cold War, it is understandable that the 1990s were characterised by the setting of a new continental agenda whereby foreign policy priorities had to be redefined (Holden and Zolov, 2011: 16). In this context, a more benign economic environment was developed, attracting investment, implementing liberalised economic reforms and building trade integration arrangements. Furthermore, academia has been optimistic about the main circumstances that constitute the framework for preventing conflict and fostering cooperation in Latin America. Ironically, 21

Petrobras is a joint capital company and a member of the indirect public administration established by the Public Power with the mandatory participation of public and private capital. Marcelo Alexandrino and Vicente Paulo, Direito administrativo descomplicado. São Paulo: Método, 2010, p. 74.

270

these changes are expected to create a favourable architecture for hemispheric relation, based on cooperation, solidarity and common identity. On the other hand, sceptics believed that, as a super power, the United States could restrict its relationship with the closest countries in Latin America and the affairs that affect Washington most directly (Fonseca, 2007: 65-66). Despite liberalised economic environment, certain aspects of the international economic scenario should be taken into account to explain the background of Brazil-Chile-United States affairs. The lost decade of the 1980s had significant influence on Latin American economies, given the stagnation these countries suffered (Batista, 2016). In 1979, the United States raised its interest rates, meaning the end of easy cheap money, which led to the beginning of a financial crisis in Mexico (in August 1982) and in Brazil three months later. This measure promoted capital attraction and the revaluation of the dollar, while weakening the position of poor countries’ oil net importers.22 Debt crises and defaults in Latin America occurred through transferring resources to debtor countries to return money to creditor banks such as the IMF of which Brazil was a regular customer at the time. The IMF was an actor that controlled Brazil’s economic stability, as well as the World Bank. IMF loan agreements with Brazil provided important short-term relief, helping to finance the current account deficit and stabilise the real exchange rate. Nevertheless, IMF support demands economic conditions, specify policy goals and structural performance criteria. The country must submit a detailed report on a quarterly basis as a precondition for access to loans. The absence of formal links between the FTAA and the IMF, since the latter are not the commited to fostering regional free trade agreements, does not mean both institutions lack influence. As Batista Junior states, this connection can have an informal background and affects Brazil-FTAA negotiations. The defence of Brazilian interests vis-à-vis the FTAA can also have significant consequences for the IMF agreement process.23 According to United States’ financial policy, Chile carried out a process 22

See David M. Cutler (2002), “Financial crisis, health outcomes and ageing: Mexico in the 1980s and 1990s”, Journal of Public Economics, vol. 84, Issue 2, May. London: Elsevier, pp. 279-303. 23 Paulo Nogueira Batista Junior, O Brasil e a economia internacional: recuperação e defesa da autonomia nacional. Rio de Janeiro: Elsevier, 2005, pp. 105-106.

271

of financial adjustments and economic reforms, economic and trade liberalisation and the privatisation of state-owned countries, among other measures. There was consensus in Chile’s foreign policy over the country’s strategy as an international trading state.24 Brazil opted for partial adherence to economically liberalised policies, since it conducted part of the economic liberalisation programmes. According to Brazil’s economic perspective, low levels of privatisation, a heavy taxation system and the absence of fiscal reform remained part of the country’s domestic policy (Almeida, 2012: 1567). The fact that Brazil opened up some sectors of its economy - such as the finance, electric power and concessions for transport - without improving bilateral relations caused certain discomfort, since the country expected to receive better treatment.25 In spite of Brazil’s position managing economic liberalised measures, insufficient open market policies led to the United States’ diplomatic hopes being disappointed. Another dimension also affected bilateral links, given the increasing importance of trade and the creation of the World Trade Organisation (WTO). This new scenario led to the discussion of Brazil-United States trade disputes within a multilateral perspective.26 24

During the 1980s, Chile had a critical need for loans from the IMF, given the economic difficulties the country was facing. The economic crisis began in 1981 as a result of increasing imports to the detriment of the decrease in exports of the country’s principal commodities, particularly copper. “Chile recibirá del FMI un crédito de 900 millones de dólares”. El País, Archivo, Thursday 6th January 1983. http://elpais.com/diario/ 1983/01/06/economia/410655612_850215.html. Accessed on 11th June 2013. This is in contrast to the IMF’s current present assessment that highlights Chile’s important financial system that is, diversified and highly integrated into the global financial system. Moreover, the country’s financial system weathered the crisis well – the result of strong balance sheets and profitability overall, a robust regulatory framework, and timely action by the authorities to counter the pressures on liquidity and the supply of credit during the crisis. “Chile: financial system stability assessment”. August 2011, IMF Report No 11/261, Washington, D.C., approved by José Viñals and Nicolás Eyzaguirre. http://www.imf.org/external/ pubs/ft/scr/2011/cr11261.pdf. Accessed on 11th June 2013 25 The Brazilian Privatisation Programme - PND - was instituted under Law No 8.031/90, when the concept of privatisation became an integral part of the economic reforms initiated by the government. See Brazilian Development Bank (BNDES), “Privatization in Brazil”. p. 15. http://www.bndes.gov.br/SiteBNDES/export/sites/default/bndes_en/Galerias/Down load/studies/priv_brazil.pdf 26 Brazil’s disputes over United States’ subsidies for the production, use and export of upland cotton. “United States – subsidies on upland cotton. Brazil’s first submission to the panel regarding the peace clause and non-peace clause related claims”. Ministry of Foreign

272

Brazil’s foreign policy underwent significant changes to acquire more visibility in the international arena. This reshaped foreign policy gained importance due to three facts: its emphasis on regional integration processes, trade liberalisation and multilateral negotiations. As Mariano and Vigevani highlight, an important factor that has contributed to this change since 1989 is the quest for autonomy in the international arena, with the term of President Fernando Collor de Mello bringing a ‘bilateral realigment’ with the United States instead of a multilateral-global paradigm for approach to foreign policy.27 The strategy was to reformulate domestic policy in order to align it with the doctrine of the Washington Consensus. Collor changed the focus of the international insertion strategy, moving away from Third World values and highlighting the importance of fostering relations with the United States (Sposito, 2013: 119-120). President Collor’s term reveals an interesting dynamic of Brazil’s foreign policy towards the United States, in which some connections to Chile can be made. Even if Brazil adopted a bilateral alignment with the United States, the former did not fully support the demands of the latter. In contrast to the Argentina of President Carlos Menem and the Mexico of President Carlos Affairs.http://www.itamaraty.gov.br/o-ministerio/conheca-o-ministerio/tecnologicos/cgc/ solucao-de-controversias/participacao-do-brasil-nos-contenciosos-documentos/brasil-comodemandante/ds-267-estados-unidos-subsidios-ao-algodao-brasil/1-painel/peticao-inicial-dobrasil. The United States’ anti-dumping measures against the import of Brazilian orange juice were another trade dispute that ended with a favourable ruling for Brazil. “BrazilUSA WTO dispute on anti-dumping measures on imports of Brazilian orange-juice – final report”. Ministry of Foreign Affairs. http://www.itamaraty.gov.br/sala-de-imprensa/notas-aimprensa/contencioso-na-omc-entre-brasil-e-estados-unidos-sobre-medidas-antidumpingaplicadas-sobre-a-importacao-de-suco-de-laranja-brasileiro-relatorio-final-do-painel-brazil2013-usa-wto-dispute-on-anti-dumping-measures-on-imports-of-brazilian-orangejuice/?searchterm=contencioso%20suco%20de%20laranja%20OMC. Accessed on 10 May 2013. 27 In the period of Independent Foreign Policy (1961-1964) and in some military government, since 1967, particularly during the term of President Geisel (1974-1978), this search for autonomy seems to have been related to maintaining distance from international affairs during the period of the Cold War. However, since 1989 there has been a profound debate on the part of the elite and policy makers as to the aim of Brazilian foreign policy. This then profoundly modifies the foreign policy strategy which seeks ‘autonomy through participation’. Therefore, during the Cold War period, Brazilian foreign policy had been conducted through the influence of Araújo Castro whose position went against the establishment of policies opposed to the existing hierarchy of power. Despite oscillating foreign policy, this situation lasted from 1967 until 1989 and constituted the foundation of an ‘autonomy through distance’ policy (Mariano and Vigevani. 2006: 336).

273

Salinas, the alignment of Collor’s administration did not apply to all circumstances, as will be observed. For instance, issues such as the environment, regional integration and the Persian Gulf War illustrate this point, given that Argentina sent troops into the Persian Gulf War while Brazil only provided political support. In this sense, Brazil’s alignment with the United States should not be interpreted as absolute support (Pecequilo, 2011: 50-2). As will be analysed, the factors explaining Brazil’s performance in the FTAA match the performance of its foreign policy in this period. In this sense, FTAA negotiations can explain the limits of autonomy through a participation strategy. The main difficulties arise from dealing with a partner like the United States and maintaining a reasonable margin for manoeuvres in the international system. Furthermore, Brazil has had to overcome the fact that negotiated contents undermine future aspirations concerning the implementation of development national policy. As Hirst says, “it has become clear that Brazil’s resistance to the FTAA goes beyond Mercosur” (Hirst, 2005: 21). Since both countries are major actors in the FTAA initiative, Mercosur serves as the scenario for the Brazil-United States negotiation process. The leading role played by Brazil in the Southern Cone demands a cautious negotiating strategy. Chilean foreign policy since the 1990s has brought with it a strategy of ‘open regionalism’, as has Mexico’s, which has been the most aggressive Latin American state when pursuing bilateral free trade agreements.28 When referring to Chile’ strategy in hemispheric politics, membership of the North American Free Trade Association (NAFTA) should be taken into account and was a central issue in its foreign policy during the 1990s. Moreover, Chile’s commercial diplomacy caused some tensions in this area: on one hand with the attempt to achieve a closer relationship with the United States and on the other the limited cooperation with Mercosur. In dealing with the United States, Chile stressed the material benefits of cooperation since copper remained an important source of export and the industrial content of its exports remained low (Mullins, 2006: 115). 28

The concept of new regionalims means an aperture to international market combined with encouraging the private sector and economic liberalisation. Indeed, it is distinguished by trade liberalisation measures, like safeguarding rules and non-tariff barriers to reduce import barriers and promote an increase in trade between nations. Devlin and Estevadeordal, 2001: 22 apud thesis, p. 73.

274

To a great extent, this explains the different stances of Brazil and Chile’s negotiations regarding the FTAA. Despite Chile’s long-standing interest in the United States market, it has sought to establish contacts all over the world. Nevertheless, it should be borne in mind that good relations with the United States were a high priority of Chilean foreign policy during the 1990s. The considerations shown in the following sections endeavour to demonstrate that Brazil and Chile’s diverging positions regarding their policies towards the United States led to a lack of strong diplomatic links between Brazil and Chile. On one hand, intense Chilean diplomatic activity as a mechanism for entering into an agreement with the United States was necessary to undertaken an ambitious strategic agenda as well as the country’s trade priorities. On the other hand, Brazil-United States relations were interspersed with more difficult periods in the relationship and a sense of frustration from both actors without them actually entering into confrontation. Indeed, a consequence of both states’ sub-regional leadership role was the difficulty of accepting FTAA rules, especially in Brazil’s industrial sector.

4.1.3 The United States’ strategy towards the continent In practical terms, the United States’ new multilateral agenda was aimed at political and trade initiatives in the continent and has fundamentally been based on presidential and ministerial diplomacy. It is worth highlighting that United States foreign policy is carried out by the State Department, the National Security Council and the United States Trade Representative, whilst Brazil’s foreign policy is conducted by the Ministry of Foreign Affairs, the so-called Itamaraty.29 Indeed, Brazilian foreign policy has a strictly Executive character, while in Chile the Executive predominates in foreign affairs and the Legislative also has the capacity to influence the trade policy decision-making process. The difference between the three states explains the general guidelines on which each foreign policy process is based. The role played by presidential diplomacy is also a key mechanism for the study of both Brazil and Chile’s foreign affairs (Bernal-Meza, 1998). 29

See The White House, President Barak Obama, “Regional Issues”. https://www. whitehouse.gov/ issues/foreign-policy.

275

Moreover, the polarisation of political parties’ preferences in Chilean foreign policy does not reflect the same traditional basis as that of Brazilian diplomacy. The increasing participation of unofficial actors such as the private sector, NGOs and civil society in foreign policy decision-making processes illustrates the importance of public diplomacy, nation branding and presidential diplomacy. As Onuki highlights, the Chilean Executive branch is the principal decision maker, although legislators do not completely forget their preferences when determining foreign policy. In the case of Chile, the preponderance of the Executive in formulating foreign policy aims promotes the internationalisation of its economy and development.30 The way each country carries out its foreign policy should also be taken into account. It is also important to bear in mind that FTAA negotiations go beyond trade issues, since they encompass a wide range of topics in BrazilUnited States bilateral relations. The bilateral agenda includes moneylaundering cases, terrorist operations, human rights and adherence to international non-proliferation agreements among others (Schott, 2005). Beyond trade negotiations, other predominant topics were Mercosur’s position regarding the FTAA process, demands for equal treatment in the WTO field and the claim for a permanent seat on the UN Security Council. Adopting the perspective that the FTAA consists of an economic-political project seeking to reduce Asian and European influence in Latin America provides a better understanding of the negotiation process. In this scenario, the United States’ strategy caused heterogeneous reactions among Latin American countries as will be seen. The proposal of a hemispheric free trade zone was first presented during the Enterprise for the Americas Initiative in 1991 by President Bush. In other words, the initiative to create the Free Trade Areas of the Americas (FTAA) suggested the creation of a hemispheric free trade area from Alaska to Tierra del Fuego, excluding Cuba. The FTAA project was heavily influenced by the NAFTA agreement considering that both initiatives were related. The impact of the NAFTA on the FTAA project cannot be underestimated, since the former 30

The fact that the Executive has preponderance over the Legislative is relevant to all foreign policy matters. More information in Onuki, Janaína et al., “Political parties, foreign policy and ideology: Argentina and Chile in comparative perspective”. Brazilian Political Science Review, 2009, pp. 127-154. Available at: http://www.fflch.usp.br/dcp/ assets/docs/Janina/Artigo_BPSR_-_Janina.PDF. Accessed on 10th July 2013.

276

imposes much stricter obligations on the members than the latter. The NAFTA came into force in 1994, involved the United States, Canada and Mexico and was focused on eliminating most tariff and non-tariff barriers, promoting a reliable framework for investment and generating an environment of confidence and stability for long-term investment.31 The formation of the NAFTA laid the groundwork for the creation of a hemispheric free trade area, while Brazil and Argentina, on the other hand, promoted the creation of Mercosur. Brazil has adopted different positions since the beginning of hemispheric integration, influenced by different FTAA factors. First, when the Bush Initiative was launched in 1990, Brazil showed its contempt for a free trade area of the Americas. Four years later at the Miami Summit, the country went on the defensive, fearing that Mercosur and the FTAA were mutually exclusive. During preparations for the summit in Santiago, in which official negotiations for the FTAA began, a third attitude emerged. Thereafter, Brazil assumed a positive stance, motivated by two different things: a) its presence in Mercosur and b) the articulation of a national position on the FTAA, anchored in the converging interests defined by the government, the business sector and union leaders.32 As has been explained, the main aim of the FTAA proposal was to promote the United States’ business interests in the continent while attention was focused on Eastern Europe and the disappearance of communism. The FTAA strategy had clear economic goals, whose implementation relied on political action. As well as liberalising goods and services, other relevant issues were taken into account (Carranza, 2004: 319-320). Needless to say, a project as ambitious as the FTAA, which altered how the economic system worked, had significant legal consequences. Regional economic integration has an important effect on the internal justice system of member countries, just like world trade liberalisation. As Vizentini states: 31

NaftaNow.Org, “NAFTA background”. Accessed on 20 May 2013. http://www. naftanow.org/about/default_en.asp 32 Veiga, Pedro da Motta. El Mercosur y el proceso de construcción del ALCA. Integración y Comercio, Buenos Aires: Intal, 1998, p. 3-32; LIMA, Maria Regina Soares de. Brazil’s response to the new regionalism. In: G. Mace and J.P. Thérien (Eds) (1996), Foreign policy and regionalism in the Americas. Boulder, CO, Lynne Rienner Publishers, pp. 137-158 apud Hirst Monica, “Os cinco ‘As’ das relações Brasil-Estados Unidos: aliança, alinhamento, autonomia, ajustamento e alinhação” in Relações Internacionais do Brasil: temas e agendas. Henrique Altemani de Oliveira, Antônio Carlos Lessa (Ed). São Paulo: Saraiva 2006, p. 105.

277

“The meaning of the FTAA and indeed its importance to the United States can only be fully understood in the context of the reorientation of North America world hegemony after the Cold War. Even though the FTAA’s reach is continental, the initiative has a planetary scope in the construction of the new order by American power in relation to other poles, such as the European Union and East Asia (Japan and China)” (Vizentini, 2004: 11).

It should be highlighted that the FTAA emerged at the same time as the Washington Consensus, meaning the redirection of United States foreign policy towards Latin America. This forum sought to liberalise Latin American markets by privatising state-owned enterprises, liberalising financial flows, reducing economic interference by the government and limitating public account deficits among others. The high social, political and economic costs of this process for a country with internal social disparities like Brazil were not taken into account. The creation of the neoliberal environment by each country functioned as a prerequisite for access to North American markets (Tautz, 2009). In fact, the United States’ strategy had already adopted in 1988, when cooperation agreements were signed between the United States and Canada and discussions with Mexico later initiated. Given the possibility of establishing a hemispheric free trade area at that time, the United States prioritised the NAFTA. From a Chilean-Brazilian perspective, there had already been significantly different reactions to the United States’ new agenda in the region. Brazil reacted cautiously to the NAFTA and FTAA initiatives, being neither for nor against either proposal. In practical terms, Brazil wanted to gain time by using diplomatic manoeuvres to obstruct any hasty action. 33 In contrast, Chile did want to join NAFTA, this never actually happened (Vizentini, 2004: 13-14). Therefore, it can be seen that Chile and Brazil adopted totally different foreign policies regarding the FTAA. In the Mercosur context, the FTAA negotiation process jeopardised Chile’s membership. According to Diaz: “Chile’s mercantilist foreign policy determines to some extent the connection of 33

It is part of Brazil’s foreign policy strategy to not refuse a proposal at first glance, even if it is difficult to immediately recongnise the benefits.

278

the country’s elites with the north. On the other side of the coin, their failed relationship with neighbours such as Peru and Bolivia and even Argentina explain their choice to look to strategic relations with the US. However, it is interesting to note that strategic steps were taken in the 1990s with Argentina” (Alvaro Díaz, interviewed on 7 February 2013 by e-mail).

The following discussion may, in theoretical terms, explain the environment in which the foreign policy of both countries was born. It should be remembered that Chile was the first country to react positively to the Initiatives of the Americas, since a preferential relationship with the United States was a long sought-after goal in Chilean trade policy. That said, on the Chilean side, imports from the United States competed with domestic products in a manner that did not boost bilateral exchange and, in fact, jeopardised national industry. Given the absence of a significant industrial area that needed to be protected a more appreciative and trustworthy atmosphere was generated between Chile and the United States. Furthermore, the ability to access the extensive United States’ market with its commodities yielded appreciable sales in its trade balance (Chiarelli, 2004: 59). Chile shaped its international trade insertion with specialisation in a narrow range of products focusing on comparative and competitive advantages and as a result the FTAA meant increasing the size of its export market. As in the case of Chile, most Latin American countries export products of lower value, whilst importing technologically sophisticated goods. Therefore, both countries directed their efforts to joining the FTAA. This means that each country’s reaction to the FTAA proposal also had its roots in the domestic economic structure and therefore the differences in Chile and Brazil’s industrial policy explain their opposing reactions to United States foreign policy.34 Chilean trade strategy has prioritised exports to the detriment of protecting the local economy. Thus, Chile continued an 34

Importantly, from 1964 to 1980, the Brazilian state’s development strategy was based on the constitution of a highly integrated industrial economy. This occurred due to the collapse of export-led growth based on primary products in the 1930s and a gradual consensus emerged that economic development must be a top priority of national economic policy. Ricardo Bielshowsky and Carlos Mussi. “El pensamiento desarrollista em Brasil: 19301964 y anotaciones sobre 1964-2005” in Rose Cave (ed) (2006). Brasil y Chile: una mirada hacia América Latina y sus perspectivas. Santiago: RIL Editores, p. 29.

279

economic strategy based on growth in exports, while the Brazilian policy prioritised domestic markets to generate growth (Mulins, 2006: 121). While engaging in the analysis of asymmetric relations in the continent, of which the FTAA is the most concrete evidence by far, it is important to quantify and measure the presence of a larger partner in Southern Cone geopolitics. On the one hand, it is possible to generalise by saying that, in theory, the larger partner may seeks economic-political benefits from neighbouring countries too and the reversal of trade discrimination. In brief, it aims to create a standard area. As will be explained, in theory, the larger partner also plays the role of 'paymaster', whereby it bears most of the integration costs. As Mattli adds, “the presence of an undisputed leader state among the group of countries seeking closer ties serves as a focal point for the coordination of rules, regulations, and policies; it also helps to ease distributional tensions by assuming the role of regional paymaster” (Mattli, 1999: 100). In this sense, the United States did not assume the role of the driving force behind integration. An active position cannot be attributed to the United States in terms of solving regional problems in order to provide the conditions for sustained cooperation. Despite the asymmetry among its partners, the United States did not appear to be willing to contribute to the costs of the FTAA process. The participation of smaller partners was centred on economic factors, such as the possibility of broadening market access, access to investments and increasing the credibility of and support for economic reform programmes. In broader terms, integration processes tend to be asymmetrical. However, what distinguishes the case of the FTAA is the huge asymmetry that separated the United States from other participating countries. Such huge asymmetry raised doubts about the United States’ real interest in the hemisphere (Mariano and Tullo, 2006: 323). Considering the broader scope of an economic agreement such as the FTAA, this not only has deep-rooted structural and institutional effects, but also long-term consequences.35 The FTAA would not commit to a restricted free trade zone. In general terms, a free trade zone involves an international 35

The FTAA was the most ambitious free trade initiative of the post-war trading system. However, negotiations have been complicated by financial crises and the political turmoil facing the region. See Jeffrey J. Schott (2005), Does the FTAA have a future? Institute for International Economics. http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=608 109.

280

agreement, which requires the signing countries’ commitment to eliminate tariff and non-tariff barriers for the reciprocal trade of goods and services. However, the FTAA initiative is much more ambitious than that United States foreign policy, rather than seeking peace, cooperation and stability, aimed to expanding its power by taking advantage of the geopolitical and geo-economic transformations of the Latin American states.

4.1.4 Brazilian and Chilean diverging strategies towards the FTAA Brazil and Chile have diverging views on United States foreign policy because of their different geopolitical contexts and internal development strategies. The key issue is the importance of Brazil and Chile’s positions vis-à-vis the FTAA project, insofar as the initiative measures both countries’ commitment to United States foreign policy targets. Brazilian and Chilean national development policies as well as their international insertion strategies, have paved the way for explaining their different perceptions of the FTAA. Despite Brazil and Chile’s different approaches to the free trade agreement, the period being analysed did not mean an absence of bilateral dialogue. The lack of a strong commitment to official bilateral dialogue needs some study not only in terms of the analysis of traditional diplomacy analysis, but also to observe the multifaceted approach of public diplomacy and presidential diplomacy, together with the specific concepts needed to understand the dynamic of the Brazil-Chile-United States relationship. Russel and Tokatlian (2008) focus on four different models to explain the different types of relationship between Latin American countries and the United States. It is worth pointing out that all of them involve a certain view of the international system, a specific relationship with Washington and last but not least - the assignation of different places in the region’s foreign policy. In general, these models reflect government policies, although there are a few exceptions, which reflect either the existence of some kind of state policy or a widespread policy strategy. Regard this classification, Chilean foreign policy strategy towards the United States consists of the ‘accommodation model’ with the gradual and selective coupling that characterised its relationship with the United States. 281

Moreover, the accommodation model promotes an active role in shaping international regimes preferably, in accordance with Washington. It means that the country adopts a single position in the international arena by focusing on foreign policy strategy regarding their own individual interests, without a firm commitment to collective mechanisms. In this way, economic diplomacy is essential both at global and hemispheric levels. Thus, assigning prominence to diplomatic negotiations with one’s neighbours rests on the opportunity of negotiating better terms with the United States.36 However, the defence of their own basic principles in the international field leads to a distancing from Washington in many foreign matters. The countries belonging to this group, including Chile as an emblematic case, require offsetting the effects of the domestic economic model with social compensation measures. In essence, Chile promotes a balance between market and state, while projecting its foreign policy towards Washington, Latin America and the world. It should be highlighted that, like Chile, the countries belonging to this group seek the introduction of partial adjustment measures to the global order and in foreign affairs, stress the importance of relations with the United States. This focus on Washington has led to a position of relative indifference towards the region (Rahn, 2014). As already stated above, adopting a favourable position regarding the FTAA with the United States illustrates this point. Nonetheless, an important factor that contributes to further understanding Chilean foreign policy towards Washington, is its opposition to following the United States in the war against Iraq in 2003. As a non-permanent member, Chile stated this position at the UN Security Council (Russel and Tokatlian, 2008: 14-15). In this way, Chilean diplomatic skills, manoeuvring in difficult times to defend the country’s democratic values, can be seen, as well as its commitment to international law. This stance has enabled further steps to be taken to avoid issues on the security agenda being affected by the economic one. In brief, Chile has tended to distance non-economic issues from Washington. Chile’s independence regarding 36

Importantly, at the present time there is interest from Latin American countries in seizing diplomatic opportunities with both neighbouring states and US. Folha de São Paulo, Dinheiro, Rubens Ricupero, “Trapalhadas em série”, 16 August 2009. The reader will notice a significant difference between Brazilian and Chilean foreign policy towards the region and Washington.

282

issues on the international agenda demonstrates the possibility of manoeuvring in foreign affairs. Chile’s independent approach favours the defence of common positions with Brazil, regarding human rights and the promotion of democratic values. Chile is not totally connected to the United States’ aims, although bilateral ties can be classified as highly linked, economically speaking. Considering Chile-United States relations, it can be observed that the United States is one of the most important destinations for Chilean exports. Chilean commerce with the United States is not only reflected in the amounts exported, but also in the variety of products that are shipped. 37 However, Chile’s relations with the United States should not be restricted to commerce, although these do foster feelings of admiration and respect. President Lagos favoured strengthening relations with the United States arguing that trade agreements would help the country becomes a more competitive and dynamic economy. From Chile’s standpoint: “There is a consensus that bilateral ties are permeated in turn by alternate feelings of love and hate to the extent that their foreign policies did not experience constant harmonic long-term ties. In this way, Chile is not totally connected to US goals. As opposed to what Brazil perceived, Chile’s agreement with US foreign policy rests on a number of complex issues. Chile’s approach towards the US cannot be classified as a totally connection without considering the country’s internal aspects” (Jaime Baeza, Professor at the University of Chile, interviewed on 30th August 2011 in Santiago de Chile).

Furthermore, links with the United States do not only exist in trade and cooperation was seen after the earthquake, when the United States offered help. The United States Agriculture Undersecretary offered to cooperate with Chile to mitigate the effects of the earthquake on Chilean agriculture. This cooperation targeted scientific and commercial exchange programmes and formed specialist teams to support agriculture and environmental issues.38 The perception of Brazil-Chile bilateral links was twofold: the fact 37

See Office of the United States Trade Representative, Chile Free Trade Agreement. https://ustr.gov/trade-agreements/free-trade-agreements/chile-fta. 38 Ministerío de Relaciones Exteriores/Dirección General de Relaciones Económicas Internacionales/Departamento de Estudios. Alejandro Gutiérrez; Roberto Urmeneta. December 2010, p. 6. Accessed on 1st June 2013. http://www.sice.oas. org/TPD/

283

that Chile’s foreign policy prioritized links with the United States did not mean the end of Brazil-Chile relations from multi-sector approach; at the same time, signing a FTA with the United States was a goal doggedly pursued by Chilean foreign policy from 1990 onwards. From the Brazilian perspective, there is what Russel and Tokatlian address as ‘limited opposition’ whereby there is a joint policy concerning the United States. This means that at the same time, there is a combination of disagreement and collaboration, deference and resistance and conciliation and misconceptions in Brazilian foreign policy with Washington. According to the ‘limited opposition’ strategy, the priorities lay with maintaining regional integration as a way to strengthening their negotiation power with the United States. In this sense, political ties with close countries are crucially important in order to achieve greater autonomy in negotiations with the United States. In general, these countries have adopted a development model that is more sensitive to social issues, whereby the state plays a significant role in terms of economic and political transactions (Russel and Tokatlian, 2008: 15). Furthermore, these countries seek more profound changes in the economic and financial structure of the international system and, at the same time, immediate negotiations with the FTAA are discouraged. In essence, their foreign policy strategies encourage the reform of global order wherein the United States is considered a dual power. In other words, the United States may represent both a threat and an opportunity at the same time. Brazil is the best example of a Latin American country that conducts a foreign policy strategy like this. In addition, Brazil’s position in the continent has two aims: firstly, due to it aspiring to regional leadership and secondly because of its extra-hemispheric projection. As a result, Brazil seeks a middle ground between distancing itself from Washington and expressing the desire to develop a closer relationship with the United States. Said another way, on one hand it partially competes with Washington and on the other, it needs its support to achieve its goal of playing a more active role in the political and economic international order (Russel and Tokatlian, 2008: 15-16). On the other hand, Chilean membership of the North American Free-

CHL_USA/Studies/EvaChUSDec_10.pdf

284

Trade Association during the 1990s was central into its foreign policy. 39 In this regard, the Frei administration invested a good deal of political capital in this strategy. Put into perspective, the strong interest in NAFTA is related to the perceived economic and political benefits that Chile would acquire by pursuing easier access to the United States market. NAFTA membership would also be an important signal to the financial markets, stressing closer relations with the most powerful economy in the world (Mulins, 2006: 121). Therefore, Chile fully supported the United States initiative, given the fact that the arrangement was an endorsement of the regional efforts of trade liberalisation and institutional stability. Moreover, for an outward economy like Chile’s one, the free trade agreement has become a vital aspect of its foreign policy. The Chilean position is applied to countries that have a less diverse productive structure. This set of countries has insertion into international trade, with a narrow range of products seeking central markets in order to seize comparative and competitive advantages. (Mariano and Vigevani, 2006: 325). At this time, the central foreign policy towards the United States influenced relations with the Southern Cone because of Chilean expectations of having special relations with the north. Nevertheless, the end of the twentieth century has brought important alterations to the patterns of international trade, whereby foreign trade is not restricted to the United States’ market, but is split around the globe. The emergence of a new multilateral order in which Brazil achieves global visibility plays a fundamental role to understanding the importance of Chile’s strategic approach to Brazil. 40 Changing the perception of the United States as a unique economic-military great power to the detriment of China 39

Investment and trade is everything in North American foreign policy. Therefore, the United States codifies its rules and agreements in initiatives such as the NAFTA. Further reading in Walter Russell Mead (2001), Special providence: American foreign policy and how it changed the world. New York: Routledge. 40 The new multilateral order embraces the multifaceted approach of public diplomacy. Public diplomacy is a form of engagement, meaning intellectual and socio-political engagement. See Alan K. Henrikson (2005), “Niche diplomacy in the world public arena: the global corners of Canada and Norway” in Melissen, Jan, The new public diplomacy: soft power in international relations. New York: Palgrave MacMillan. Further reading in José Augusto Guilhon Albuquerque (2006), “Os desafios de uma ordem internacional em transição” in Oliveira, Henrique Altemani and Lessa, Antônio Carlos, Relações internacionais do Brasil: temas e agendas, vol. 1. São Paulo: Saraiva.

285

and other emerging powers, shifted the international perspective from one singular power to a new multilateral arrangement.41 For obvious reasons, the new international system brought significant changes to current Brazil-Chile affairs, to the extent that these new international parameters, which influenced the standards of their bilateral relationship could not be ignored. Chile’s focus on strengthening its ties with the United States should not serve to explain the lack of studies on Brazil-Chile bilateral relations.

4.1.5 The limited scope of the FTAA The demands of the business sector together and labour unions explain Brazil’s position during the FTAA negotiation process. Brazil’s nationalist economic policy gained the support of key sectors such as labour unions, political parties and the business and academic sectors. The country had growing concerns, not only about the economic effects of trade liberalisation, but also the lack of the guarantee of reciprocity on the part of the United States (Nelson, 2015). The impact of bilateral trade disputes contributed to Brazil’s careful approach to the United States. In this context, negotiations were carried out according to three principles: the indissolubility of Mercosur, the gradual nature of the integration process and the balance between costs and benefits. The wide scope of the cooperation initiatives between the two countries means that Brazil and the United States do not share similar interests in the region. Brazil aims to expand its influence in South America and supporting democratic values has always been a feature of the country’s international insertion, with a core issue being the expectations and frustrations related to the recognition of Brazil’s international potential. There was an internal consensus that the opening of new historical stages in Brazil would be projected in its international insertion. However, frustration not only occurred in the Brazilian field, since the United States also expected a much more liberalised economy from its Brazilian counterpart. As will be 41

Today’s China is a booming economic power with a pragmatic foreign policy regarding the international community. China’s projection of its nation brand sells its ancient culture and economic success. More information in Ingrid d’Hooghe (2005), “Public diplomacy in the People’s Republic of China”, in Jan Melissen, The new public diplomacy: soft power in international relations. New York: Palgrave Macmillan.

286

observed, the understandings and misunderstandings that occurred between the two in the FTAA negotiations would become the most prominent issue on the bilateral agenda in the first year of Lula’s administration.42 Moreover, another important and changing feature refers to the new world order. The importance of the United States as a market has declined and foreign trade has been divided into four zones: Europe, North America, Asia and Latin America (Mulins, 2006: 115). As Van Dijk states: “Regarding the direction of trade flows prior to the establishment of the FTAA, it can be noted that the trade of Mexico and the Central America and Caribbean countries has traditionally been very much oriented towards North America, but this holds true to a much lesser extent for members of Mercosur and the Andean Group, which are more oriented towards the Latin American region and the United States” (Van Dijk, 2004: 156).

For instance, in 2007, the European Union accounted for more than half of the total value of all commercial services exported worldwide. China’s rise as a global economic superpower changed the global perspespective of American hegemony. Therefore, not only the United States, but also Europe lost its politically and economically dominant position to the detriment of China. However, the United States continued to be the second-largest exporter of commercial services, even if its share of world exports went down from 20% in 2000 to 15% in 2007. 43 This demonstrates that the United States’ comparative advantage resides in the commercial services’ sector. Therefore, the FTAA implies that all services are to be liberalised, even those provided by governments, such as education, social security and health care (Wiesebron, 2004: 79). Furthermore, FTAA negotiations 42

Hirst, Mônica. “Os cinco ‘as’ das relações Brasil-Estados Unidos: aliança, alinhamento, autonomia, ajustamento e afirmação” in Oliveira, Henrique Altemani and Lessa, Antonio Carlos Relações Internacionais do Brasil: temas e agendas. São Paulo: Saraiva, 2006, pp. 118-121. 43 WTO. "Trade in commercial services by category. p. 118. http://www.wto.org/ english/res_e/statis_e/its2008_e/its08_trade_category_e.pdf). While studying the FTAA, it should be considered that the United States has a deficit in its goods export rate compared to its goods imports one. Moreover, tha gap between goods imports and export growth is particularly large in developing regions such as Latin America (WTO. "World Trade developments in 2003 and prospects for 2004". p. 8. http://www.wto.org/english/ res_e/statis_e/its2004_e/its04_general_overview_e.pdf

287

adopted the so-called negative list, this means that all sectors are liberalized except those indicated by the countries, such as reservations or exceptions.44 As a result, the United States tends to stimulate the liberalisation of international service transactions over the international economic system of goods. Instead of studying the FTAA as the result of a Latin American consensus reached against the United States, it should be analysed as the result of diverging policy interests from the past. This explains the differences between Chilean and Brazilian foreign policy regarding the FTAA. Accordingly, the absence of converging interests between Brazilian foreign policy and that of the United States was not the only factor that led to disagreements about the implementation of the FTAA. Other countries in the region resisted to the United States’ version of neoliberalism and the Washington Consensus served to overcome asymmetrical power relations in the continent (Boekle, 2007: 92). Moreover, Brazil wanted to play the role of a fundamental regional actor in South America, while aspiring to an active role in global geopolitics. Therefore, Brazilian foreign policy remained reticent about establishing closer links with the United States. The FTAA denied Brazil’s influence in the Southern Cone, as well as its foreign policy’s autonomy in other international initiatives. In fact, Brazil needed more time to adapt its domestic market to the more competitive North American market and last but not least, the limited scope of the agreement, which did not include the transfer of science and technology, was criticised by Brazilian diplomacy (van Rompay, 2004: 30). Another way of stating the same point is by indicating that Brazilian foreign policy was sceptical about US provision for 44

It is important to stress the difference between the GATT and the FTAA concerning the principle of national treatment. In the GATT, national treatment applies only to service sectors included in the schedules of specific commitments made by each member country whereby these sectors apply the rules of liberalisation established by each state. This type of services liberalisation is based on so-called positive lists. In contrast, the NAFTA and the FTAA are based on negative lists. Costa, Ligia Maura. Comércio Exterior: negociações ee aspectos legais. Rio de Janeiro: Elsevier/Campus, 2005, p. 60. The GATT 1947, negotiated by Great Britain and the United States was rightly characterised as having created a “rich man’s club”. It introduced a norm that was entirely normal at the time, namely trade nondiscrimination. Chin Leng Lim. “The conventional morality of trade”. In: Global Justice and International Economic Law: opportunities and prospects. New York: Cambridge University Press, p. 134.

288

opening its markets to Brazil’s sectors of interest. Other issues also played an important role in Brazil-United States ties, like the United States protectionist trade policies against Brazil’s exports. The United States’ coerciveness was the result of export measures promoted by Brazil and an emerging information technology policy. Another significant point of divergence was the new General Agreement on Tariffs and Trade, since Brazil opposed topics such as information technology rules as well as restricted liberalisation procedures, given its domestic industry. However, in 1996, the approval of an intellectual property law by the Brazilian Congress facilitated dialogue on normalising relations between the two states (Hirst, 2005: 9-11).

4.1.6 The diverging aspects of the FTAA and Mercosur By the 1980s, many South American states were rebuilding their democracies after several years of military dictatorship. The four states that set up Mercosur (Brazil, Argentina, Uruguay and Paraguay) shared the common struggle for democracy, as well as economic crises and chronic inflation. 45 In this context, Brazil and Argentina suffered the impact of new trends in the international economy associated with neoliberal values, trade liberalisation and privatisation. Sustaining the macroeconomic balance demanded new cooperation mechanisms within the region in order to achieve greater insertion into the global economy. In response to the FTAA initiative, Brazil launched the Common Market of the South (Mercosur), in 1991, made up of Brazil, Argentina, Uruguay and Paraguay, in an integration initiative guided by the trade agenda. This period brought with it the idea of economic cooperation, closely linked with the perception of economic growth and prosperity. After the Asunción Treaty of 26th March 1991, member states sought to establish a common market for the so-called four year ‘transition period’.46 The four years period targeted measures of legislative harmonisation, the coordination of 45

See Javier Corrales (2013), “Constitutional Rewrites in Latin America 1987-2009” in Jorge Domínguez and Michael Shifter (eds), Constructing democratic governance in Latin America. Baltimore: The Johns Hopkins University Press, pp. 13-47. 46 More information in Ruy Pereira (2014), “O valor do Mercosul”, Política Externa, vol. 22, no 3. São Paulo: Editora Paz e Terra.

289

macroeconomic and sectorial strategies, cooperation on commercial policies and the maintaining of similar foreign policies (Vigevani, 2004: 35). Mercosur was the result of economic programmes carried out by Brazil and Argentina.47 However the project had a broader impact, since it was supported on a three-fold basis: legal, political and economic. The political basis, as previously mentioned, was the redemocratisation process that the member countries underwent. The economic aspect was the initiative’s main aim, fostering macroeconomic growth and international insertion. The legal order come from the fact that Mercosur had its roots in the ACE No 36 in the field of the Latin America Integration Association (LAIA) and the Protocol of Ouro Preto (POP), signed on 17th December 1994, leading to the bloc’s institutional structure. It only became explicitly legal through the POP and therefore could not be considered an international organisation during the transition period. Prior to the POP, any legal actions were performed by member states (Ventura, 2003: 63). The aim behind Mercosur was that Brazil would consolidate sub-regional integration over any United States-led hemispheric proposal. Brazilian strategy towards the rest of the region rests on its full complement of industry, modern infrastructure, a well-established national project and competent diplomacy (Vizentini, 2004: 16). From a Brazilian foreign policy standpoint, prioritising Mercosur would lead to strengthening its bargaining position in future negotiations. Besides Brazil’s geopolitical strategy, uncertainty regarding the possibility of moving forward with the FTAA, with the United States Congress as its centre weakened the United States’ negotiating position.48 Curiously, the absence of a fast track has not only delayed Brazil’s negotiations with the United States, but also virtually frozen Chile’s negotiations. Ironically, Chile was one of the main supporters of the arrangement and waited patiently, but not passively for this approval, as highlighted by Rosales. As already addressed due to the difficulties in continuing FTAA negotiations, in the first half of the 1990s, Washington 47

See “30 years of Argentine democracy”, The Economist, 22nd January 2014. Regarding the difficulties which Presidents Clinton and George W. Bush faced with obtaining fast tracking or trade promotion authority (TPA), Brazilian policymakers saw the United States’ congressional resistance as a factor that could jeopardised the United States’ ability to negotiate. Estado de São Paulo, 10th December 2000, "Mercosul sobrevive sem o Chile, diz Graça Lima"; interview with José A. G. Lima apud thesis by Jan van Rompay, p. 32. 48

290

established Economic Complementary Agreements (ECAs) with Mexico, Mercosur and the Andean areas. The Chilean focus on trade led to an FTA with Canada in 1996 and the ECA with Mexico was strengthened in 1998. In a sense, an appreciative environment was generated which also led to FTA negotiations with Central America along the lines of the NAFTA model49 (Rosales, 2003: 3). Together with these, other FTAs were also negotiated between Chile, the European Union and South Korea. From a political standpoint, Mercosur has remained a priority of Brazil’s foreign policy strategy since President Bush’s announcement of the Enterprise for the Americas Initiative in 1991. Nonetheless, while FTAA talks were being conducted, the foreign policy conducted by Brazil’s Itamaraty was gradually changing from a defensive to a more offensive and contributive approach. In this scenario, the economic reforms that Brazil underwent in the 1990s were not reciprocated by the United States. This means that the Brazilian economy opened up too much and too fast, with negotiations with the United States having little impact on their own system of subsidies and non-tariff barriers. Additionally, the Itamaraty stressed the problem of the lack of definition of its role by the FTAA as well as its unclear trade policy towards Brazilian goods in the United States market (Van Rompay, 2004: 34). During the summit in Mar del Plata, Argentina in November 2005, negotiations seemed to have reached an impasse, hindering further consensus over important issues. Among other things, the difficulties in the negotiations cannot only be attributed to disagreements between the political interests of the two main actors, the United States and Brazil, but also to disagreements of an economic character. In other words, the incompatibility between the foreign policy of Brazil and the United States cannot be considered as the only obstacle to the negotiation process. Another important factor was the growing discontent of Latin American countries over the Washington Consensus.50 Furthermore, the United States was 49

Economic-diplomatic agreements of a bilateral nature led by Washington sought to weaken or even derail the autonomous Latin American initiatives of integration, such as Mercosur (Chiarelli, 2004: 126). 50 Bettina Boekle. “El Brasil y el Alca: análisis político enfocado em la política exterior brasileña”, pp. 90-91 in Sérgio Costa, Hartmut Sangmeister, Sonja Steckbauer (eds) O Brasil na América Latina: interações, percepções, interdependências.” São Paulo: Annablume; Adlaf; Fundação Heinrich Böll, 2007.

291

always reluctant to include the crucial topics of its protectionist strategy, like its anti-dumping legislation and policy to protect agriculture in the debate. According to United States’ policy, these topics should preferably be treated in the World Trade Organisation (WTO).51 However, the United States wanted the FTAA to go beyond WTO standards on matters of interest, such as services, investments, government purchases and patents (Batista 2005: 79). As mentioned above, the many obstacles during the FTAA negotiation process led to bilateral agreements between certain Latin American countries. From these countries’ perspective, as in the case of Chile, such agreements ensured access to the United States’ market and more foreign investment.52 For Brazil, this fact led to a struggle involving conflict and cooperation among Mercosur members, since the Brazilian government provided real short-term benefits as a way of maintaining some influence in the region. As Mariano and Vigevani point out, from a political standpoint, it is possible for countries to maintain complementary positions regarding their goals, even having parallel goals in the short-term. In this context, the prospect of the FTAA tends to generate limitations for the acquisition of regional balance (Mariano and Vigevani, 2006: 327). In fact, Brazil’s approach during the FTAA negotiations was backed by the business sector, highlighting a more offensive policy due to the United States’ continued protectionism.53 For example against, some of the goods that caused controversy like Brazilian orange juice and sugar exports, which had the highest import tax rate in the United States’ market.54 As a result, countries demanded guarantees with regards to United States’ subsidised 51

It should be remembered that consensus among members of the WTO is the base of the decisions. Further reading Roberto Azevêdo (2014), “A OMC e a Conferência de Bali”, Política Externa, vol. 22, no 33. São Paulo: Editora Paz e Terra, pp. 9-20. 52 Stefan A Schirm. “Indicadores de liderança e modelos de análise para a nova política internacional do Brasil” p. 53 in Costa, Sérgio, Or.; Sangmeister, Hartmut, Org.; Steckbauer, Sonja, Org. “O Brasil na América Latina: interações, percepções, interdependências.” São Paulo: Annablume; Adlaf; Fundação Heinrich Böll, 2007. 53 It must be stated that the business sector is not a homogeneous group, with some favouring a more positive approach to the FTAA initiative. In the shadow of the generals, p. 95. 54 Brazil had ongoing problems with other products, such as steel, textiles and footwear which all faced a powerful US lobby in order to protect uncompetitive sectors of its economy. Batista Junior, Paulo Nogueira (2005: 78).

292

goods in order to ensure similar competition with their non-subsidised products.55 It can be observed that the active participation of the Brazilian business community is congruent with the concept of public diplomacy, which means that the new diplomacy collaborated with diverse sectors.56 Indeed, as analysed in the first chapter, the new international agenda demanded the participation of other sectors in foreign policy strategy and could not be restricted to the relationship between state representatives. That said, the support of the business sector played an important role in FTAA negotiations. 4.2 The Brazilian Business Sector vis-à-vis the FTAA In addition to the different geopolitical strategies of Chile and Brazil, their opposing reactions can be explained due to their extremely different economic structures. On the Brazilian side, an estimation of initial trade losses and their impacts on the domestic economy demonstrated the effects they might had on exports. That said, the scarcity of expensive short-term credit seriously prejudiced and medium-sized companies in particular, which have little access to loans abroad. In this way, the FTAA with the United States had a destructive effect on much of the Brazilian productive system and also affected the most sophisticated sectors. As opposed to what some defenders of the FTAA believed, even the most sophisticated Brazilian companies were not prepared for the FTAA (Batista, 2005: 8283). 55

Neither sugar nor orange juice are considered crucial products to the United States economy, whereas the orange crops located in the state of Florida were key element to the elections of 2001. Regarding the sugar issue, even if Latin American countries needed the United States’ market for export, the latter did not depend on these countries to meet its internal demand. Bettina Boekle, “El Brasil y el Alca: análisis político enfocado em la política exterior brasileña”, pp. 98-99 in Sério Costa, Hartmut Sangmeister, Sonja Steckbauer (Eds) (2007). “O Brasil na América Latina: interações, percepções, interdependências.” São Paulo: Annablume/ Adlaf/ Fundação Heinrich Böll. 56 However, the role played by Brazilian presidential diplomacy on its two main axes cannot be underestimated, in United States’ and Southern Cone relations. Concerning either relations with the United States’ or the neighbouring south, the president is an important driver of foreign policy, even though this does not mean the retraction of the Itamaraty from Brazilian foreign policy. Alessandra Falcão Preto. “O conceito de diplomacia presidencial: o papel da presidência da república na formulação da política externa. São Paulo: Universidade de São Paulo, 2006, p. 39.

293

It is important to remember that since the beginning of the 1950s, the Brazilian economic development model has been based on import substitution industrialisation (ISI). Continuing in this vein, the volume of the production and diversification of economic activity has also been very impressive in Brazil during the twentieth century. During the last century, a complex infrastructure of transportation, energy and communications was built up; huge steel, metallurgic and petrochemical industries were constructed and an important capital goods sector and a huge consumer goods industry emerged (Guimarães, 2004: 110). As a result, some sectors of the Brazilian economy were able to compete in the international market, for example steel, textiles, footwear and large sectors of agriculture and agri-business. For this purpose, these sectors were targets for the systematic protectionist practices of developed countries (Batista, 2005: 84). Due to some domestic sectors’ lack of competitiveness, together with excessive international protectionist barriers, the FTAA left a disastrous legacy for the Brazilian business sector. In this case case, state economic control was conducted through diverse institutions such as the Central Bank, the financial system and the Trade and Development Bank, even though they were interconnected.57 In Brazil’s opinion, rising doubts over competing without tariffs against the United States from 2005 to 2015 had always caused concern among businesses. At the same time, part of the business sector supported the FTAA project, given the possibility of reducing domestic intervention in the economy. For this group, the FTAA meant liberalising the domestic economy by diminishing state instruments of economic control. Other government departments stated that Brazil would face difficulties counterbalancing the United States’ power, therefore dilatory manoeuvres were an important strategic policy for dealing with the FTAA initiative (Batista, 2005: 108). Brazil was the only Latin American country that could resist the FTAA project while proposing alternative integration mechanisms like Mercosur. Mexico was already a member of the NAFTA and Chile targeted stronger 57

In fact, multifaceted state intervention in the economy had been the target of widespread criticism due to the lack of coordination and communication among the different sectors. Werner Baer. A economia brasileira; tradução de Edite Sciulli - 2. ed. - São Paulo: Nobel, 2002, p. 297.

294

links with the United States. Central America and the Caribbean consisted of consolidated United States’ zones of influence in Latin America. 58 However, Brazil’s international insertion had changed, to the extent that the country was now an emerging global power. Indeed, the strategy of attracting Venezuela as a Mercosur member country was a way to prevent Chávez getting lost in the Caribbean and also a way of demonstrating a policy to strengthen regional influence. In this regard, Brazil’s foreign policy adopted the position of an emerging power that should stand as autonomous before the United States.

4.2.1 Brazilian economic strategy in the 1990s Since the 1990s Brazil has adopted a new economic strategy whereby privatisation, unilateral trade concessions, deregulation, the indiscriminate attraction of foreign capital and political alignment with Western powers transformed the domestic scenario.59 The new strategy sought to promote monetary stability as well as fiscal equilibrium. Regarding trade and regional integration, the strategy consisted of overvaluing the exchange rate and fixing low tariffs in order to promote imports and control domestic prices and inflation. Furthermore, it considers denationalisation and structural trade and current account deficits as essential structural changes to the economy (Pinheiro, 1999: 11-12). However, these measures were not as rigidly adopted as in the case of Argentina. On the one hand, a liberalising policy was adopted during the administration of President Fernando Collor de Mello (1990-1992), given anti-inflationary economic planning in which savings and other investments were temporarily blocked. President Collor desisted from building more advanced industrial structures in which the State actively intervened. On the other, the United States exerted pressure on internal economic liberalization, as well as on government barriers to national industries (like the computer 58

See The Economist, “Trade in Latin America: Unity is strength”, 10th March 2012. http://www.economist.com/node/21549939. 59 However, Brazil’s delay in entering the global economy causes concerns among the business sector. See Pedro Passos (2014), “Para uma nova política de comércio internacional do Brasil”, Política Externa, vol. 22, no 3. São Paulo: Editora Paz e Terra, pp. 31-40.

295

industry) and markets. Liberalising procedures were carried out through unilateral tariff reductions. The liberalisation policy did not offer compensation for international competition. The resuming of subordinate relations with the United States and an opening proposition for the IMF represented priorities adhering to the Washington Consensus (Visentini, 2013: 96). Looking ahead, Brazilian economic and social indicators should raise concerns. To summarise, the liberalisation of the economy has brought even great social problems to a Brazil already facing social inequalities. As for the future, it can be speculated that the neoliberal strategy will face serious economic and social problems. From an economic perspective, dependence on the enormous inflow of capital, the multiplication of taxes, the dollarisation of domestic public debt and an excessive privatisation programme has had a great impact on unemployment, urbanisation, international competitiveness and export expansion among others (Visentini, 2004: 112). President Collor did not take into account the fact that the Cold War weakened the United States’ power and therefore the United States maintained firm strategy regarding international economic affairs in the framework of the FTAA initiative. Contrary to, President Collor’s perception, military power was not linked to economic power, since the United States did not sustain economic hegemony. Interestingly enough, Southern Cone cooperation also targeted a reduction in tariff barriers in the sense that the main aim of strengthening ties was to accelerate tariff reductions. Fostering Brazil-Argentina relations with Uruguay and Paraguay had the aim of encouraging reductions in tariff barriers, since these, the smallest full members of Mercosur, maintained low trade barriers (Ibid).

4.2.2 Chile’s liberal economic backgrounds From the Chilean perspective, the Chicago Boys reversed the entire stateinterventionist trend adopted since the 1920s. The Chicago Boys’ dogmatism would not allow backtracking on liberalisation policies.60 60

The Chicago Boys took their place in the Chilean economy during Pinochet’s administration at a time of steep price increases and mounting unemployment. In that

296

Therefore, in the mid-1970s, in order to open up the economy, market relations were imposed throughout society and a new entrepreneurial culture substituted dependence on the state (Collier and Sater 2004: 366). Despite the economic recession of the mid-1970s, the neoliberal programme was preserved. In this way, the privatisation of state-owned companies began in 1974, import tariffs were brought down, very liberal foreign laws were decreed and currency was reformed, among other measures. The creation of a more benign neoliberal environment seemed to have results for the Chilean economy. The economy began to rebound from the recession, inflation fell and the GDP rose by an average of 7% per year. One interesting factor is the growth of non-traditional exports in that period. As in the example given by Collier and Sater, “Chilean apples appeared in British supermarkets and good-quality Chilean wines in American liquor stores. Whereas copper had accounted for nearly nine-tenths of all exports (taking yearly averages) in the 1960s, it accounted for under half in the 1980s” (Collier and Sater, 2004: 369-370). Importantly, privatisations in towns and the countryside alike provided excellent opportunities for financial conglomerates to consolidate their business empires. By the end of the 1970s, these conglomerates - called ‘grupos económicos’ - had taken control of much of the banking system, the new and unregulated finance houses named ‘financieras’ and an increasing share of the manufacturing and agro-exporting sectors.61 This new pragmatism was based on a careful manipulation of the exchange rate and money supply, although it allowed for selective measures to stimulate domesticoriented agriculture, industry and the already much-favoured exporters as well (Montecinos, 2009: 142-143). The combination of the limited strategies of import substitution and export promotion contributed towards propelling the country into a new phase of significant growth from the mid-1980s onwards. In this respect, the neoliberal framework was encouraged and scenario, their unrestrained capitalist vision seemed risky. However, during 1974, the effects of the first oil shock, the result of which, was a rise in oil prices were felt and indeed, copper prices began to fall alarmingly. In a context where inflation seemed to be largely out of control, the Chicago Boys gained full control over economic policy. Simon Collier and William Sater (2004). A History of Chile, 1808-2002. New York: Cambridge University Press. 61 Further reading in Ricardo D. Paredes Molina et al. (1994), Organización industrial y grupos economicos: el caso de Chile. Departamento de Economía, Universidad de Chile.

297

maintained (Collier and Sater, 2004: 371). It should be emphasised that Chile was a laboratory for neoliberal experiments and in this regard the country reaffirmed its exceptionalist position in the continent. As observed, economic growth after the mid1980s was achieved at a heavy price, two deep recessions and badly distributed income (Collier, and Sater, 2004: 372). One of the major and most recognisable consequences of the neoliberal model was the increased concentration of wealth in the hands of a few, which simultaneously created a greater disparity between the rich and the poor. Oppenheim points out that “there may be differences of opinion as to whether the liberal reforms of the 1976-1981 period were, overall, beneficial for Chile, but there is clear evidence that economic concentration increased and income distribution worsened” (Oppenheim, 2007: 129). The approval of the free trade agreement between Chile and the United States produced regional liberalisation efforts. As Rosales pointed out, “American authorities always highlighted Chile's best rights to accessing a FTA with the United States, insisting that Chile headed the ‘waiting list’ considering its good economic and trade performance” (Rosales, 2003: 2). Nonetheless, the United States was much more important to Chile than Latin America was generally to the United States. Since Chile was aware of the region’s lesser strategic importance to United States foreign policy, there was a persisting commitment on its part to establishing an FTA with that country. In 2001 Chile was invited to initiate trade negotiations with the United States to open up the possibility of an FTA between the two countries. From Chile’s perspective, an FTA with the United States would create clearer rules about trade and investments, while reducing transaction costs and giving incentives to new exporters.62 As a result, the agreement eliminated, the escalation of tariffs, providing a greater impulse for diversifying exports. In summary, the main aim of the FTA was the construction of a preferential relationship with the United States.

62

See the United States Congress, 2002 Trade Policy Agenda and 2001 Annual Report, “Message from the President of the United States”. Washington: U.S. Government Printing Office, pp. 119-120.

298

4.3 United States Foreign Policy under George W. Bush vis-à-vis Latin America As far as Latin America was concerned, George W. Bush campaigned for a platform that promised to reinforce and broaden relations with the region in 2000. Nonetheless, after attacks on September 11th things changed in terms of the priorities of the United States foreign policy and security became a key.63 In contrast, security was not considered a priority for Latin American countries. However, in March 2007 President Bush decided to pay special attention to the continent with a visit to five countries. Clearly, the purpose of the visit was not trade negotiations, but rather to halt the growing influence of Hugo Chávez in the region. In this respect, security and terrorism are not considered the only factors that explain the scant attention paid to Latin America. The United States’ strategy of negotiating separate bilateral agreements also contributed towards paralysing FTAA negotiations (Fonseca, Carlos, 2007: 67). In fact, separate negotiations put the United States in a better position to assert its will. That said, the Enterprise for the Americas Initiative, launched in 1991 and which later resulted in the Free Trade Areas of the Americas (FTAA), with aspirations to become a hemispheric free-trade area from Alaska to Tierra del Fuego excluding Cuba, ended up producing nothing concrete in terms of hemispheric cooperation. The aperture of the markets is an inevitable trend and trade liberalisation, leads to benefits for the world trade system as a whole. The elimination of trade barriers are important for both north and south, contributing to creating a more open and trusting environment in international trade. However, as explained, the implementation of the FTAA was a goal that generated uncertainty in both economic and political fields. Most significantly, the FTAA was an economic project with strong political ballast. Thus, its purpose was to bring a greater balance to relations in the hemisphere so as to not worsen internal asymmetries. 64 In order to understand the reasons that led to Brazil’s foreign policy strategy regarding 63

More information in Ricardo Seitenfus (2013), “O impacto do terrorismo sobre as relações internacionais” in Relações Internacionais, 2. ed.. Barueri: Manole. 64 Costa, Ligia Maura. Comércio Exterior: negociação e aspectos legais. Rio de Janeiro: Elsevier/Campus, 2005, p. 62.

299

the FTAA, it is important to remember that this was not simply the free trade area it appeared to be. That said, a broad regional agreement like that of the FTAA generated not only profound structural and institutional changes but also significant long-lasting ones. As is already known, no major steps to cementing the United States’ influence in Latin America through the FTAA occurred. In the aftermath of September 11th, United States foreign policy focused its efforts on security and consequently its policy making collaborated to undermine the continent’s agenda of cooperation. On a political level, the main difficulties arose because of the differences in the positions of the United States and Latin America regarding foreign policy strategy. The United States’ focus on security has overshadowed Latin America’s importance to Washington. In this respect, some studies have been devoted to the United States’ neglect of the continent in this period. Despite this attitude mainly existing during the terms of George W. Bush, the scant attention paid to the continent had its origins in the presidencies of Bill Clinton and George H. W. Bush (Russel and Tokatlian, 2008: 20). With this in mind, the lack of a longstanding foreign policy strategy towards the region is understandable. Regardless of the lack of President W. Bush’s political capital to achieve a successful regional agenda, the importance of his official visit in early March 2007 should not be underestimated. In fact, this official visit seems to have achieved its goals to a certain extent. Firstly, it sought to establish closer ties with Brazil based on the two countries’ interests in promoting production and global trade of ethanol. Secondly, President W. Bush aimed to get the tacit support of Brazil for a strategy to contain President Hugo Chávez. Curiously, President Lula’s attitudes towards Chávez and the President of Bolivia, Evo Morales, hardened after the visit of the President of the United States (Soares, 2007). The change in President Lula’s position became evident during the Summit of Isla Margarita in April 2007. As Sotero highlights, there was a willingness to foster cooperation with the United States during Lula’s second term. In many respects, this was due to Lula’s interests in establishing closer ties with the private sector. In this way, Brazil redirected its hemispheric policy motivated by three fundamental factors: diverging interests with Venezuela and Bolivia; the need to reassert regional leadership and the fact that there were also some areas of agreement 300

between Brazil and the United States foreign policy. 65 At the present time, there are three major topics that shape the United States foreign policy towards the continent: the potential increase in transnational terrorism on a global scale; the sharp decline in the State’s importance and the link between illicit drugs and organised crime (Russel and Tokatlian, 2008: 20). The imbalance of power between the United States and Latin America will continue in the coming years, meaning it could still be predominant feature of international policy in the near future. In this context, Brazil and Chile have seen an opportunity to develop strategic policies towards Washington instead of the long-standing traditional diplomacy of previous decades. Regardless of the difficulties in the region’s greater political balance, there is room for manoeuvre in the continent’s geopolitics. In some respects, the multilateralism endorsed by the high-level of institutionalisation plays a major role in terms of restricting the abuse of power and legitimising the state policies to be adopted. Therefore, the United States cannot afford to ignore them without receiving substantial penalties for a loss of support for their policies and aspirations. Most significantly, at the present time Brazil is a ‘necessary interlocutor’ between the United States and Latin America. This means that Brazil is crucial to the continent’s stability. The fact that the United States has recognised Brazil as an articulator of consensus is exclusive to their foreign relations, meaning that Brazil plays a key role in regional security. 66 Brazilian cooperation on regional matters and the country’s ability to deal with every Latin American country has legitimised its position. Brazil is a sub-regional leader and Chile supports the country’s geopolitical position in the region.

65

See Paulo Sotero (2007), “Bush na América Latina: próximo do Brasil, longe de Chávez”. Política Externa. São Paulo: Editora Paz e Terra, p. 67. 66 Diplomacy is a mode of tactful civilised conduct, gracefully smoothing the rough edges of competitive, sensitive societies and men. Chiefly, however, it is an instrument and procedure by which nation-states conduct their political affairs and other business among themselves while at peace. It is thus the legislative process of world politics. Power and force can establish or change equations of strength among nations, thus limiting diplomacy’s influence. Paul Seabury (1964). Power, freedom and diplomacy: the foreign policy of the United States of America. University of California. New York: A Division of Random House, p. 332.

301

4.3.1 Brazil, the United States and Mercosur’s biofuel and ethanol markets A point made earlier in this chapter concerns the interests of both countries in increasing the production and global trade of ethanol. In this context, energy appears as the most promising area of bilateral cooperation between the two countries in the foreseeable future. The opportunity to explore cooperation in the research and development of ethanol has undeniable implications for Brazil as a global player. To illustrate this point, the Brazilian Sugarcane Industry Association (Unica) has sought to create a global ethanol market, transforming the product that today meets less than 3% of world fuels demands into an internationally important commodity. 67 It is worth observing that Proalcool was the world’s most consolidated biofuel programme, as well as the main mechanism used by the government to encourage sugar-cane production and foster the industrial capacity needed to transform the alcohol programme into a credit subsidy. Subsidies are also currently given for the development of the ethanol industry in the financial system, with compensation for regions according to their level of production and biofuel use requirements. Proalcool was implemented through financing contracts with unions and with National Treasury Secretariat and Brazilian Bank funding (Banco do Brasil S/A) allocating resources for the programme (Andrade, 2009: 131-132). The National Treasury provided financing to the Brazilian Bank according to the Selic rate and refinanced sugar mills, distilleries and cooperatives producing alcohol at a fixed rate for the programme (11,5% in 2004). The amount financed corresponded to the volume of alcohol estimated to guarantee the loan. Law No 10,453/02 established the Sugarcane Production Cost Programme for the north-east region, with direct compensation for major north-eastern production costs compared to the centre-south. Moreover, the Green Fleets Law determined that acquisition or 67

The Brazilian sugar-energy industry particularly that associated with the National Alcohol Programme (Proalcool) was launched in the 1970s as an alternative to imported fossil fuels. After a successful period that lasted into the 1980’s followed by a difficult stretch in the 1990s, ethanol made a strong comeback as an alternative fuel source in 2003, with the car industry’s introduction of Flex-Fuel technology. Unica News, “White House staffers learn about Brazilian ethanol”, 17/08/2009. http://english.unica.com.br/noticias/ show.asp?nwsCode={CBD9A90F-23DB-4A96-81F5-401D3E170024

302

replacement of the official fleet only be made up of vehicles that used renewable fuels. 90% of biofuel production is concentrated in the United States, Brazil and Europe, which represents a great potential for Mercosur members.68 Mercosur’s main partner is the world’s second largest producer. It is estimated that Brazil’s production will reach 44 million tonnes by 2016, an increase of 145% compared to 2006.69 Industrial scale production of ethanol goes back several decades, so it is not surprising that the ethanol sector outweighs the biodiesel one. The increasing demand for renewable energy sources has had an important impact on ethanol production, to the extent that production volume almost tripled between 1995 and 2006. World ethanol production has reached approximately 50 million tonnes, with Brazil and the United States contributing more than a third of the total (López and Starobinsky, 2009: 24-5). It should be remembered that the bilateral agreement between Brazil and the United States in 2007 changed the energy scenario in such a way that it created an important international ethanol market. Strengthening ties in other sectors such as energy goes hand-in-hand with the concept of public diplomacy and demonstrates the importance of diverse actors in foreign affairs. Energy issues play a fundamental role in foreign policy strategies in Brazil, the United States and Chile and therefore help build bridges in the sector to strengthen bilateral links. On the other hand, global efforts to reduce dependence on oil have led to initiatives being encouraged worldwide that use renewable energy sources. An increase in environmental concerns demands an alternative energy matrix to serve as a potential solution for cleaner energy use. Achieving greater energy security through increasing biofuels and ethanol production demands a competitive performance from the country’s producers. However, there is still some reticence about the United States and 68

Among experts, biodiesel is the best candidate for diesel fuel. Biofuel has a number of benefits, such as adding value to feedstock and increasing rural manufacturing jobs and income taxes and investments. More information in Ayhan Demirbas (2007), “Importance of biodiesel and transportation fuel”, Energy Policy, vol. 35, issue 9. Elsevier, pp. 46614670. 69 Despite the general arguments against renewable energy sources, Brazil’s ethanol programme demonstrates that scale economies can profit by using renewable energy. See José Goldemberg et al. (2004), “Ethanol learning curve: the Brazilian experience”, Biomass and Bioenergy, vol. 26, Issue 3. Elsevier, pp. 301-304.

303

Brazil’s production of ethanol and its impact on food prices. Whereas the impact of ethanol produced from corn in food production is recognised, Brazilian ethanol derived from sugar-cane does have a similar impact (Zhang, 2010: 145-146). Unlike the United States, Brazilian ethanol is already a reality in its energy matrix. To illustrate this situation, it can be pointed out that Brazil today meets more than 40% of its needs for fuel for cars with ethanol. At the same time, Brazil has become one of the three largest producers and exporters of food in the world, together with the United States and the European Union. In addition, sugar-cane is only grown in 5% of the country’s land used for agriculture. This fact demonstrates how ethanol can be used as a political tool to reshape the Brazil-United States relationship. In practical terms, the United States-Brazil agreement to promote the consumption of biofuels such as ethanol has still not achieved great results. Ironically, this has occurred due to the trade barriers that the United States has imposed on ethanol imported from Brazil. 70 The growing international demand for biofuel and ethanol means that renewable energy source have become an important issue in foreign affairs, encouraging multi-sector cooperation such as public-private partnerships. Environmental concerns have increased in the last few decades, determining the comparative advantages of ethanol producers like Brazil. The combination of adequate weather conditions and an adequate renewal of sugar-cane stocks have led to an increase in production. The United States is the main destination of Brazilian ethanol exports, leading to continuous energy links. In Mercosur, biofuel cooperation, especially ethanol in which Brazil is a world leader would help launch the aforementioned energy sources as a real alternative to fossil fuels.

4.3.2 Mercosur vis-à-vis Brazilan and Chilean foreign policy Given the even more unfavourable and worsening conditions for 70

There has been an attempt by representatives of the Brazilian ethanol industry to create a more open and trustwothy market for ethanol as a global commodity. Moreover, the Brazilian biofuels sector has directed its efforts towards the greater carbon credit market advantages that President Obama wants to create to combat climate change. Eletrosul, Gestor digital de informações, “EUA buscam cooperação na área de energia”, 13th March 2009. http://www.eletrosul.gov.br/gdi/gdi/index.php?pg=cl_abre&cd=hniceZ4:%5BTehe

304

international insertion in the 1980s, Brazilian foreign policy was unable to seize diplomatic opportunities with strategic world regions like before. In practical terms, relations with the European Union and Japan became more difficult due to increased protectionism. Likewise, the country’s privileged relations with the developing world were impractical and hard to maintain. It became clear that the regional order established in the Middle East after Gulf War of 1991 restricted any possibility of relations in that area. As the international scenario worsened, the creation of a new regional reality came into effect. In this sense, the process of integration with neighbouring countries became a reality, bringing immediate economic benefits. Another important point that should be mentioned is the reinforcement of the regional base with a view to broadening Brazil’s participation as well as that of its neighbours in the global system. The creation of Mercosur should not be considered a goal in itself but goes hand-in-hand with a far-reaching geopolitical project (Visentini, 2004: 16-17). As was explained in the first chapter, contemporary integration initiatives cannot be exclusively defined as state activity and the role of the State should not be underestimated. It has been recognised that the adoption of major reforms in Chilean public policy led to a decrease in external tariffs, together with the liberalisation of foreign investment. In this sense, Chile decided not to take part in projects involving negotiated economic integration and instead chose to support a system with a freer exchange rate. At this time, the country withdrew from the Andean Group due to the fact that it did not share a common external tariff. Indeed, it opposed the common treatment of foreign investments as well as of industrialisation through import substitution. The transition from a military regime to a democratic one brought with it a multitude of risks because of the economic reforms carried out during the military government. The developed strategy preserved the macroeconomic balance and therefore in President Aylwin’s term import tariffs were also reduced as an incentive for non-traditional export products. Continuing along these lines, foreign policy was built up through trade negotiations with central markets. Meanwhile, more public and private resources were designated to Prochile and to a more active development of the Direcon.71 As a small country, 71

Dirección de Relaciones Económicas Internacionales. Prochile is an agency that belongs to Direcon and the Ministry of Foreign Affairs and is aimed at developing the country's

305

Chile’s foreign policy strategy was to take advantage of global trade, even if it could not influence it. Chile sought to sign complementary economic agreements within the framework of the ALADI with Mexico and other Latin American countries. Furthermore, it signed free trade agreements (FTA) and cooperation initiatives with certain developed and emerging Asian countries. The important strategic understanding that emerged between Chile and Mexico should be stressed, enabling the possibility of Chile becoming part of the APEC, in the same way as it also favoured its negotiations with developed countries. 72 On the whole, this foreign policy strategy continued in the subsequent governments of Presidents Frei (1994-2000) and Lagos (20002006). During the Frei administration, complementary economic agreements were signed with Mercosur, other Latin American countries and Canada and the European Union. Trade agreements were part of Chile’s long-term foreign policy, with the government encouraging the expansion and diversification of commerce.

4.3.3 The fundamental matters concerning the FTAA As has been explained, the FTAA was designed by the United States’ government and the business sector and led to a tremendous loss of autonomy for Latin American countries. Brazil was threatened by international agreements to keep its domestic market open to United States’ exports and exports from other countries in the continent. Certainly, Brazilian companies could not compete with corporations from the United States, given their technological, financial and commercial power. However, Brazil would have to give up a number of government policy instruments in order to join to the FTAA.73 As a result, its trade policy would cease to exist trade policy. http://www.prochile.cl/quienes_somos/que_es_prochile.php. The activities carried out by Direcon depend on the Ministry of Foreign Affairs. http://www. direcon.cl/index.php?accion=quienes_somos 72 Augusto Animat (2008). “La política comercial chilena: una experiencia satisfactoria pero con nuevos desafíos”, pp. 136-137. 73 Brazil’s organised resistance to the FTAA was shaped by the Rose Garden Agreement signed in the White House Garden on 19th June 1991. This was the first such multilateral agreement since the EAI. The agreement establish a Council of Trade and Investments, which would be shared and chaired on a rotating basis by the foreign ministers from

306

in other FTAA countries. This means that neither tariff barriers nor nontariff barriers would apply to protect certain sectors of the economy. In practical terms, the country would be unable to use trade policy to protect its industries and the emergence or consolidation of new sectors. Most significantly, the situation worsened during the government of George W. Bush, with the United States’ interests becoming more explicit.74 On the one hand, the FTAA played an important role in creating a more open environment for the more competitive sectors of the United States’ economy. On the other, it adopted protectionist measures for the most vulnerable and least competitive sectors of its economy. As previously analysed, the FTAA also had trade and economic implications for Brazil, since the liberalised policies of the United States required the country to open up its industrial sectors. Maintaining industrial development was the basis of the national industrialisation initiative. Historically protected from foreign competition, Brazil service sector reacted cautiously to the FTAA project. The negative listing approach adopted by the FTAA, which demanded the exclusion of certain sectors from the agreement, reflected the dissonance in the way the country was being industrialised.75 The FTAA’s target to include almost every sector in the liberalisation programme had undesirable effects on the economy. Therefore, the FTAA model was formally rejected, due to its strong liberalising nature. As already noted, the FTAA had a much broader scope than better market access to goods and services. 4.4 The Present Course of Brazilian Foreign Policy Under President Lula, Brazilian foreign policy did not undergo any dramatic Mercosur member countries and the Office of the United States Trade Representative. Signficantly, the agreement established a framework in which to relax trade barriers between the United States and Mercosur countries. “Mecanismos de diálogo e processos negociadores”. Ministério das Relações Exteriores. Available at: http://www.itamaraty. gov.br/o-ministerio/conheca-o-ministerio/america-do-sul/dnc-ii-divisao-de-negociacoesextra-regionais-do-mercosul-ii/?searchterm=acordo%20do%20Jardim%20das%20Rosas. Accessed on 11th July 2013. 74 See Luiz A. P. Souto Maior (2001), “Brasil-Estados Unidos: desafios de um relacionamento assimétrico”, Revista Brasileira de Política Internacional, vol. 44, n o 1. Brasília: Instituto Brasileiro de Relações Internacionais. 75 See Inter-American development Bank, “The trade policy making process: Level one of the two level game”. Buenos Aires: INTAL_ITD_STA.

307

changes or adopt a more militant position as some would have expected from a leftist government. The appointment of a career diplomat, Ambassador Celso Amorim, as head of Brazilian foreign policy illustrates this point, strengthening the foreign policy of fomer President Cardoso in the last two years of his administration, which coincided with the international financial crisis. This means that, in the last two years of Cardoso’s term, diplomacy prioritised an agenda of cooperation in South America as a way of circumventing the crisis in Mercosur, maintaining the integration process in adverse circumstances (Vigevani and Cepaluni, 2012: 50-51). Brazil also attempted to recover a degree of autonomy from the Bush administration, as already highlighted. Brazil’s new foreign policy strategy sought to increase its negotiating power on the international agenda vis-à-vis major world powers. At the same time, talks were conducted with its neighbours regarding the establishment of a broader partnership in order to help economic growth. That said, Brazil encouraged the possibility of a coordinated action plan at an international level, aiming to avoid the marginalisation the region was suffering. 76 The logic behind this strategy was that regional integration could contribute to South American development. Furthermore, an integrated Latin America was an indispensable tool for negotiating the FTAA (Visentini, 2006: 166). The new international coalition strategy adopted by Brazil’s foreign policy-makers was a continuous and flexible search for international activities in order to extend national power. The Brazilian multilateral foreign policy strategy of the twenty-first century, in which the G-20 and BRICs (Brazil, Russia, India and China), are important bodies in the country’s foreign policy strategy has been considered by many analysts as more rhetoric than substance. 77 However, the coalitions strategy is part of a new global order, creating a new architecture for international relations. In 76

It should be highlighted that Mercosur was created for strategic and political reasons beyond the field of trade. Further reading in Féliz Peña (2011), “Uma perspectiva sobre o future do Mercosul”, Política Externa, vol. 20, n o 1. São Paulo: Editora Paz e Terra, pp. 99106. 77 The weakening of the United States’ power in the international arena is associated with India and China’s emerging position as global powers and has been attracting greater interests among the international community. Roberto Teixeira da Costa (2011), “Chile e Índia: protagonistas de um mundo em transformação”, Política Externa, vol. 20, no 1. São Paulo: Editora Paz e Terra, pp. 181-188.

308

this global scenario of restructuring, the so-called emerging countries of Brazil, India and South Africa, for example, aim to exert more political and economic influence on the international arena. The end of the Cold War brought the return of these large, peripheral countries to the diplomatic context, with them playing the role of intermediaries between developed and developing countries in international talks. Despite major differences between the larger peripheral states, they all share similarities such as large populations and huge territories, providing opportunities for economic exploitation. As Visentini points out, the potential of these countries for promoting greater economic, scientific and technological developments, military capability and broad and diverse competitiveness on an international level was soon realised (Visentini, 2006: 161). Furthermore, in the current context of economic crisis, the size of these peripheral countries matters when world trade is falling, since large economies have millions of domestic consumers to turn to when foreign markets fail. Another important fact is that large economies tend to be diversified. On the one hand, diversification means little when markets all fail at once. On the other hand, it can be considered a significant advantage when recovery begins, since these countries are most likely to be involved in businesses in which demand is rising.78 Due to the previously mentioned factors, these states can increase their bargaining power in the international arena through coordinated action. The reason behind this policy of coordination is the attempt to develop a more symmetrical world order. In response to the inability to reform existing structures within the United Nations, new attempts to shift the global balance of power were made by emerging countries. In this way, initiatives like the BRIC, striking for a bigger say in global policy-making, contribute to this trend. That said, when the BRIC meet, they discuss topics such as reforming the IMF and, in the case of China, Brazil and Russia plans to switch some of their foreign-currency reserves out of dollars and into IMF bonds.79 Continuing along these lines, the G-20 the group of the world’s 20 largest economies, constitutes a forum for debating topics that affect the global order, such as international crises, climate change and global warming and 78 79

The Economist, 20th-26th June 2009, p. 65. Ibid, p. 63.

309

trade liberalisation among others. According to President Lula, decisions about measures to contain the international crisis cannot only be contained to the G-8 (the United States, Japan, Germany, the United Kingdom, France, Italy, Canada and Russia). The G-20, which represents about 80% of global wealth, should also discuss issues such as the recovery of the global economy. 80 In the long-run, Brazil’s foreign policy expresses values of tolerance and respect for other countries. In accordance with the country’s diplomatic tradition, Brazil’s leadership builds on its capacity to articulate conflicting interests, while operating as a consensus-building country. Regardless of Chile’s divergent approach to the FTAA initiative vis-à-vis Brazil’s diplomatic strategy, the two countries share common values associated with their similar international insertion. As van Klaveren states: “From Chile’s standpoint, Brazil embodies the so-called ‘para-neighbour policy’, as does Ecuador, which has also been a traditional friend of Chile. This kind of relationship reflects ties that are not so strong, since neither state shares a common border or long-term stable relations that encourage mutual respect. Chile’s position supporting the NAFTA and FTAA projects, while distancing itself from Mercosur and UNASUR initiatives, cannot be linked to Brazil-Chile ties. The perception within Chile’s foreign policy plan was that strengthening participation in the field of UNASUR could demonstrate undesirable support of the country for the Bolivarian Alliance for the People of Our America (ALBA). Establishing closer links with President Hugo Chávez was not the goal of Chilean diplomacy (Alberto van Klaveren, Vice-Chancellor for Foreign Affairs (2006-2009), agent of the State of Chile in the case of Peru versus Chile in the International Court of Justice regarding a maritime border dispute on 16th January 2008. Interviewed on 29th August 2013 in Santiago de Chile).

Brazil and Chile’s similar international insertion, based on the defence of human rights, should not be underestimated, given the importance of protecting human rights and the favourable environment developed from the 1990s onwards in both countries. 81 The consolidation of human rights 80

“Lula diz que cabe ao G-20 agir contra a crise”. O Globo, Economia, Tuesday, 14 July 2009. 81 Further reading in Mónica Serrano and Vesselin Popovski (2010), Human rights regimes

310

reforms laid the groundwork for both states’ active position. From Brazil’s standpoint, the return to civilian rule in 1985 brought a minimum number of political rights: universal suffrage, free and fair elections and an adequate separation of power. With regards to civil rights, the country signed every regional and international human rights protocol and convention, taking an active position in the United Nations’ human rights protection system. Indeed, reapprochement to the Inter-American system also occurred in this period. The 1988 Constitution expressly recognised rights and guarantees in accordance with the country being a pioneer as one of the first to institute the National Plan of Action on Human Rights (Macaulay, 2010: 133-137). In Chile, the increasing importance of protecting human rights has been twofold. The gross violations that occurred during the military dictatorship and the legal changes that had to be carried out to sustain democratic values as a due process of law to guarantee freedom of expression and to give rights to vulnerable groups led to important changes in the country’s political system. The first step was the creation of the National Commission for Truth and Reconciliation (the Rettig Commission) during the administration of President Aylwin (1990-1994).82 From the 1990s onwards, civil tribunals played an active role in prosecuting the abuses committed by the dictatorship. Alongside Brazil, Chile remains extremely active in international forums on human rights, as illustrated by the country’s position signing of the Universal Declaration of Human Rights and of the American Convention on Human Rights. At a constitutional level, important changes took place in 2005, due to the interpretation of information of a public nature. Therefore, the so-called desacato laws were removed from the penal code and restrictions on freedom of expression in a state of emergency were modified to adhere to international standards. Vulnerable groups like women and their rights also underwent significant reforms, with the creation of the Ministry for Women (SERNAM). The transition policy included membership of intergovernmental human rights organisation notably the UN Human Rights Commission, the Inter-American Court and Commission, the UN Human in the Americas. New York: United Nations University Press. 82 More information in the “Report of the Chilean National Commission on Truth and Reconciliation”, United States Institute of Peace, 4th October 2002. Notre Dame: University of Notre Dame Press. http://www.usip.org/sites/default/files/resources/ collections/truth_commissions/Chile90-Report/Chile90-Report.pdf

311

Rights Committee and the UN Sub-Commission on Human Rights (González, 2010: 156-164). It is worth highlighting Brazil and Chile’s similar approach, through their mutual support to the Universal Declaration of Human Rights and their policies on democratising and promoting human rights policies. Brazil’s hope of gaining a permanent seat on the UN Security Council had Chile’s support. The reform of the Security Council needed would lead to more permanent members and Brazil, as an emerging global power would comply with the council’s need to better represent the new international context. The fact that Chile was the first country in the region to express such support has an important diplomatic interpretation. 83 It shows that Brazil and Chile think about global matters in a similar way, as well as demonstrating the values of peace, democracy and human rights.

4.4.1 Brazil-United States bilateral relations during the Obama administration There is a general consensus that the well-functioning bilateral relationship between Brazil and the United States has not undergone significant changes during Obama’s term. On the whole, the partnership has continued in the areas of cooperation, although the emergence of new subjects has warranted closer attention. The unexpectedly easy dialogue between President Bush and President Lula provided, to some extent, a new scenario for the development of bilateral ties from 2005 onwards (Amaral, 2002). Despite some scepticism about the ability of the two states to maintain a favourable relationship others saw an opportunity to cultivate good relations and continue the development of new areas of cooperation in the subsequent years, taking into account Obama and Lula’s similarities in their personal trajectories and values. Moreover, both presidents share the same opinion on multilateralism as an inclusive universal mechanism, as opposed to the idea of it as a mere 83

Chile has carried out its foreign policy based on respect for international law, the inviolability of treaties, non-interference in other countries’ international affairs and the juridical and peaceful resolution of controversies. “Chile’s foreign policy”, Chile Embassy of Chile, Washington D.C., 2014. http://www.chile-usa.org/forpolicy.htm

312

grouping of the like-minded. When announcing his foreign policy, President Obama named three main Department of State priorities: strengthening international institutions, promoting nuclear non-proliferation and managing peace in the Middle East. Indeed, he ranked the UN as an indispensable organisation for fostering global cooperation. The previous 15 years had been filled with the United States’ attempts to promote ‘anchor projects’ in Latin America: the Enterprise for the Americas (EAI) announced by President George Bush in June 1990 and the redefinition of the Latin American system through periodic summits with the creation of the FTAA as the main target, as previously studied (Sharma and Gielen, 2014: 219). As outlined in the chapter about energy and also in the section about nation branding, Brazil and the United States developed a partnership to search for and develop biofuels. This bilateral understanding had implications for the harmonisation of global technical standards. Furthermore, it contributed to the dissemination of information seeking the production and use of biofuel in developing countries through the viability of financing studies and technical assistance.84 Bilateral cooperation is a big step towards an international biofuel market with the largest possible number of producer and consumer countries, all of which is a prerequisite for the security of this energy source. The appointment of a Nobel Prize winning physicist committed to clean and renewable energy sources to the Department of Energy illustrates the United States energy policy. Regarding trade, Brazilian exports increased from US$13.2 billion to US$27.4 billion between 2000 and 2008 and imports rose from US$12.9 billion to US$25.6 billion. The United States enjoyed a strong commercial relationship with Brazil, representing nearly US$63 billion of bilateral trade in 2008. Ironically, bilateral trade led to a better trade performance, with some countries maintaining a free trade agreement with the United States. In 2008, the United States was Brazil’s top foreign direct investor (US$7 84

However, Brazil’s protest over United States’ ethanol tariffs demonstrated the trade dispute between the two countries over ethanol. According to Brazil, the US tariff of US$ 54 cents per gallon was designed to protect American corn farmers who could not produce ethanol as cheaply as sugarcane growers. The United States considers ethanol the only United States product outside the scope of WTO rules, but Brazil challenges this, saying any tariff cuts would have to be a part of future global trade pact. “Brazil is poised to begin WTO protest over ethanol tariffs”. New York Times. Available at: http://www. nytimes.com/2008/07/30/business/worldbusiness/30iht-30ethan.14880834.html?_r=0. Accessed on 11 July 2013.

313

billion) and, at the same time, the largest recipient of Brazilian foreign direct investment (US$4.8 billion). Both President Obama and Secretary of State Clinton demonstrated signs of an interest in strengthening relations with Brazil in the economic and commercial fields through their support, for example of the United States-Brazil CEO Forum that takes place twice a year. 85 In the UN Security Council, cooperation between the two countries acquired greater relevance, given Brazil’s two-year term (2010-2011) as a non-permanent member.86 Under the United Nations’ Charter, the Security Council has primary responsibility for maintaining international peace and security and the authority to determine “the existence of any threat to peace, breach of the peace or act of aggression” (Article 39). The Council decides which measures are to be adopted to fight these threats, including the establishment of peacekeeping operations.87 Brazil’s participation in international decision-making sets the stage for further bilateral partnerships. The United States recognised Brazil as an emerging power and a key actor when dealing with issues of lesser politics, like trade, finance and the climate, given its ranking as the Latin American leader in dealing with radical regional trends (Bonomo, 2011: 101). Minister Celso Amorim and Secretary of State Hillary Clinton had phone conversation shortly after the confirmation of the appointment of Clinton by the United States Senate. On 24th February, Clinton and Amorim held a summit to decide common areas for more intense cooperation and dialogue 85

Brazilian-American Chamber of Commerce, Inc., “United States -Brazil CEO Forum to hold fourth meeting in Washington later this month”. 16th July 2009. http://www.brazilcham.com/ default.asp?id=248&c002_ui=sa&c002_id=730 86 United Nations Security Council. http://www.un.org/sc/list_eng5.asp 87 Brazil held an elective seat on the Council for the tenth time, a number matched only by Japan. As an elected member of the Security Council, Brazilian priorities were among others, stability in Haiti, the situation in Guinea Bissau, peace in the Middle East, efforts towards disarmament, the promotion of respect for International Humanitarian Law, the strengthening of peacekeeping operations and an approach that relates the defence of security to the promotion of socio-economic development. Nowadays, Brazil contributes more than 1,300 soldiers, military observers and police on three different continents. The greatest contingent is in Haiti, where a Brazilian General also holds the military command of the United Nations Stabilisation Mission in Haiti (Minustah), made up of 17 countries. Ministério das Relações Exteriores, “Brazil elected to the United Nations Security Council”, 15 October 2009. http://www.itamaraty.gov.br/sala-de-imprensa/notas-a-impren sa/2009/10/15/brazil-elected-to-the-united-nations-security

314

in the future: energy, climate change and global warming; the first against poverty; Haiti, Cuba and the Middle East and the strengthening and reform of the UN among others. Triangular cooperation for promoting the development of third world countries was also an important topic during the talks. As pointed out earlier, the complementary capabilities of Brazil and the United States already existed in the areas of ethanol and health, yet further progress could also be made in other fields allowing for a joint performance (Patriota, 2009: 91). Most notably, the development of closer dialogue does not imply absolute alignment or agreement between the two states. However, their partnership has faced difficulties due to the international financial crisis and the resurgence of protectionist tendencies. Furthermore, the latest negotiations of the Doha Round, agricultural subsidies, a consensus on the ethanol tariff, the relationship between intellectual property and access to health among others, all demand constant dialogue.88 Fixing these issues requires an extra effort on the part of Brazilian diplomacy. 89 It should be remembered that this is the first time in history that an international financial crisis has not significantly affect Brazil’s growth. Despite unequal social distribution remaining improvements did not occur to social inequality rates. Obviously, more needs to be done to improve the education system, health care, infrastructure, transportation and the political and tributary system among others (Oliveira, 2010). However, Brazil did take advantage of the environment of mutual respect between the two countries, the undeniable new political affinities and the more powerful international role it had acquired in recent years. The addition of several specific topics not directly linked to the need to create a common economic agenda or to the harmonisation of trade policies sustains the progressive institutionalisation of bilateral dialogue. The Brazil-United States relationship during President Dilma and 88

The complexity of agricultural issues demanded global solution for liberalising these markets. John C. Beghin and Ataman Aksoy (2003), Agricultural trade and the Doha Round: lessons from commodity studies. Iowa City: Iowa State University Press. 89 Negotiation is the principal mechanism for resolving major conflicts in international commerce. Advances in transport and communication systems coincided with a period of political, trade and economic instability. Therefore, negotiation was the best way to solve conflicts in international trade. See Ligia Maura Costa (2005), Comércio exterior: negociação e aspectos legais. Rio de Janeiro: Elsevier.

315

Obama’s administration was not marked by strong political links. The United States spying on Brazil significantly influenced the bilateral relationship. Evidence that the United States’ National Security Agency (NSA) appeared to be spying on Petrobras, Brazil’s national oil company caused certain discomfort between the two countries. President Dilma Rousseff demanded explanations from the United States, threatening to postpone or cease paying official visits to Washington. The lack of formal explanations led to the cancellation of the planned state visit. Chile joined Brazil in demanding answers from Washington over allegations of spying. 90 Chile’s Minister of Foreign Affairs Alfredo Moreno, categorically condemned the practice of espionage. As Moreno said, “Chile reaffirms its adherence to international law and conventions, which are appropriate instruments to ensure harmonious coexistence among nations.”91 Regional cooperation mechanisms, such as the Community of Latin American and Caribbean States (CELAC) set up in 2011, included Cuba and excluded the United States and Canada and create a new regional body. The CELAC provides hope of a regional cooperation initiative beyond the United States’ influence.92 In line with the interpretation of public diplomacy, the growing participation of different actors, such as the business sector in foreign affairs is significant, especially from a regional point-of-view. The focus on the centrality public diplomacy is now occupying in foreign policy, with the rise of multiple actors, offers a new paradigm for exploring international relations. The CELAC and the European Union (EU) summit of heads of 90

“Brazil and the United States: more in sorrow than anger”. Volume, 408, 21st-27th September 2013. The Economist, p. 37. 91 Karen Riquelme. “Chile condemns USA spying”. News. 11th July 2013. 92 The combined gross domestic products of the countries in CELAC make it the third largest economic powerhouse in the world. It is also the group with the world’s largest oil reserves and the third largest world producer of energy and food. In Havana, on 30th January 2014, the bloc’s leaders signed a declaration that stated that regional integration should respect the sovereign right of each of the region’s population to choose their own form of political and economic organisation. “Time to hug a Cuban: a rush to embrace a fading outpost of communism”, The Economist, 15th-21st October, vol. 410, 2014. p. 32. Founded in 1986, the well-known Rio Group - ‘Grupo de Rio’ - was a political forum to facilitate discussions of common interest. The Rio Group’s dialogue with the EU was institutionalised in 1990. The Rio Group merged with CALC (Cumbres América Latina y Caribe – internal LAC Summits in 2010 under the CELAC framework. “The EU and the Rio Group”, European Union External Action, http://eeas.europa.eu/la/riogroup_en.htm

316

state and governments in Santiago de Chile from 26th-27th January 2013, was the first of the official meetings between the European Union and CELAC and contributed to the regional approach towards Europe. Brazil, Chile and the other Latin American states came together to address an alliance on sustainable development.93 The CELAC sought to promote regional cooperation within a framework of solidarity, economic cooperation and political coordination.

4.4.2 Chile’s expectation with regards to the United States In 2000, Chile undertook an ambitious agenda with the United States, made up of emerging topics such as electronic commerce, business visas, labour requirements, environmental topics and civil society participation in the trade negotiation process, all beyond the traditional topics of trade negotiation. Not surprisingly, a free trade agreement with the United States had been the goal of Chile’s foreign policy with the EAI since June 1990. Symbolic negotiations occurred in the early 2000s during the administration of President Clinton and actual negotiations were carried out during the term of President George W. Bush, but were not fast-tracked. Afterwards, the United States Congress – by a minimum number of votes – passed the Trade Promotion Authority (TPA) on 6th December 2002. As Pizarro stated: “President Lagos’ approach is totally in accordance with the United States’ liberalising values. More than sharing similar economic principles, Lagos appreciates the significance of strengthening and intensifying links with the United States. Therefore, his administration was connected to the United States’ trade liberalisation measures. The first free trade agreement ratified by Chile was the Canada-Chile Free Trade Agreement (CCFTA) that came into force in 1997 during Lagos’ government” (Interviewed on 24 August 2011 in Santiago de Chile).

The CCFTA promoted increasing bilateral links between the two countries, with Canada becoming the largest source of new direct investment in Chile since the agreement. In this way, the aim of stregthening ties with the United 93

“EU-CELAC Action Plan 2013-2015”, Santiago 27th January 2013, 5748/2013, Press 32. http://www.consilium.europa.eu

317

States consisted of opening up the Chilean economy, becoming more competitive, fostering the export-oriented model, increasing value-added exports and raising the share of manufactured goods and skilled services.94 Achieving a balanced parnership played a key role in promoting understanding beyond the WTO, as well as including all aspects of a bilateral economic relationship, such as trade, investments and strict trade barriers. When negotiations took place, 19 topics were selected from topics involving trade goods, trade protectionism, technical rules, investments, trade services, institutionalisation issues, labour requirements and environment sustainability. Official talks started in December 2000, with 14 rounds of negotiations concluding in agreements on 11th December 2002. President Lagos officially announced the new agreement, emphasising the opportunities for job creation and the dynamic growing economy. On 31st January 2003, the United States notified Congress of its intention to sign the free trade agreement, with the legal procedure to be carried out in an estimated minimum of 90 days.95 However, in the international context, the result was that the agreement’s ratification was postponed. The press argued about the pressure on President George W. Bush to sign the FTA in exchange for Chile’s support for United States’ military intervention in Iraq in the UN Security Council. In this respect, President Lagos’ decision to remove FTA negotiations from the UN Security Council debate was unanimously backed in Chile. Maintaining an independent approach while strengthening bilateral trade and economic connections demonstrates the lack of correlation between the country’s economic and political-diplomatic position (Sater, 1990: 135-136). Therefore Chile - as a non-permanent member of the UN Security Council - maintained its opposition to the military invasion of Iraq. The United States-Chile FTA entered into force on 1st January 2004. Chile’s neoliberal approach, in accordance with the United States’ advanced economic liberalisation values, demonstrated the pragmatism of Chilean diplomacy, whereas their absence of support for issues related to 94

See Government of Canada (2012), “Canada-Chile Free Trade Agreement”. http://www. agr.gc.ca/eng/industry-markets-and-trade/agri-food-trade-policy/trade-agreements-inforce/canada-chile-free-trade-agreement-ccfta/?id=1383936689069. 95 “Chile: 20 años de negociaciones comerciales”. Direcon. Santiago: B&B impresores. November 2009, pp. 135-136.

318

‘hard politics’ as illustrated by the invasion of Iraq, should not be underestimated. Economic ties do not have a direct relation on international political insertion, which explains the adoption of Chile’s independent position on specific topics (Pennaforte, 2001: 68-69). Another important point that help understand Chile’s foreign policy approach consists of the greater priority given to the Pacific Alliance by President Sebastián Piñera. Chile’s business diplomacy was consolidated by the Pacific Alliance, with the private sector playing a significant role in carrying out market integration initiatives. The pragmatic nature of the alliance goes hand-inhand with the country’s foreign policy strategy. Therefore, on 23rd May 2013, Chile, Colombia, Mexico and Peru signed the alliance removing tariffs on 90% of their trade of merchandise. Although the alliance currently involves four Latin American countries, nine showed up at the meeting as observers, including Canada, Spain, Australia, New Zealand, Uruguay, Japan, Guatemala, Costa Rica and Panama. These countries and investors from outside of Latin America were attracted by the positive business climate among the alliance’s members. The countries of the new alliance already occupied four of the top five spots in the World Bank’s list of countries for doing business in Latin America, encouraged by the fact that the bloc was serious. According to international perceptions, the bloc was focused on trade, investment and immigration rather than politics and ideology.96 Not surprisingly, Chile signed the Pacific Alliance because of its economic foreign policy priorities, which had gained a preponderant position in the country’s diplomatic targets. Since trade and investment liberalisation were fundamental aims of Chile’s economic policy, the alliance created a deeper regional market in which to reap scale economies. 4.5 The Pacific Alliance vis-à-vis Mercosur The excitement among the international press over the Pacific Alliance should be cautiously observed. Different organisations’ perceptions of the economies of the Atlantic and Pacific countries led to the erroneous 96

Keppel, Stephen. “Meet Latin America’s serious side: the Pacific Alliance”. ABC News, 28th May 2013. Available at: http://abcnews.go.com/ABC_Univision/News/meet-latinamericas-side-pacific-alliance/story?id= 19262599#.UeM4S1OhA0Q.

319

interpretation of Mercosur as a political front without original principles and which opposed the pragmatism aspect of the Pacific Alliance.97 The superficial analysis of Mercosur as a lost cause without considering Brazil’s role as a leader in the region does not serve to help understand Brazil-Chile cooperation. It is worth remembering that Brazil-Chile ties demand public diplomacy, nation branding and a presidential diplomatic approach, in which the traditional diplomacy perspective lags far behind when explaining current bilateral links. On 30th April 2013 Chile’s Chamber of Deputies approved the law proposed by the administration of President Piñera, a first step that targeted parliamentary sanctions for the Pacific Alliance agreement, signed in Paranal, Antofagasta on 6th June 2012. The pact was signed by the host country’s president plus Mexico, Peru and Colombia which gave way to the Pacific Alliance upon the signature of the Lima Declaration on 28th April 2011. This was the political context in which President Alan García officially invited the presidents of the three countries to join closer collaboration between them. As Monge says: “The idea had its roots in the economic perception, given that the nations that made up the alliance - the so-called ‘Arc’ at the beginning – had exports valued at $445 billion in 2010, almost more than 60% of Mercosur exports in the same year, according to the World Trade Organisation. Simultaneously, the traditional allies of Chile - like Brazil and Ecuador - in terms of ideological activism should not be ignored. Traditional historical friendships should not be transformed into economy as the main aim of foreign policy aims” (Monge, 2013: 2).

Brazil’s international insertion as a global emerging superpower encouraged Chile’s interest in developing closer links. Moreover, their share and similar values on various topics in the international agenda could not be ignored. Díaz provides a fundamental explanation:

97

See The Economist (2015), How deep is their love? The Pacific Alliance is a great brand in search of a shared product, 14 March 2015. http://www.economist.com/news/ americas/21646273-pacific-alliance-great-brand-search-shared-product-how-deep-theirlove.

320

“The Pacific Alliance is the natural integrated economic bloc for Latin American countries with coasts in the Pacific. The perception of the alliance as an antiMercosur bloc is not aligned with Chile’s foreign policy targets. The subsequent administration considered Brazil and Mercosur as essential actors in the country’s diplomatic strategy. However, Brazil needs to redefine its foreign policy with regards to Chile” (Álvaro Díaz. Interviewed on 6th June 2013 via e-mail).

In this way, pragmatism and continuity appeared in Lagos’ economic policies. As seen in the first chapter, the long-term focus of Chilean foreign policy encourages the state’s relations of cooperation with conglomerates and business sectors. The public diplomacy perspective demonstrates the importance of diverse sectors to understanding Chile’s strategy, insofar as the country has maintained neoliberalism as a development model, strengthening the role played by transnational capital.98 Furthermore, the country has created fundamental institutions to guarantee coherence during negotiations and parliamentary approval for trade agreements. In theory, the Arc of the Pacific goes hand-in-hand with the country’s liberal foreign policy aims. Another core element to understanding Chile’s growth is the emergence of China as an international power, increasing its imports of Chilean copper. According to OECD rates, Chile has grown by 4.8% a year and has seen productivity increase by 1.1% a year. However, its educational system’s performance, labour force participation and youth unemployment rate are relatively high compared to other OECD countries. At the same time, the country is described as investing enough in education and training, since Chile spent 6.8% of its annual income on education in 2010 more than the OECD average in 2009.99 According to the 2012 Human Development Index Ranking, Chile ranked fortieth with a ‘Very High Human Development’, while Brazil was eighty-fifth with ‘High Human Development’.100 98

Public diplomacy requires state and private actors to communicate with the people. Geoffrey Cowan and Amelia Arsenault, “Moving from monologue to dialogue to collaboration: the three layers of public diplomacy”, The Annals of the American Academy of Political and Social Science. http://ann.sagepub.com/content/616/1/10.short 99 “How Chile compares”. OECD. http://skills.oecd.org/informationbycountry/chile.html. Accessed on 10th July 2013. 100 Human Development Reports. 2012 Human Development Index (HDI) Ranking.

321

Despite the importance of China’s insertion into the global scenario, the internal differences between Chile and Brazil’s social organisation should be observed. Brazil’s gigantic dimensions and social inequalities contradict the country’s international insertion as an emerging global power. Nevertheless, the boom in the past years has caused significant changes to the rate of poverty, especially in the north-west region, falling markedly from 21% in 2003 to 11% in 2009. Extreme poverty (people living on $1.25 per day) has also dropped dramatically from 10% in 2004 to 2.2% in 2009. Despite their totally different dimensions – to some extent explaining Chile’s better human development levels – Brazil’s social inequalities remain high even for a middle-income country.101 Brazil’s human development levels contrast sharply with its position as the world’s seventh wealthiest economy. Hosting important international events such as the Pope’s trip to Brazil in July 2013, the World Cup in 2014 and the Olympic Games in 2016 has demanded logistical organisation as well as social development. The Pacific Alliance and Mercosur should not be seen as South America separating into two blocs, since the former is the natural way for countries on the Pacific coast. The coexistence of two blocs does not mean a continental division, since Mercosur serves to consolidate the efforts of Argentina-Brazil integration after a history of wars and differences. Moreover, the Pacific Alliance does not reflect the homogeneous cohesion of Chilean national interests, since the agreement in practice summarises the conducting of business diplomacy. The historical friendship and mutual support in multilateral forums of the Brazil-Chile bilateral relationship should not be underestimated. When analysing Brazil-Chile bilateral relations, Asia is an overwhelmingly important actor with Chile representing a bridge to the Pacific. As long as China is its main trade partner, Brazil urgently needs access to the Pacific. Chile is the natural choice in this case, since the country’s stable socio-economic circumstances favours building infrastructure partnerships.

Available at: http://hdr.undp.org/en/statistics/. Accessed on 1 August 2013. 101 “Brazil overview”. The World Bank. Available at: http://www.worldbank.org/ en/country/brazil/overview. Accessed on 1st August 2013.

322

4.5.1 Brazil-Chile-Asia The increasing importance of China as a global power - to the detriment of the United States’ world influence - targets a new approach to the role played by the Asian actor in Brazil-Chile foreign affairs. The remarkable growth of China in the past few years demands special attention, given the transformation it has produced in the global economy’s contemporary history. China’s growth has had a direct effect on Brazil and Chile’s economies, taking into account the flux of commerce between China and the two countries. China’s rapid growth in the world economy has enhanced Brazil-Chile direct growth and both the United States and this Asian power have emerged as relevant actors in the Brazil-Chile bilateral context. In the global order, Brazil and China are similar in the sense that they both face difficulties when projecting an accurate contemporary image abroad.102 We support the idea that Brazil’s image is completely tied to past perceptions, which may occasionally correspond more to stereotypes than serious branding initiatives. Like China, Brazil finds its identity shifting as never before since both states have become increasingly influential global players. From the Brazilian perspective, the emerging force of ethanol as a renewable energy source is also a tool of political influence and therefore careful marketing is necessary to maintain its value. In addition Brazil’s exports have diversified over the years, to the extent that the country has become one of the world’s most successful and fastest growing manufacturers of jet aircrafts with its company Embraer (Morgan, 2002: 43). Today, China and Brazil face similar dilemmas and need to find ways to select a set of ideas and values – among the ones that are most obvious and important - in order to rebrand their contemporary image. It should be highlighted that it takes patience to establish brand reputations and that a successful nation brand requires a long-term effort. From the Chinese perspective, it successful nation brand is not only important in the context of domestic public diplomacy, but also, given the 102

However, China comprises the same public diplomacy instruments as other countries, like internet, the media, events, publications, notwithstanding the fact that in the case of China, many of these mechanisms are state-controlled. Ingrid d’ Hooghe (2005), “Public diplomacy in the People’s republic of China”, in Melissen, Jan, The new public diplomacy: soft power and international relations. London: Palgrave Macmillan, p. 96.

323

potentially vital role China can play in maintaining a peaceful international order, its misbranding may result in dangerous consequences worldwide (Bergsten, 2009: 9). Therefore, China needs to reassure the international community of the overall positive, peaceful and constructive implications of its growth.103 Given the challenge to the global economy posed by China, it can be assumed that its growth is also reflected in Latin America and as a result in Brazil-Chile affairs. The emergence of a new global agenda in the twenty-first century has been suggested in which a broader coalition of government officials and non-governmental agents provide the necessary elements to deal with a wide array of critical issues in the international system.104

4.5.2 The background and potential of a Brazil-Chile-Asia partnership Once Asian states have diversified their socio-economic realities, they provide different opportunities for Brazil and Chile in terms of sustainable 103

China recognises the importance of projecting its culture through soft power. Nicholas Dynon (2014), “China and nation branding: Beijing’s ‘all culture’ focus is delivering a poor return on its soft power investment”, The Diplomat, 11th January 2014. http://thediplomat.com/2014/01/china-and-nation-branding/ 104 Nowadays, non-traditional issues play an increasingly important role in the international security agenda and therefore multilateral bodies have assumed a substantial role in global coordination. The new reality demands cooperation between diverse actors and emerging economies, like China and Brazil play a central role in the process. See Giovanni Maggi (1999), “The role of multilateral institutions in international trade cooperation”, The American Economic Review, vol. 89, no 1. American Economic Association. There will be no cooperation on global affairs unless emerging powers embrace them. With the advent of the financial crisis this approach became clear. More information in “The origins of the financial crisis”, The Economist, 7th September 2013. London. We have the Group of Twenty, which has assumed an important role in the context of financial crisis in many ways reducing the importance of the Group of Seven. See Leonardo Ramos et al (2012), “A governança econômica global e os desafios do G20 pós-crise financeira: análise das posições de Estados Unidos, Alemanha e Brasil”, Revista Brasileira de Política Internacional, vol. 55, n o 2, July/December 2012. Brasília. Within a multilateral scenario, nation branding is part of a collective domestic effort to promote a better image abroad. Public diplomacy embraces the concept of nation branding, so both strategies should be aligned, otherwise countries’ misconceptions may cause either international friction or have opposite effects internally. For the importance of systematic multidisciplinary effort to analyse contemporary international relations, see Eytan Gilboa (2008), “Searching for a theory of public diplomacy”, The Annals of the American Academy of Political and Social Science, vol. 616, pp. 55-77.

324

relations. The emerging importance of Asia is not only due to the Pacific Alliance, but also to other areas, as will be observed. Despite China’s position at the forefront of economic influence, it is worth observing the Asian presence in Brazil-Chile ties. When referring to Asia, two points must be discussed: first, the relevance of Asia in the field of Brazil-Chile relations, given that Chile is a bridge to accessing Asia. Secondly, Asia is a significant international partner, so Brazil-Chile-Asia relations should be observed from a long-term perspective. The emergence of Asian provides a new architecture for Asia-Latin America relations in that new forms of approach, not previously available, have been developed, as will be argued in this section. Ironically, the Asian crisis combined with the Brazilian crisis at the beginning of 1999, created an opportunity to establish closer links, but also created downturn in the trade and investment between both states. The postcrisis circumstances laid the groundwork for strengthening political ties seeking mutual support to deal with issues on the international scene. However, what is seen in Asian intercontinental relations - particularly in the case of Brazil - is the difficulty in prioritising an Asian partnership to the expense of either regional or Western commitments. As will be discussed, there is a huge interest in expanding political ties and business partnerships, even though there is no clearly defined way of pursuing these goals. As a result, an institutionalised approach to Asia and Latin America was developed in 1999, called the Forum for East Asian-Latin American Cooperation105 (FEALAC). The FEALAC played a strategic role in fostering and strengthening relations between the two regions without the presence of the United States. It demonstrated the increasing interests from both sides in promoting cooperation and strengthening political economic dialogue. Technology has helped mitigate the effects of the geographical distance between East Asia and Latin America and has created a benign environment in which to foster interaction between the two regions. Along with the concept of public diplomacy explained earlier, the FEALAC forum sought both a private and public approach to promoting better understanding and political and economic dialogue. The possibility of preferential Latin 105

The FEALAC is an association of 34 countries from East Asia and Latin America tha came together for the first time to form an official and regular channel of dialogue between the two regions. FEALAC, http://www.fealac.org/FEALAC/01_about/sub01_01.asp

325

American-United States trade due to the emergence of the FTAA provided the context for the development of Asian cooperation initiatives. To avoid the negative effects that the FTAA might have brought to Asian insertion into the Latin American market, Asia launched the FEALAC. All in all, the evidence suggests that the revival of Brazil’s attractiveness, the aperture of the market, financial stability and market expansion (as a result of Mercosur) have all played a significant role in Asia-Brazil relations (Oliveira, 2006: 179-181). Therefore, in the study of the Latin AmericanAsian partnership, the FEALAC can be considered a big step towards establishing ties between the two regions. Since one of the key aims of the FEALAC was multidisciplinary cooperation, the partnership was not constrained to the economic field and an increasing interest in political links should be taken into account. To understand East Asian-South American relations, it should be considered that Asian countries share important features with the region, like the fact that cultural differences exert a strong influence on the economy and politics. Furthermore, APEC106 and ASEAN107 are the leading regional institutions, even though none of these initiatives have played a central role in achieving economic leadership in the Pacific region. The absence of a regional political framework and the direct influence of economic forces in integration processes - either among their members or abroad – has led to the separate study of Asian countries. Nonetheless, our study focuses on the relevance of Asia in the context of Brazil-Chile relationship and therefore an emphasis on Asia as a core component to strengthening bilateral links. Creating a benign geopolitical scenario, China’s economic progress has influenced the way north-east Asia has inserted itself into the world today. Furthermore, China’s attractiveness as an alternative development model is a source of normative power for the country. Its emergence and impact on the global economy provides a new context for international relations at the beginning of this century. China is welcomed as an engine of economic growth worldwide, not only in terms of trade but also China’s in foreign 106

Asia-Pacific Economic Cooperation, which included Chile among its members and operated as a cooperative, multilateral economic trade forum. APEC http://publications. apec.org/index.php 107 Association of South-East Asian Nations. http://www.aseansec.org/index2008.html

326

policy. Geopolitics have been growing rapidly, to the extent that they have become a key element for the study of other emerging powers like Brazil. 108 State relations with Asia have grown, motivated by President Lula’s administration but also by Brazil’s relations with East Asian countries as the result of over a century of friendship and cooperation. For instance, relations with Japan commenced in 1895 and relations with China officially began in 1909 after signing of an arbitration convention. Indeed, under the military rule of the 1970s and early 1980s, Brazil developed extensive ties with the developing world. In other words, the Itamaraty’s desire to seek a closer relationship with developing countries has been present for some time. Moreover, in the 1990s, Brazil redirected its foreign policy in terms of international affairs. As part of this strategy, Asia played an increasingly important role in Brazil’s world insertion policy. From an economic perspective, its growing interest in expanding cooperation ties led to the emergence of Asia as an important actor after the Cold War. In this respect, in 1993, during the term of President Itamar Franco, Asia was recognised as being key to shaping bilateral arrangements. The strength of Asian links enjoyed strong diplomatic support, considering on one hand, the demand for investments and the easy access to technology and, on the other, a huge capacity for market consumption. From a political standpoint, Brazil’s foreign policy strategy was to strengthen Southern Cone integration, whilst expanding relations with different regional poles. Indeed, Brazil and Asia shared similar views in multilateral forums, ensuring more autonomy and a diversified partnership for Brazilian diplomacy. In accordance with the new scope of Brazilian foreign policy, President Cardoso maintained the focus on a long-term relationship with Asia and in his first term in January 1995, paid an official visit to Malaysia and Japan. During his second term, at the beginning of twenty-first century, Cardoso was the first Brazilian president to visit Seoul, Dili and Jakarta.109 108

Moreover, the Yellow Sea Basin was portrayed as a new model for dynamic transnational cooperation between the Chinese, Japanese and South Korean economies. In terms of economic value, Japan, China and South Korea provide a useful insight into the increasing importance of Asian trade. Amaury Porto de Oliveira. “Coréia do Sul e China em tempos de globalização administrada”. Política externa, vol. 16, no 1, June-July-August 2007, p. 83. 109 Henrique Altemani de Oliveira, “O Brasil e a Ásia” in Henrique Altemani Oliveira and

327

Continuing along these lines, President Lula shared the vision of his predecessors for creating a benign environment for an Asia-Brazil partnership in his inaugural speech on 1st January 2003.110 However, after Lula’s election, the focus on relations with other developing countries increased. To illustrate this point, Brazil has developed closer links with China, India and South Africa in recent years. In other words, after decades of talks about the importance of south-south ties, significant progress has been made regarding those links. After prioritising relations with central states, Brazilian foreign policy saw an opportunity to learn from Asian countries about how to combine tradition, culture, business, its own interests and international insertion. Importantly, this focus was not only connected to ideological terms and trade also played a crucial role in the process. In this way, the foreign policy goals were to open markets up to Brazilian goods and services. Brazil’s relationship with developing countries offered potential leverage in wider negotiations on trade. As a result, Brazil and similar countries were less vulnerable to the regular intense pressure from the United States (Mullins, 2006: 96-97). In fact, a more appreciative atmosphere was created that favoured Brazil’s relationship with the developing world and is partly the result of two sets of circumstances. First came the relative decline of the United States’s economic and political pre-eminence after a period of dominance at the end of the Cold War. As has been explained, Latin America was specifically neglected because of the - “war on terror” – under George W Bush. The second factor is that not only Brazil, but also other Latin American countries had become more self-confident in terms of asserting their diplomatic independence. This is due to economic stability and the more robust democracies acquired by the regions’ states. From the Brazilian perspective, in the elected left-wing government of President Lula, the Antônio Carlos Lessa, Relações Internacionais do Brasil: temas e agendas, vol. 1. São Paulo: Saraiva, 2006, pp. 170-178. 110 Since the 1990s, Brazil and Asia have re-established ties, despite their remarkable differences in previous periods. Firstly, Japan remained the most important trade and investment partner only losing ground afterwards to other competitors. The relationship with China, South Korea and the Association of South-East Asian Nations (Asean) was highly supported. Henrique Altemani de Oliveira, “O Brasil e a Ásia” in Henrique Altemani Oliveira and Antônio Carlos Lessa, Relações Internacionais do Brasil: temas e agendas, vol. 1. São Paulo: Saraiva, 2006, p. 178.

328

search for new allies occupies a prominent position on the Itamaraty’s agenda. This was part of its strategy to seek a more powerful role as a regional power of global significance. Therefore, Brazil saw expanding ties with China as an opportunity to strength south-south alliances not only with China, but also with India, Russia and South Africa as will be seen later on.111 There are parallels between Brazil and Chile’s background relationship with East Asia, since both nations began to develop diplomatic ties with their Asian counterparts in the late nineteenth century. Brazil entered into relations with Japan in 1895 and with China officially in 1909, while Chile’s diplomatic ties started in 1845 and ran until the end of the century, when it opened a consulate in Canton and Hong Kong and a commercial bureau in China. Like Brazil, Chile’s international affairs throughout the twentieth century have been defined by their relationship with the United States, Europe and Latin America. Whether East Asia will strengthen its ties remains to be seen.112 The widespread prejudice and misconception were based on the idea of the ‘yellow peril’ prevalent in the West. Furthermore, the enormous geographical barrier posed by the Pacific Ocean, combined with the lack of appropriate technology to foster cooperation set the stage for the absence of viable methods for improving dialogue. However, Chile was the first South American country to establish ties with Beijing in December 1970 under the socialist President Allende. Furthermore, the eighties included a move towards enhancing ties with the nations that avoided condemning Chilean policy-makers for human rights abuses. Throughout the 1980s Chilean authorities, including high-ranked officials, businessmen and journalists, advanced China’s position as an emerging power. In the 1990s, two successive Chilean presidents regularly held talks with Chinese heads of state as part of their multilateral and bilateral discussions. The president’s official visits were accompanied by large delegations of businessmen who contributed to conveying Chile’s nation brand as a serious country (Benedikter, 2015: 128-129). According to how it was promoted brand, a sound business environment helped project the country’s image in East Asia. As well as, Chile’s aim of playing a 111

The Economist, 15th August 2009. “Briefing Latin American geopolitics”, p. 19. For a regional economic outlook, see Asia and Pacific: Consolidating recovery and building sustainable growth. Washington D.C: International Monetary Found, 2010. 112

329

leading role in South America as a bridge with Asia, Brazil’s recognition of Chile as an export platform also illustrated this point. Despite diplomatic stagnation during Pinochet’s regime, which should have led to the Asia-Chile relationship getting worse, trade rose dramatically especially with Japan, South Korea and China. Furthermore, the first joint venture between Beijing and a Latin American state was signed with a Chilean copper company in 1987. 113 In the coming decade, President Frei recognised the economic importance of Asia and that Chile would be the natural bridge between Asia and Latin American countries. From a traditional foreign policy perspective, the admission of Chile as a member of APEC in 1993 – with China’s support - represented a further step towards Pacific cooperation. In November 1995, President Frei paid an official visit to China, reinforcing bilateral ties.114 113

More information about Asian joint ventures in M. Patricia Marchak (1995), Logging the globe. Quebec: MacGill-Queen’s University Press. 114 Frei’s administration exerted a political and economic influence on bilateral trade, which resulted in the decision to establish a consulate in Shanghai in 1996. The Chinese market was the third most important destination of Chilean exports, after America and Japan. Copper, cellulose and fish accounted for almost 75% of Chile’s total outputs in China, with copper representing 25% of this. Insofar as the Chinese market grew rapidly and increased its need for copper talks were conducted in the area of Chinese investments, seeking to start joint ventures with the Chilean copper industry. For instance, the Chilean Quadra Mining company QUA agreed to form a joint venture with China’s largest utility company to develop its huge Sierra Gorda project in Chile, expected to cost over US$ 2 billion. “Quadra, Chinese utility in Chilean join venture”, Reuters, 8th March 2010. http://www.reuters.com/article/2010/03/08/er-quadra-china-idUSN0816535220100308. In this respect, plans were discussed for Chile to sell its copper know-how to China. Since then, discussions have taken place between the Chinese National Corporation of NonFerrous Metals and the corresponding Chilean companies as part of a project to invest in copper exploitation in Chile. Talks have also focused on fostering partnerships in other areas, such as the non-violent use of atomic energy and the possibility of developing common projects in the space industry. In 1995, during President Frei’s visit, a maritime agreement was signed, in which mutual maritime and port rights were given. The two countries also signed a forestry agreement including the processing and commercialisation of forestry production .Augusto Soto Alvarez. “Chile faces China. Relations in a new era. Expectations and realities”, p. 3. http://www.casaasia.es/ pdf/1409041520081095168 008479.pdf. The APEC Summit in 1995 was a meeting in which China announced significant tariff reductions, including on fruits and vegetables. The products that benefitted were salmon, wine and grape. Chile also directed its wine production towards the Chinese market through its aggressive trade strategy that opened a permanent Chilean company in Beijing. ProChile, “Expertos internacionales expusieron oportunidades para vinos chilenos em los mercados asiáticos emergentes”, 12th July 2010. http://rc.prochile.cl/

330

Over the last few years, Chile’s improving economy, political stability and status as the only South American country that is a member of APEC (since November 1994) has provided it with opportunities to take advantage of its position and make advances in Asia. The opinion in Chile was that, since other countries in the region had undergone sustainable growth, the country should hurry up and strengthen its ties with Asia in order to improve its position as leader. Membership of APEC had already been extended to Peru (November 1998), while Colombia and Ecuador’s interest in joining it suggest that they will be next.115 However, for countries that dot not face the Pacific Ocean like Brazil and Argentina that also have significant trade with Asia, Chile would help bridge the gap between the two regions. It must be considered that Brazil was the first Latin American partner of China.

4.5.3 Chile as a bridge to Asia Once Asia had provided technology and a huge market, Chile’s aim was to strengthen its export strategy in the region. By entering into a second stage of export-oriented manufacturing with the generation of value-added production, the Japanese industry and Chinese market became core elements of Chile’s trade policy. As highlighted earlier, the tariff liberalisation announced by Beijing in conjunction with the rising amount of participation in joint ventures in China bolstered Chile’s trade policy efforts. From the Chilean perspective, there was mutual desire to advance its position in Asia and a willingness to become the natural bridge between Mercosur and the Pacific Ocean. However, as was pointed out earlier, Peru-Brazil bilateral initiatives have progressed in terms of business partnerships, illustrated by $20 billion in Brazilian company investments in the country in 2010. Indeed, projects with Peru-Brazil cooperation have assumed a leading position in the area of regional infrastructure. Peruvian ports appear to be viable vehicles for Asia, especially China and therefore, public-private integration methods have

noticia/26339/1. 115 Alvarez, Augusto Soto. “Chile faces China. Relations in a new era. Expectations and realities”. p. 3. http://www.casaasia.es/pdf/1409041520081095168008479.pdf

331

been developed between Brazil and Peru.116 In fact, Chile offered better access to the Pacific through a series of improvements to railroads, highways and ports, although the Andes remain a tremendous natural barrier. In this way, investments, transportation and communications - in short, financial support mechanisms - must be developed in order to create a more realistic approach. Continuous trade growth spurred on by an emerging Asia brought with it the urgent need to find a - “valid bridge” - between Asia and Latin America. From a Brazilian standpoint, the Chile-Brazil partnership widened its trade flow taking advantage of the FTAs that Chile had signed with several countries worldwide. Furthermore, goods production in Chilean territory seeking subsequente export is another interesting point, since Brazil enjoys a wide range of tariff reduction benefits because of the FTAs signed by Chile (Resende-Santos, 2007: 282-283). Today, the country has FTAs with Australia, Canada, South Korea, China, Costa Rica, El Salvador, Japan, Mexico, the United States, Panama and the European Union. However, from Brazil’s perspective, the key issue when gaining access to these markets is paying close attention to the rules of origin, because these cannot be violated whether or not access concerns are a priority. The pursuit of developing trade exchange in countries with which Chile has FTAs requires obeying the rules of origin. 117 Apart from technical discussions, there are already signs of the expansion of Brazilian-Chilean export markets. Together, public-private sectors from the two countries have made mutual efforts to perform better trade-wise and to redirect their strategic partnerships. Since progress in WTO negotiations remains slow, the search for new markets has been part of Brazilian government strategy. Thus, as outlined in the first chapter, neither Brazilian or Chilean foreign policies can be restricted to the fields of diplomatic activities, since diverse issues such as the economy, business, trade, energy sources, sustainable development, the environment and nation branding among others occupy centre stage in international affairs.

116

O Globo, “Aposta brasileira no Peru”. Economia, 2 August 2010, p. 17. “Parceria Brasil-Chile requer análise das regras de origem”. International Centre for Trade and Sustainable Development (ICTSD). http://ictsd.org/i/news/pontesquinzenal/ 44935/ 117

332

4.5.4 Brazil-China China has become a global economic superpower. It has the second largest national economy in the world and is the second largest exporter. China is far more deeply integrated into the world’s economy than any of the other economic superpowers. Since China’s rapid expansion has had a powerful effect on the rest of the world, China’s emergence in the study of BrazilChile bilateral relations should be taken into account.118 Today, China is an increasingly important market for Brazilian and Chilean exports, since Brazil having to export through the Atlantic increases transport costs, shipping times and causes product prices to rise. Maintaining a Sino-Brazilian relationship can be attributed to the cooperation efforts made by representatives of the two countries. The reestablishment of diplomatic relations with China occurred in 1974, as a result of Brazil’s economic development and in conjunction with a favourable international context. As Brazil’s foreign policy sought to diversify its partnership and focus on a more competitive international insertion, rebuilding ties with China played an important role in the pursuit of these goals. Despite the initial increase in trade flows, Sino-Brazilian relations at that time were restricted to the political-diplomatic field. 119 Only in the 1990s, in the context of the aperture of the Brazilian economy and the increasing insertion of Chinese trade did Brazil-China trade ties get stronger. A big change occurred during the government of Presidents Cardoso and Lula who, aiming to maintain so-called ‘universal’ foreign policy, strongly supported relations with developing countries. On one hand, developing countries were becoming emerging markets, safer places to invest and not as dependent on aid from the West as they used to be. On the other, emerging countries meant areas with a strong political expression and the prospect of joint action in multilateral institutions. When carrying out foreign policy, the business sector was at the forefront of the Brazil-China negotiation process. This initiative was aligned with the 118

See The World Bank, “China Overview”. 6th April 2016. http://www.worldbank.org/ en/country/china/overview. 119 It is symptomatic that the development of closer relations occurred due to the initiative of the Brazilian entrepreneur Horácio Coimbra, who in 1970 visited the Canton Fairs for personal reasons. As a result, the government opened negotiations to establish political ties.

333

concept of public diplomacy, whereby other actors also played an important role in international affairs, as seen in the first chapter. Brazilian businessmen in search of new markets for their products took the first steps towards establishing Brazil-China political ties at the height of the Cold War. In response to this changing situation, China became Brazil’s top trade partner in 2009, displacing the United States. Since then, both states have built a balanced partnership based on key points on the international agenda. The fact that both countries are important emerging powers that want developing nations to have a larger say in world affairs explains their cooperation efforts.120 In practical terms, Brazil and China’s national development models converged in the 1980s in such a way that both states supported the statebased development model. Therefore, talks were conducted after China’s reform and opening-up policy and after Brazil’s military regime was replaced by democracy.121 In this way, a more open and trusting environment was created, favouring bilateral relations. Brazil and China share common values such as the defence of sovereignty and national independence, territorial integrity and the defence of international stability and security. The strategic importance of dialogue between Brazil and China has increased in international organisations and through actions of bilateral cooperation and exchange. Indeed, in a context of recession in the wealthy

120

In 1993, Zhu Rongji representing the President of the People’s Bank of China, visited São Paulo to promote a strategic partnership between the former and the Federation of Industries of the State of São Paulo (Fiesp) seeking cooperation in the economic, commercial and financial fields. Cabral, Severino. “1974-2004: trinta anos de relações Brasil-China” in Relações Sul-Sul : países da Ásia e o Brasil. Alberto do Amaral Júnior e Michelle Ratton Sanchez (Eds.). São Paulo: Aduaneira, 2004, p. 167. 121 Policymakers broke with agro-export diplomacy and in turn committed themselves to the new role played by the state. This paradigm shift occurred not only in Brazil nut also in many Latin American countries, which led to a new strategy of international insertion. The context could be typified as follows: introducing of economic diplomacy to external negotiations; promoting industry to meet societal demands and implementing national development projects to overcome inequalities between nations. The development paradigm contains ideological and political aspects that exerted more influence over the Brazilian scene from the 1950s until the 1980s. Amado Luiz Cervo. “Política exterior e relações internacionais do Brasil: enfoque paradigmático”. Revista brasileira de política internacional, July-December, vol. 46, 2003. Instituto Brasileiro de Relações Internacionais. Brasília, Brasil, p. 9. http://redalyc.uaemex.mx/redalyc/pdf/358/35846201.pdf

334

world, China and Brazil are contributing more than ever to world output.122 Since the Brazil-China trade relationship has grown sharply, this improving partnership suggests that progress is possible, leading to a more benign environment for bilateral relations, which go well beyond mere commercial issues.123 During the summit, Brazilian and Chinese authorities supported the creation of a new international reserve currency to eventually replace the dollar as the world’s standard124. The increasing importance of Asia claimed to facilitate access to Asia through the Pacific; therefore Brazil-Chile links go beyond bilateral ties, given the relevance of Chile to targeting Asian market.125 The partnership with China has been normalised since 1974, though it only achieved consistency from the 1990s onwards, when important 122

While Brazilian diplomacy refers to relations with China as a ‘strategic partnership’, which means special relations with a certain country, Amado Cervo recognises the term ‘ascending partnership’ as the best way to define their relationship. An ascending partnership indicates a move towards closer ties in the future by comparing them to the present Brazil-US relationship. Cervo, Amado Luiz. Inserção internacional: formação dos conceitos brasileiros. São Paulo: Saraiva, 2008, p. 279. 123 Together, both states demanded the reform of and a greater say for developing countries in global financial institutions like the World Bank and the International Monetary Fund, especially after the global financial crisis. The BRICS Summit held on 16th June 2009 in Yekaterinburg was the first full-format meeting of BRIC nations, which today are the main centres for economic growth in the world. BRIC consists of the world’s fastest emerging economies – Brazil, Russia, India and China. The term BRIC (later BRICS) was first coined in 2001 by Jim O’Neill, chief economist for Goldman Sachs. However, despite those unlikely beginnings, in the past decade, BRICS has become a near ubiquitous financial term, shaping how a generation of investors, financiers and policymakers view the emerging markets. Now Public, “BRICS Yekaterinburg summit”. World, http://www.nowpublic.com/world/brics-yaketenaburg-summit 124 O Globo, “Brasil e China afinam discurso para reunião do G-20, 4th June 2010, Economia, p. 23. 125 However, there is a certain reticence on the issue in the United Nations Security Council, since China does not support Brazil’s demand for a permanent seat. Brazil would obviously like the Chinese to support its bid to get a permanent seat on the UN Security Council. It should be remembered that, in 2005, China opposed the proposal of the Group of 4 – Brazil, Germany, India and Japan – all of whom aspired to become permanent members of the UN Security Council. One way to explain the Chinese lack of support for the Group of 4 consists of its opposition to Japan and India’s aspirations for permanent seats, meaning that Chinese opposition was not directly related to Brazil. United Nations, Press Release GA/10371. ‘Uniting for consensus’ group of states introduces text on Security Council reform to General Assembly, 26 July 2005. http://www.un.org/ News/Press/docs/2005/ga10371.doc.htm

335

initiatives in the economic, commercial, scientific and technological fields were developed. 126 This is due, to some extent, to the context of the financial slump, which increased the role played by Asian countries in the international scenario.127 China has grown at an average of 10% for the past 30 years, the most impressive record in history. Real GDP in 2006 was about 13 times the level of 1978, when Deng Xiaoping began economic reforms.128 When Chinese President Hu Jintao officially visited Brazil in 2004, some issues came to the fore again: Chinese investment in infrastructure, the strengthening of business links, the growth of Brazilian manufactured goods in bilateral trade and the signing of bilateral agreements concerning trade. Furthermore, potential trade conflicts of interests were discussed in the field of the WTO. In 2006, Vice-President José de Alencar paid an official visit to China, aiming to establish the Sino-Brazilian Commission to increase bilateral partnerships, with regulatory agreements and strengthen cooperation in multilateral organisations especially the UN and the WTO, as well as bilateral links in agriculture, energy, mining, information technology, infrastructure and advanced technology. 129 126

One of these initiatives was the China-Brazil Earth Resources Satellites Programme (CBERS), considered the paradigm of south-south cooperation. In other words, the CBERS is a pioneer in terms of satellites cooperation agreements between developing nations. Along these lines, further steps have been taken to develop cooperation programmes in other fields, such as information technology, biotechnology and joint initiatives in the production and selling of drugs against AIDS. See Paulo Vizentini (2006), “O G3 e o G20: o Brasil e as novas coalizões internacionais” in Henrique Altemani Oliveira and Antônio Carlos Lessa(Eds) (2006), Relações Internacionais do Brasil: temas e agendas, vol. 2. São Paulo: Saraiva. Moreover, bilateral trade has increased dramatically, transforming China into the most important trading partner for Brazil today. After almost 80 years of the US being Brazil’s top trading partner, the importance of China as a foreign trade leader has been growing rapidly. “China passa Estados Unidos como principal parceiro comercial do Brasil”. O Globo, caderno Economia, 5th May 2009. 127 Important initiatives have been developed in the area of investments and joint ventures, such as the association between Baogang Steel and the Vale do Rio Doce company and between Embraer and AVIC-II. Edmundo Fujita. “O novo quadro estratégico da Ásia pósguerra fria”. Amaral Júnior, Alberto and Rattom Sanchez, Michele. Relações Sul-Sul países da Ásia e o Brasil. São Paulo, 2004, p. 30. 128 Bergsten et al. (2009) “China`s challenge to the global economic order”, p. 9 in China’s rise, challenges and opportunities. Washington DC, October 2009, p. 9. 129 Rapid economic growth, together with urbanisation and industrialisation, have turned China into the second largest consumer of energy in the world. In this regard, China faces a series of challenges such as expanding its energy supply by increasing the efficiency of

336

Brazil and China share a coherent foreign policy concerning national development, the stage of development achieved in recent decades, geopolitical standpoints and the autonomy of state-led world insertion. According to the Brazilian Central Bank, there is a growing tendency towards Chinese investment in Brazil and Chinese direct investment is still increasing, growing by $359 million in the first quarter of 2010 compared to $83 million in 2009.130 At the moment, China is the fifth largest foreign investor in Brazil, behind the United States, Bermudas, the Netherlands and France. Another sign of growing Chinese interest is the opening of a subsidiary of the Bank of China in São Paulo, which finances Brazilian companies’ purchases of Chinese supplies. 131 Since Brazil’s main export commodity to China is soya beans - and considering that it has a lot of competition in the international market, especially from the United States - shipping costs must be reduced in order to have a more competitive product. In this scenario, Chile can serve as a bridge, facilitating Brazil-China trade. Since public diplomacy involves a broader coalition of decentralised actors, the Brazil-Chile pragmatic approach is congruent with a dynamic idea of the concept, since BrazilChina ties also demand a multifaceted approach.132 In this context, the creation of the China-Brazil Business Council contributes to promoting dialogue in a coordinated way, enhancing bilateral trade and the investment environment.133 how it is used. Since the geopolitical context cannot be separated from the field of energy, as argued in a previous chapter, the problem of China’s energy matrix, which is highly dependent on coal, should be addressed. Therefore, in the coming years, China’s demand for new energy sources will increase rapidly and will certainly include a close association with other countries to exploit new oil deposits, develop nucleus-electricity and include renewable energy sources like ethanol. Luiz Augusto de Castro Alves. “Os desafios da China na crise do mundo globalizado”. Política externa, vol. 18, no 1, June/July/August 2009. Universidade de São Paulo, p. 99. 130 Investment performance does not consider the operation of Itaminas, the partnership between MMX the Chinese group Wisco and the Metallurgical Complex of Açu, launched on 18th May 2010. The partnership of the two companies represented the largest Chinese investment ever made in Brazil. O Globo, Economia, 19 May 2010, p. 27. 131 O Globo, Economia, 22nd May 2010, p. 25. 132 China is under pressure from the US to increase its soya bean purchases in order to drop its strong bilateral surplus in its favour. Henrique Altemani de Oliveira, “O Brasil e a Ásia” in Relações Internacionais do Brasil: temas e agendas. São Paulo: Saraiva, 2006, pp. 192193. 133 The CBBC is a non-profit organisation dedicated to promoting dialogue among

337

Moreover, China and Brazil share common values regarding their participation in world politics: peaceful coexistence among nations, respect for the sovereignty of all members of the international community and cooperation between countries to achieve greater equity in international economic development. In recent years China has been one of the most active countries using multilateralism as an instrument in international policy (Wei, 2008: 10). For Brazil, the issues of pluralism and selfdetermination are long-standing concerns in its foreign policy. Regarding the Brazil-China partnership, there are basically two areas in which progress can be made: scientific-technological cooperation to break the monopoly of developed countries and a political-strategic alliance in multilateral forums. As has been explained, there are many points of agreement between the two states, since both countries seek to achieve economic development, while improving the living conditions of their populations. Brazil-China long-term relations demand better access to the Pacific in order to facilitate business diplomacy. In this regard, Chile is the natural bridge to the Pacific, meaning that Brazil-Chile share a long-term trustworthy relationship.

4.5.5 The Brazilian-Chilean coordinated policies towards Asia The relationship between Latin American states and Asia has been further stimulated by the initiatives of Chile and Singapore, for example, the cooperation forum between East Asia and Latin America (FEALAC) established in 1999 and outlined earlier. This forum involves 15 Asian countries and 15 Latin American countries, all seeking to strengthen their mutual knowledge and socio-economic cooperation. The first summit was held in Santiago de Chile in 2001. Together with South Korea, Brazil began to coordinate group activities, shortly after the summit in Manila in 2004. FEALAC’s goal is to search for bi-regional areas of cooperation (Fujita, 2004: 31). In this context, Brazil and Chile begin to establish coordinated policies based around the vision of the latter as an export platform for the United Brazilian and Chinese companies. The CBBS focuses its efforts on addressing the structural issues underlying bilateral relations. China-Brazil Business Council, http://www.cebc. org.br/005/00502005.asp?ttCD_CHAVE=12211

338

States, EU and Asia, taking into account its bilateral agreements worldwide. Despite the fact that Chile has developed a long-term strategy as an exportplatform, this concept only became important to Brazil in 2008. In practical terms, attention has been paid to policies concerning an increase in trade and investment between both states. In pursuit of these goals, Brazil sent a trade mission to Chile from 1st-3rd April 2009. Apart from using Chile as an export platform for products destined for Asia, the mission sought to strengthen trade ties and foster partnerships between entrepreneurs.134 The opportunity for integrating the two countries’ supply chains contributed to diversifying the market, especially during economic crises. Brazil took advantage of the trade agreement network, which Chile had signed worldwide as a way of expanding markets. With copper as its main export commodity, Chile has a great opportunity in the Asian market. The country has also succeeded in reducing its dependence on mining: 89% of total exports in 1973, the mining sector’s participation has gone down to 41% in 2001. Copper is still an important export commodity through and in 2005 accounted for 15.5% of the government’s budget. Together with this, Chile has diversified its exports to include wine, fresh fruit and salmon. Furthermore, it has been possible to direct efforts towards higher value-added sectors than the copper industry, such as mining consulting and machinery. 135 However, for Brazil a major concern is excessive specialisation in commodities, which could lead to the ‘Dutch disease’ in the economy. This is when either the focus on a single product or a low diversification when it comes to products causes an undesirable architecture for trade relations. That said, the increasing economic force that is China and its insatiable demand for raw materials may widen trade concerns. At the same time, 134

Ministerio do Desenvolvimento, Indústria e Comércio Exterior. “MDIC recebe inscrições para missão empresarial ao Chile”, 04/03/2009. http://www.mdic.gov.br 135 The introduction of new varieties of grape, quality control of wine and the certification of fruits for export are among Fundación Chile’s innovations. In 2005, the Chilean government introduced a mining tax to increase public funds for research and development. However, one of the challenges has been to incorporate the private sector into financial innovations. A lack of human resources is another of the difficulties with the relationship between industry and science, although important measures are being put into practice. Rolando Avendaño, Goril Bjerkhol Havro, Javier Santiso. “Oportunidades na Ásia? Perspectivas para o comércio internacional da América Latina”. Política Externa, vol.18, no 3, December/January/February, 2009-2010, pp. 158-159.

339

Brazilian manufactured products could lose ground in the export sector. Brazilian manufactured exports, however, have gained ground as shown by the deal involving Embraer – the Brazilian aircraft maker – with a unit of the state-owned China Development Bank (CDB) to fund the sale of regional jets in Asia and since December 2009, Embraer has had a factory in the north-eastern Chinese city of Harbin. 136 From 2002 to 2003, Brazilian exports to China increased by 80%. Together, they accounted for 6.2% of Brazilian exports, in contrast to 1999 when they accounted for 1.4%. The five Brazilian products that have benefitted most from Chinese demand are soybeans, soybean oil, iron ore, steel and wood, all of which correspond to 75% of the total of Brazil’s exports to China in 2008. However, the low-tech sector has been couched in terms of being the most vulnerable to Chinese competition.137 In addition, in the long-run this threat can be extended to the automobile industry. There are also some market policies that should be taken into account when strengthening bilateral relations between China and Brazil. For instance, the two countries’ agricultural sectors complement each other, since they foster trade and investments. For Brazil, the main challenge concerning China is to maintain the same kind of exports as to other regions, while avoiding an excessive specialisation in commodities. 4.6 Latin American Infrastructure Before undertaking an analysis of the potential implications of an AsianLatin American partnership, it should be noted that the region’s countries have become less dependent on traditional trade partners. For the first time, in history, the region has sought to establish relations simultaneously with the three main world centres of trade – the United States, the European Union and Asia. China has overtaken the United States and the European Union to become Brazil’s biggest trading partner and formal diplomatic ties have been strengthened, as stated earlier. Despite the fact that the United States still accounts for more than 50% of Latin American exports, trade 136

Reuters. FACTBOX-Brazil-China ties surge with trade and investment. 13th April. http://www.reuters.com/article/idUSN1321425620100413 137 More information in Vera Thorstensen (2010-2011), “China e EUA – de guerras cambiais a guerras comerciais”, Política Externa, vol. 19, no 3. São Paulo: Editora Paz e Terra, pp. 11-35.

340

with Asia has grown considerably in the last few years, although the lack of a suitable infrastructure has caused considerable concerns in terms of Latin America’s competitive advantage.138 In this way, building an effective infrastructure would strengthen the region’s trade relations as a whole. This means that the cause of high transport costs can not only be attributed to the long distances involved, but also to the quality of its infrastructure (Gayá and Campos, 2009). Therefore, foreign affairs are included in a much broader discussion, given that traditional diplomacy restricts the understanding of contemporary international relations. In contrast, public diplomacy is a flexible approach, according to which not only state-centric actors are considered in foreign affairs and decentralised actors also play a relevant role. However, the relevance of investment in infrastructure differs depending on each economic sector. For instance, economies focused on the export of commodities like Chile tend to emphasise the need for ensuring transportation infrastructure. Chile has developed successful public-private partnerships in the second half of the 1990s, with large investments in infrastructure (Grimsey and Lewis: 2004: 127). Unfortunately, infrastructure problems remain in several of the region’s areas. When compared to other Latin American states, Chile is considered a successful example of the transformation of high rates of growth into large investments in infrastructure. With the exception of Chile, there are twice the number of roads per capita in Asia than in Latin America. In Brazil, for example, only 5% of roads are paved and both the river system and railways are underdeveloped. The performance and efficiency of ports is a critical factor that differentiates Asia from Latin American ports. It be should highlighted that, since ports are a vital link in the overall chain of trade, to a large extent their level of efficiency determines a nation’s international competitiveness.139 Framework topics need to be dealt with in order for Latin American 138

See Inter-American Developmen Bank, “14% drop in exports underlines importance of trade diversification in Latin America and the Caribbean”. 14th December 2015. http://www.iadb.org/en/news/news-releases/2015-12-14/latin-american-exports-drop14,11365.html. 139 Hsuan-Shih Lee and Ming Tao Chou (2005). Journal of the Eastern Asia Society for Transportation Studies, vol. 6, pp. 544-559. http://www.easts.info/on-line/journal_ 06/544.pdf

341

integration to succeed and provide a competitive advantage in export costs. However, several aspects play an important role in the region’s potential integration. First, the potential for economic gains from developing an infrastructure programme has to be significant in order to justify its high costs. Secondly, the willingness to do so relies on presidential diplomacy, involving the president’s incorporation of new topics into the foreign policy agenda, as pointed out in the first chapter. This means that the willingness to develop projects involving infrastructure is expected to be conducted by political leaders, although policymakers may implement regional transportation projects if these are expected to improve their chances of retaining power. Third, a lack of coordination must be mentioned as one of the collective problems that can have a major impact on how regional infrastructure networks functions. Mattli highlights: “… the presence of a benevolent leading country within the region seeking integration. Such a country serves as a focal point for the coordination of rules, regulations, and policies; it may also help to ease the tensions that arise from the inequitable distribution of gains from integration. Contested institutional leadership or the absence of leadership makes coordination games very difficult to resolve” (Mattli, 1999: 42).

Increasing Asian-Latin America trade has led to important partnership initiatives between countries in the region, like the “Brazil-Chile platform for integration”, which has set the stage for strengthening the integration between the two states, with a focus on the Asian market. The potential for economic gains between both countries has helped increase their interest in developing a mutual transportation network. However, regarding the integration of regional infrastructure, Peru-Brazil cooperation took the lead in the process. Brazil-Peru integration has shown signs of significant improvement, as illustrated by several Brazilian companies that, in 2010 invested over $20 billions in their neighbouring state. Private integration has been driven by the rapid increase of Brazilian investments, mainly carried out by Vale, Votorantim and Eletrobras. One of the stated aims of this initiative is the gaining access to the Asian market, especially China. 140 With the target of implementing infrastructure projects, policymakers 140

O Globo, “Aposta brasileira no Peru”, Economia, 2nd August 2010, p. 17.

342

should be able to accommodate the demands for transportation at each level of the integration process. Latin American topography per se is among the most restrictive in the world and tends to keep people and resources apart rather than joining them together. Since the territory is filled with natural barriers, improving the infrastructure of a transportation network is a core element for regional integration. The structure of Latin American countries has changed in many ways, with industrialisation, the increase in the export of commodities to the Asian market and intra-regional trade having a major impact on each nation’s policy. Growing exchange at a regional level has given rise to the demands to develop the commitment to infrastructure needed to carry out cooperation aims.

4.6.1 China’s power and its impact on Brazilian and Chilean foreign policy China’s rapidly growing economic and political influence around the world today is as undeniable as it is remarkable. Furthermore, China has become an active player in critical global security issues. Along with China, other emerging powers like Brazil, Russia and India have an ever-growing importance internationally. This means that no major international challenge can effectively be met without the assistance of an emerging power. China’s embrace of globalisation in all its forms has meant that it has become a coequal player in international affairs (Derolle, 2015). Therefore, it is not possible to analyse international studies without taking into account China’s role in the global arena. As a permanent, veto-wielding member of the UN Security Council, China has the authority to act or block action on critical international affairs facing the world, be it weapons proliferation or energy security, among other issues. However, Brazil is interested in gaining Chinese support for its aims of getting a permanent seat on the UN Security Council, China’s increasing power is forcing Western nations to look again at how they deal with emerging actors.141 141

See Post-Western World, “Brazil and UN Security Council reform: Is it time for another big push?”, 30th June 2013. http://www.postwesternworld.com/2013/06/30/brazil-and-unsecurity-council-reform-is-it-time-for-another-big-push/.

343

As scenario of growing world interdependence means that Chile is not only an important actor in the Latin American context, but also an important partner for Brazil’s intercontinental relations. The contemporary international scenario requires a more collaborative approach, in which the infrastructure sector is seen as a relevant area in foreign affairs. The promotion of links between the public and private sectors, provides BrazilChile relations with the conditions to develop pragmatic ties in accordance with the concept of public diplomacy. Chile has become a significant partner in the sense that the country helps reduce export costs to Brazil. The possibility of becoming a bridge to the Pacific has turned Chile into an important player in Brazil’s foreign policy strategy, as well as in Latin American integration. 142 As argued in the first chapter, the Brazil-Chile long-term stable relationship dating back to the ABC Pact forms a trustworthy context for a bilateral partnership. The importance of the Brazil-Chile pragmatic approach has grown to the extent that China overtook the United States as Brazil’s most important trade partner, although it would be wrong to conclude that Brazil-China ties are constrained to commerce. In many ways, the prospects for strengthening the partnership have progressed in terms of scientific-technological cooperation and politic-strategic alliances. Sharing a coherent foreign policy on national development, as well as geopolitical views and state’ autonomy suggests that both countries share common positions. Both nations promote the idea that there no single model of national development applies to all countries and therefore each state must decide the best path of development without outside interferences. Moreover, the capacity to enforce future links has led to the definition of Brazil-China relations as an “ascending partnership” and China’s brand remains well-regarded in most developing region - whether Africa or Latin America - mainly because of the perceived economic benefits of engagement with this country. Furthermore, from a Chinese viewpoint, America remains at the top of the countries’ explicit hierarchy of important topics in international relations, followed by fostering ties with neighbouring countries and then 142

See “Chile ready to act as a ‘bridge’ between Mercosur and the Pacific Alliance”, MercoPress.South Atlantic News Agency, Wednesday, 27th August 2014. http://en. mercopress.com/2014/08/27/chile-ready-to-act-as-a-bridge-between-mercosur-and-the-paci fic-alliance

344

developing states elsewhere. This means that in practical terms, recognising a ‘strategic partner’ cannot be taken literally. However, interaction with the developing world has increased in importance in recent years, previously outlined, with the growth of the Brazil-China relationship, the Chile-China FTA and the signing of a Memorandum of Understanding on Labour Cooperation and Social Security. This approach towards the developing world emerged in the latter years of Jiang Zemin’s administration and was accelerated under Hu Jintao (Olopade, 2014). In this regard, China has established multilateralism as a priority in foreign affairs and has developed certain patterns of cooperation with developing nations. In Brazil steps were already being taken in the 1960s towards an independent foreign policy involving autonomy and partnership diversification, as a way of compensating for problems with traditional partners and to avoid reliance on a single country or region. Foreign policy in the 1990s provided a context whereby the macroeconomic stability promoted by the Real Plan in 1994, privatisation, trade openness and a consolidated democracy all laid the groundwork for a policy that involved diversifying its partners. 143 In brief, the concept of Brazil as an articulator of consensus, able to maintain a sustained and coherent dialogue with different actors worldwide emerged in the 1990s and East Asia-Brazil affairs have gained substantial support since then. Despite concrete steps toward an Asia-Brazil partnership, the relationship suffered the effects of the Asian Crisis between 1997 and 1998. As a result, Asian imports dropped dramatically and rather than an adverse context for Brazilian output what was seen was an optimistic scenario for exports between 1997 and 2001, with the exception of the crisis period.144 Another cause for concern is the lack of a consolidated effort on physical Latin American integration. The absence of a well-integrated transportation infrastructure has, to some extent, made an alliance on issues relating to China and other countries more complicated. Despite the lack of efficient infrastructure in the region, the establishment of constructive relations 143

See Folha de São Paulo, “Entenda os mecanismos usados em 1994 na criação do Plano Real”, 28th June 2014. http://www1.folha.uol.com.br/mercado/2014/06/1477907-entendaquais-os-mecanismos-usados-em-1994-na-criacao-do-plano-real.shtml. 144 More information in Prema-chandra Athukorala and Nobuaki Yamashita (2006), “Product fragmentation and trade integration: East Asia in a global context”, The North American Journal of Economics and Finance, vol. 17, issue 3, pp. 233-256.

345

recognising Chile as an export platform towards Asia is noted. The initiative of a Brazil-Chile platform for integration is offered as an example of this attempt. As well as initiatives such as the development of the Brazil-Chile partnership, East Asian and Latin American countries came together for the formation of the FEALAC. However, one of the major obstacles facing FEALAC is that both regions preferred a traditional partnership, either in South America or in East Asia. However, this means that within the developing world, traditional partners - called Western powers – benefited from such alliances, to the detriment of their potential Asian counterparts. Secondly, as pointed out earlier, when referring to East Asia, there are changing trade and economic circumstances regarding China’s major impact on total trade, increasing Korean participation and the re-establishment of ties with Japan. High expectations about the increase in Chinese investments have played a significant role, while South Korea seeks investments possibilities in Brazil aimed at third-party markets. Thirdly, China considers Brazil a “strategic partner” sharing a commitment to topics on the international agenda and supporting a new world order. In short, technological and political ties have been core elements to bilateral relations in recent years.

346

Chapter 5 Brazilian-Chilean Energy Scenarios and their Impact on Bilateral Relations Energy topics are increasingly being incorporated into the context of Latin American relations, since the energy situation both in the southern hemisphere and worldwide is changing rapidly. In recent years, issues concerning energy have leapt to the top of every country’s agenda, leading to the possibility of either cooperation or conflict in the area. Energy has a lot to do with public diplomacy, since energy resources involve publicprivate cooperation. Energy has also become an important tool for projecting the nation’s brand, given that a renewable energy matrix demonstrates energy sources in accordance with environmental concerns (Fräss-Erhfeld, 2009: 84). The nations’ geopolitical relationships in the region must not be disassociated from the energy market, in which natural gas, hydroelectricity, biomass (among other renewable energy sources), sugar-cane ethanol, nuclear energy, oil or other energy resources have substantially contributed to influencing either interstate or multilateral relations. In the current international scenario, energy simply cannot be separated from other important events regarding foreign affairs. Energy policy makes an integral part of domestic foreign policy strategy. In this sense, energy policy is perfectly aligned with the idea of public diplomacy, presidential diplomacy and nation branding in our multi-field approach. As observed in the first chapter, Lula’s presidential diplomacy plays an active role in promoting the country’s ‘nation brand of sugar-cane ethanol’, exerting a great influence over strategic foreign policy targets and the perfect scenario is presented for understanding how nation branding and presidential diplomacy are interrelated when projecting the nation’s image. Brazil’s rapidly changing international status and insertion into world energy markets led to a change in state-oriented policy regarding the importance of energy in foreign affairs. The emerging Brazilian energy sector was a positive factor for conducting foreign policy in the Southern 347

Cone. In this way, Brazil’s diversified energy matrix encouraged more scientific bilateral dialogue to increase the use of renewable energy sources to ensure energy security. Within the Brazil-Chile bilateral context, energy dialogue serves to promote scientific cooperation, through which both states can strengthen their economic, political and defence ties using a more dynamic energy approach.1 Today, energy has emerged as one of the most important variables in the global geopolitical context. Given the global and regional nature of energy issues, it is difficult - if not impossible - to separate the national focus of analysis from the overall energy context. Moreover, environmental issues and global warming have increased interest in the biofuels industry and other alternative energy sources. Brazil’s favourable macroeconomic context, together with increasing international demand for renewable energy sources, has paved the way for changes to the country’s international insertion in the last two decades (Hanson, 2012). Moreover, the combination of a global commodity boom with the increasing projection of Brazilian firms has led to further the country international insertion for the country. As observed in Chapter 3 with regards to foreign direct investment (FDI), Brazilian companies such as Vale, Gerdau, Petrobras and Odebrecht have contributed to diplomatic leverage to the extent that they lead to even stronger links between Brazil and Chile.2 Like energy in the Brazil-Chile bilateral approach, the two core sectors promote strengthening business dialogue as a broad platform on which to improve bilateral cooperation. Energy shows that Brazil-Chile bilateral ties go beyond traditional diplomacy and that public diplomacy and nation branding are core concepts when analysing the bilateral approach. Although many experts argue that pipelines should not be built, mainly for political and financial viability reasons, the region’s reality has been somewhat different in the sense that energy sources are necessary tools for 1

Energy is an important topic in European integration for obvious reasons. The consolidation of energy cooperation would reduce energy costs for member states. The energy union aims to make Europe greener, safer, cheaper and more modern. “European energy policy: only connect”, The Economist, 17-23 January 2015, vol. 414, p. 52. 2 Energy is also interrelated with foreign direct investment. See Otavio Mielnik and José Goldemberg (2002), “Foreign direct investment and decoupling between energy and the gross domestic product in developing countries”, Energy Policy, vol. 30, issue 2. São Paulo: Elsevier, pp. 87-89.

348

guaranteeing adequate regional security. Since the economic benefits of energy integration tend to be high, multilateral and bilateral opportunities for dialogue should occur more frequently. The emerging focus on sustainable development in international policy recommendations fosters cooperation for providing renewable and non-renewable energy supplies. In the long run, South America’s vast energy sources have laid the perfect groundwork for strengthening cooperation. Therefore, Chilean-Brazilian foreign affairs cannot be discussed without analysing the role of energy in the bilateral and regional economic integration process.3 At the current time, energy is a key factor to understanding foreign policy and the discrepancies that exist between both countries’ energy policies. Obviously, this issue cannot only be restricted to the Chilean-Brazilian energy sector analysis and attention must be drawn to the Latin American energy matrix to fully understand its complexity. It should be remembered that sometimes energy decisions are taken on a subregional basis, which means that each country cannot be analysed each country separately. Another reason is that the energy sectors from different countries are interrelated, either directly - through the interconnected electricity market and natural gas pipelines - or indirectly. The aim of this chapter is not to reconstruct the details of ChileanBrazilian historical bilateral relations - since this was the done in Chapter 2 or to compare the energy matrixes of both countries. This chapter’s aim is to recognise the possibility of cooperation between both countries, either through bilateral dialogue or in the multilateral field. In the current context, there is a kind of parallel between both countries’ status as natural gas importers, with certain similarities and differences in each nation’s energy supply. So far, there is a greater possibility of Brazil-Chile reaching an 3

Natural gas resources occupy an important position in Brazil and Chile’s energy and foreign policy agendas. The creation of Brazil’s Natural Gas Act No 11.909/09 created a regulatory framework. The Natural Gas Act establishes standards for the operation of economic activities for the transport of natural gas. Lei no 11.909, 4th March 2009, Presidência da República, Casa Civil. http://www.planalto.gov.br/ccivil_03/_ato20072010/2009/lei/l11909.htm. In the 1990s, Chile’s increasing demand for electricity and the state of electricity markets’ development generated the need to import natural gas. See Constanza Fosco and Eduardo Saavedra (2003), Estructura de la industria y relaciones patrimoniales del gas natural en Chile. http://fen.uahurtado.cl/wp-content/uploads/ 2010/07/inv147.pdf

349

agreement in the multilateral scope than in the field of exclusive bilateral relations. 4 In this sense, regional multilateral forums serves to promote closer interaction between Southern Cone actors, targeting cooperation connections within the multilateral mechanism. Another important factor in the energy scenario is that energy policy strategy is not a recent phenomenon and is deeply rooted in defence policies from the 1970s and 1980s. A more pragmatic concern is that the Brazil-Chile energy approach from the 1990s onwards cannot be studied, since energy is part of the longterm political and defence strategies of both states. Another fundamental aspect of Brazil and Chile’s politicised energy context is the different nature of their energy matrixes. The disparities in both countries’ energy matrix are significant and the Chilean energy scene faces several limitations with regards the diversification of resources. Although the energy approach cannot be constrained by an analysis of both states, such discussion naturally implies the examination of Argentina, Bolivia, Peru and Venezuela. In brief, other Latin American realities must be considered in energy analysis. The energy approach is a mechanism of extending the horizons of the analysis of Brazil-Chile bilateral relations. Energy’s scope is a legitimate presence in the Brazil-Chile bilateral approach, to the degree that even cultural exchanges embrace energy issues. As noted in Chapter 3, the new Brazil-Chile bilateral agreement in the cultural field also encompasses collaboration in other areas, in which bioceanic corridors, scientific cooperation and clean, renewable and bio energy promote the future relationship of dialogue between the two actors.5 Two-way communication between official and non-official actors - as in public diplomacy - embraces the energy field insofar as the sector demands public-private partnerships. Public diplomacy’s emphasis on a decentralised approach goes hand-in-hand with the importance of public-private coordination in the energy field. 4

See Global Data, “Brazil and Chile leading strong South American renewable energy growth to 2017”, May 2015. http://energy.globaldata.com/media-center/press-releases/ power-and-resources/brazil-and-chile-leading-strong-south-american-renewable-energygrowth-to-2017-says-globaldata. 5 This is Chile. Chile’s oficial website. Bi-national cooperation. “Chile and Brazil agree to forge new academic and cultural ties”. Thursday 28th February 2013. http://www. thisischile.cl/8511/2/chile-and-brazil-agree-to-forge-new-academic-and-culturalties/News.aspx

350

Interestingly enough, strengthening cultural, educational and scientific initiatives helps to boost cooperation in different sectors. This kind of agreement also demonstrates that both states seek a closer approach, given that they share important features and that they therefore see a long-term partnership as a possibility. Although Chile is not considered a top priority among Brazil’s state partners, the absence of conflicts in the course of their history, together with their support of similar democratic values, has had positive effect on strengthening bilateral links in the energy dialogue. As per Russell’s definition, foreign policy can exclusively be considered the area of governments’ policy action and comprises three analytical dimensions: diplomatic policy, military strategy and the economy. These three dimensions project themselves in the international scenario through diverse actors such as governmental and non-governmental organisations (NGOs), either in bilateral or multilateral circumstances (Russel, 1990: 5). Despite the increased involvement of NGOs, enterprises and social groups in the process of state interaction, foreign policy still means the performance of each state in the defence of the interests of these institutions (hard power). However within the energy scenario, the important role played by the private sector in driving foreign policy energy targets must be taken into account, instead of the exclusive traditional diplomatic approach.6 Although energy may become nation branding in order to carry out official foreign policy strategy, the importance of emerging new actors in the international arena went down in traditional diplomatic analysis. 7 For instance, Venezuela’s foreign policy towards Latin America and the Caribbean rests upon the use of oil to promote its integration into the region and is highly connected to maximising its geopolitical influence by using its oil exports as political weapons. Oil politics depend on public-private interaction, to the point where it is difficult to differentiate the exclusive role of traditional diplomacy in conducting domestic foreign policy. 6

Energy infrastructure encompasses socio-economic institutions, social norms and actors. Further reading in Andreas Goldthau (2014), “Rethinking the governance of energy infrastructure: scale, decentralisation and polycentrism”, Energy Research & Social Science, 1. Cambridge: Elsevier, pp. 134-140. 7 Denmark is an interesting example of a country that has gone from being 99% dependent on foreign fossil fuels to being completely energy self-sufficient. Denmark is officially recognised as the ‘Green Brand State’. See “International Frontrunner”, Danish Responsibility. http://danishresponsibility.dk/danish-responsibility/international-frontrunner

351

Despite the region’s historical lack of cooperation, there is a tendency towards increasing transnational cooperation in the energy sector that could easily be translated into benefits. Therefore, strengthening interdependent energy links constitutes an international tendency endorsed by the increasing participation of energy in diplomatic affairs. Real innovation comes from integrating energy policy into Brazil-Chile cooperation ties. Energy is not only associated with business, but also establishes the basis of national foreign policy targets. In this scenario, energy has assumed a fundamental role to help understand the focus of Brazil-Chile ties. Clearly, the energy question in Latin America cannot be compared with the highly developed cooperation between the United States and Canada as illustrated in certain NAFTA clauses on energy security. Indeed, it should be remembered that Canada and the United States had already been integrated trade-wise since the 1950s and two-way trade increased due to the significant lowering of tariffs through GATT rounds.8 In summary, before the NAFTA, Canada and the United States were already highly integrated economies (Weintraub, Sidney, 2008: 10-11). However, South American infrastructure integration has made progress in the last few years, to the extent that concrete initiatives have been carried out in this area. The importance of the energy issue in foreign policy cannot be discussed in the abstract; the origins of the European Union should be highlighted to illustrate this point, as well as the impact of the European Coal and Steel Community, which led to the European cooperation process (an administrative agency established by a treaty ratified in 1952, designed to integrate the coal and steel industries in Western Europe). Energy remains a political issue - as shown by the cooperation between German and French war industries’ (coal and steel) in an attempt to avoid another conflict. Therefore political strategy was centred on war industries, with the same authority undermining state power in this field (Barbosa, 1991: 37-38). The creation and recent evolution of the European Union have influenced other regional cooperation projects worldwide. Furthermore, political unification based on the functionalist theory has had an impact on theories of regional 8

The United States and Canada are the largest integrated energy markets in the world. The two countries have established a huge market for energy, focused on fuels and products such as natural gas, electricity, coal and hydropower among others. “Energy”, Embassy of the United States, Ottawa Canada. http://canada.usembassy.gov/canada-us-relations/ energy.html

352

integration in Asia, Africa and Latin America (Axline, 1994: 10). In Latin America, there is already an example of bilateral energy cooperation, the Brazilian-Argentine Agency for Accounting for and Controlling Nuclear Materials, created by the governments of Brazil and Argentina (the ABACC) in 1991.9 An interesting example of a bi-national agency that has the goal of expanding its membership in the future, the ABACC demonstrates how coordination efforts may go beyond ABACC officials and their countries of origin. That said, technical cooperation activities have also been extended to specialists working for laboratories in Argentina and Brazil. Furthermore, technical cooperation activities are shared with other countries, such as the United States, France and South Korea. The main purpose of the ABACC is to verifying that the nuclear materials existing in both countries are being used exclusively for peaceful purposes. The ABACC is another important example of how presidential diplomacy played a significant role in its creation, to the extent that the political aspect cannot be underestimated in comparison with technical issues.10 It should be taken into account that the creation of the ABACC demanded a long political dialogue that involved generating trust and building up a strategic alliance, rather than exclusively technical support. There are parallels between the ABACC initiative and similar ArgentinaChile cooperation within the security sector, illustrated by the Permanent Security Committee (COMPERSEG). Both the ABACC and the COMPERSEG involve the participation of Brazil and Chile’s common neighbour Argentina, showing a high level mutual trust between Southern Cone actors. COMPERSEG and ABACC constitute core elements to help understand Brazil-Chile-Argentina geopolitics. As mentioned in Chapter 1, Argentina complements the understanding of the Brazil-Chile approach and therefore becomes an important actor in the analysis. Moreover, the ABACC and the COMPERSEG are unprecedented, not 9

Its well-known abbreviation is ABACC (Agencia Brasileiro-Argentina de Contabilidade e Controle de Materiais Nucleares in Portuguese or Agencia Brasileño-Argentina de Contabilidad y Control de Materiales Nucleares in Spanish). http://www. abacc.org.br/home.htm 10 The ABACC comprises the Commission (made up of four members, two from each country) and the Secretariat (a Secretary and a Deputy Secretary). http://cns. miis.edu/inventory/pdfs/abacc.pdf

353

only in terms of Brazil-Argentina and Chile-Argentina links, but also concerning the three main Southern Cone states. Their two initiatives in the defence have two different features: strong cooperation ties and a high level of diplomatic confidence. The involvement of the three states in integration mechanisms relates to Chapter 2 about the Brazil-Chile historical backgrounds and the importance of Argentina when analysing the BrazilChile bilateral approach. By analysing the Brazilian-Chilean energy sectors, it should be considered that they have a totally different energy matrix. Chile, on the one hand, is a consumer and net importer of energy and has not yet developed a sustainable energy plan for the coming years. Chile still used a high percentage of energy derived from fossil fuels (73%), while fuel from renewable energy sources only accounts for 37% (Nasirov and Silva, 2016). On the other hand, Brazil is the region’s main player in terms of a wellbalanced energy mix. Indeed, Brazil’s size and leadership have led the country to exert an influence on the region’s geopolitical context. However, Chile’s energy supply is not secure, given that its own energy sources are very limited. For this reason, Chile would benefit from widespread hemispheric energy cooperation in order to safeguard its energy supply for the foreseeable future. As highlighted by Wittelsbürger, “whichever way Chile intends to solve its energy problem in the long-run, it will need to act quickly and make decisions efficiently”, especially because it depends on fossil fuel imports, account for between 70% and 90% of energy consumption (Wittelsbürger, Helmut, 2007: 3). Chile’s vulnerability became clear when Argentina started cutting off natural gas deliveries to Chile in 2004. According to the report by the Embassy of Switzerland in Chile, with energy consumption growing at an average rate of 6% per year an extra 15MW is considered necessary by 2020, reflecting the high level of economic activity in Chile at the moment.11 In this context, further dialogue between Brazil and Chile has been encouraged, with significant gains for both sides and the entire region, contributing to the creation of possible cooperation in the field pertaining to 11

The Chilean Energy Market. Embassy of Switzerland in Chile. Santiago de Chile, January 2011. http://www.osec.ch/sites/default/files/The%20Chilean%20Energy%20Market_Embassy%2 0of%20Switzerland%20in%20Chile.pdf. Consulted on 16th March 2013.

354

hard politics. This means that, beyond soft power cooperation, bilateral dialogue provides benefits for strategic cooperation between the two states. Chile’s lack of a nuclear energy programme and of a self-sufficient energy matrix has led to bilateral dialogue with respect on the energy issue. Furthermore, energy dialogue has provided the opportunity to bring together different groups from Brazil and Chile, such as politicians and technical teams, to discuss a single key issue. 5.1 Brazil and Chile’s Energy Matrix The Brazilian energy sector has been associated with the concept of national security since the so-called “Era Vargas” (1937-1945 and 1950-1954), in other words, the term of President Getúlio Vargas. The creation of Petrobras, which reflected a new stage in oil exploration in Brazil, occurred during this period. In the Brazilian energy matrix, hydroelectricity represents 80% of the amount of energy used. Despite the important advantages of generating cleaner energy and its lowerer generation costs, hydroelectric power cannot guarantee a constant supply of energy in the long run, taking given its meteorological uncertainty. It should be considered that the Brazilian energy matrix is the result of strategies pursued during the military period (1964-84) combined with the regulatory reforms and privatisations of the 1990s. The country’s energy policy is deeply rooted in the strategies developed during this period, to the degree that changes during the 1990s did not affect the well-consolidated tendencies in Brazil’s energy policy. However, the use of gas has been introduced into the domestic energy matrix. The reforms of the 1990s were much more market-oriented and economically efficient with respect to the structure of national energy policies (Sennes and Narciso, 2009: 20). Moreover, regarding the constant supply of energy, the use of thermoelectric energy generated by diesel and natural gas has been relied upon, with both sources mostly being imported, even though Brazil is practically self-sufficient in petroleum products. The use of thermoelectricity raised many concerns about the Brazilian government’s decision to use this type of energy to replace hydroelectricity in specific situations. In other words, the government’s plan to replace hydroelectricity for thermoelectricity - in periods of drought - provoked severe criticism 355

from diverse sectors of society. Moreover, a large part of this thermoelectricity was generated by natural gas (Landau, 2008: 245). The impact of the petroleum crises in 1973 and 1979 on the Brazilian energy matrix led to the emergence of Proalcool – the creative ethanol programme based on sugarcane that was created in 1975. 12 This crisis, combined with periods of low demand in sugar markets, resulted in the development of an important programme to produce ethanol for use as an automobile fuel. In this way, domestic production and the use of ethanol decreased dependence on foreign oil, reduced trade deficits, created jobs in rural areas and reduced air pollution. 13 Ethanol production has reached such volumes and technological sophistication that Brazil aspires to world leadership in the export of this commodity, although there is still a long way to go before reaches this objective. 14 Other alternative sources of energy with obvious environmental benefits are solar and wind power, which have also been subsidised by Lulas’s administration, although to a lesser extent. In this respect, solar and wind power are not as relevant in terms of the Brazilian energy matrix (Landau, 2007: 246). The fact is that important changes have occurred in the international aspects of Brazil’s energy projection. As Sennes and Narciso state, “the strategies’ content was altered both in multilateral spheres – the UN, the International Atomic Energy Agency and the like – and in terms of the country’s international role, as it went from being an oil importer to being an oil, capital, technology and ethanol exporter”. External participation in the energy cycle involves a variety of energy sources, such as oil, gas and 12

Further reading in Eduardo Giacomazzi (2012), “A brief history of the Brazilian Proalcool Programme and the development of biofuel and biobased products in Brazil”, Industry Federation of São Paulo State, Bioindustry Committee. http://www.oecd. org/sti/biotech/Giacomazzi.pdf. See Carlos R. Soccol et al (2005), “Brazilian biofuel programme: an overview”, Journal of Scientific & Industrial Research, vol. 64, November. New Delhi, pp. 897-904. 13 Brazil continues to invest highly in its sugar cane programme. The State of São Paulo’s Research Foundation has supported a large number of research projects based on different topics related to sugar-cane cultivation. “Brazil world leader in sugarcane and ethanol knowledged technology”, São Paulo Research Foundation (FAPESP). http://www. fapesp.br/en/4686 14 See Isaias C. Macedo et al. (2008), “Green house gas emissions in the production and use of ethanol from sugarcane in Brazil: the 2005/2006 averages and predictions for 2010”, Biomass and Bioenergy, vol. 32, issue 7. Elsevier, pp. 582-595.

356

the electricity sector (Sennes and Narciso, 2009: 20). As previously mentioned, developing biofuels technology demanded public-private partnerships, in which public diplomacy, presidential diplomacy and nation branding played an active role. Another key issue regarding Brazil is the structure of the country’s energy supplies. The plus is that the Brazilian energy matrix is different from that of most developed and developing countries in several respects.15 The high use of renewable energy sources is primarily the result of the use of biomass and hydroelectricity. At the same time, the use of natural gas, coal and uranium help lower rates below the world average, although the percentage of natural gas in Brazil’s energy matrix has increased considerably in recent years. As opposed to international tendencies, Brazil has invested heavily in hydroelectricity, while the use of biomass is comparatively high (Sennes and Narciso, 2009: 21-2). Nuclear energy is another potential source, not only for Brazil but also for the Chilean energy matrix in the foreseeable future, which is why this chapter addresses the nuclear approach.16 There is one key fact that is relevant in the field of nuclear power for both countries, with Chile a potential user of this source of energy and nuclear energy already part of the Brazilian energy matrix.17 It is important to note that the city of Rio de Janeiro is supplied with electricity that is partly derived from thermonuclear generators. However, factors such as the possibility of accidents involving nuclear power still have a profound effect on the public’s perception of its use. Chile does not currently produce nuclear energy and President Piñera’s 15

The positive impact of ethanol is particularly noticeable in the air quality of metropolitan areas, as well as in rural areas. More information in José Goldember et al. (2008), Energy Policy, vol. 36, issue 6. Elsevier, pp. 2086-2097. 16 Brazil’s relations with long-time rival Argentina even improved insofar as Brazil and Argentina cooperate in nuclear and other security areas. Travis C. Stalcup and Barbara Bush (2012), “What is Brazil up to with its nuclear policy?” Georgetown Journal of International Affairs, 10th October. Edmund A. Walsh School of Foreign Service. Washington, DC: Georgetown University. 17 Chile is once again thinking of meeting its energy demand with nuclear power. The government decided to build a new nuclear power plant in 2013, despite the fact it would not be ready until after the end of President Sebastián Piñera’s term in 2014. “Chile thinking again of nuclear power use”, UPI, 30th October 2012. http://www. upi.com/Business_News/Energy-Resources/2012/10/30/Chile-thinking-again-of-nuclearpower-use/UPI-77881351632087/

357

administration indicated that a decision on nuclear power would not occur during his term, altough this did not mean that studies were not being made on possible projects. In order for future governments to make a valid decision, the juridical requirements for the establishment of nuclear energy in the country are already being worked on. Possible future nuclear power applications are being researched by the Chilean Nuclear Commission.18 In 2010, the Chilean government met with their French counterpart to discuss the possibility of nuclear power use.19 Nuclear power was also one the topics of President Obama’s official visit to Chile in 2011. After two years of problems (2003-2004) in oil production, due to delays in the delivery of offshore platforms, Brazil has been a modest exporter of petroleum since 2005. Petrobras’ plan emphasises the consolidation of petroleum self-sufficiency to carry this out, the company needs to continue its research and put new blocks out to tender (Landau, 2007: 264-7). Beyond Brazil’s evolution from a net importer to a potential net exporter of petroleum, Petrobras has become one of the world’s most successful oil companies, increasing its reserves, production and technical capacity and developing international projects (Isabell, 2008: 11). Indeed, Petrobras has become an important symbol of Brazil’s energy supremacy, to the extent that it airs television commercials in other countries, such as Chile, where the country’s image is linked to its brand projection. In Chile, the energy policy is carried out by the National Energy Commission (Comisión Nacional de Energía- or CNE), the Ministry of Finance (Ministerio de Economía) and the Ministry of Mining (Ministerío de Minería) (Martner, 2007: 110). However, the CNE executes the majority of the technical work, aimed at elaborating and coordinating national energy security programmes and, in this respect, the commission has centred on the production and development of efficient energy use (CNE).20 18

The Chilean Energy Market. Embassy of Switzerland in Chile. Santiago de Chile, January 2011. http://www.eda.admin.ch/eda/fr/home/doc/publi.html.html. Consultation, 19th March 2013. 19 Chile thinking again of nuclear power use: Chile is thinking of meeting future energy needs with nuclear power after more than a year of delays caused by the atomic reactor disaster in Japan”. Energy Resources. October, 2012. http://www.upi.com/ Business_News/Energy-Resources/2012/10/30/Chile-thinking-again-of-nuclear-poweruse/UPI-77881351632087/. Consulted on 20th March 2013. 20 As Chile grows, it needs more energy and therefore energy is directly related to the economy and foreign policy strategy. Energy is a central element for achieving economic

358

During the last five years, Chile’s energy supply has not been secure, since the country’s energy matrix is very limited to gas, coal and oil. To make matters worse, it is estimated that 90% of each of these sources come from abroad.21 Furthermore, as will be addressed in the following section, even imports of Argentine natural gas are no longer reliable. Due to its narrow and restricted territory, the only realistic way to deal with energy shortages and demand is to import, which has constant dependence as a consequence (Wittelsbürger, 2007: 1). Since the Chilean energy matrix is too dependent on natural gas, the following section focuses on ChileanBrazilian gas supplies. Moreover, the Chilean energy shortage may have profound short and long-term consequences for its foreign policy.

5.1.1 Natural gas At present, natural gas is the second most important fossil fuel after oil in the United States. Natural gas is growing in use, since it is seen as an increasingly good alternative to oil. Therefore, the potential or real possibility for natural gas to replace the role of oil in the economy deserves special attention from an academic standpoint. For some countries, natural gas provides an opportunity to use another energy source that will be able to replace some of the power that is currently obtained from oil. However, it should be borne in mind that oil still plays an overwhelmingly significant role in the international energy scenario. Overall, since the 1980s, natural gas has been the fuel that has experienced growth to the expense of coal and oil22 (Clegg, 2001: 10). growth and sustained social progress. “National energy strategy 2012-2030: energy for the future”, Gobierno de Chile, February 2012. http://kallman.com/shows/iftenergy_2012/ pdfs/Energy-for-the-Future-Chile%27s-National-Energy-Strategy-2012-2030-English.pdf 21 Today 62.9% of the total amount of energy produced in Chile comes from generators that use oil, coal or natural gas, whilst 31.2% comes from hydropower, according to the Chilean National Energy Commission (CNE). José Luis Alarcón (2013), “Chile seeks to diversify energy sources”, Diálogo/Digital Military Magazine, 07/08/2013, Forum of the Americas. http://dialogo-americas.com/ en_GB/articles/saii/ features/economy/2013/08/07/feature-02 22 Moreover, “natural gas consumption is concentrated in three major areas: North America, Europe and the Former Soviet Union, and the Far East”. See Marian Radetzki, “World Demand for Natural Gas: History and Prospects”, The Energy Journal Special Issue (1994), pp. 219-236.

359

According to some predictions, it will soon be the second most important energy source in the rest of the world as well. Increasingly, natural gas is becoming more important for the production of electrical power. Furthermore, it is highly important in the production of industrial fertilizer (Darley, 2004: 8). Darley reminds us that: “…after natural gas, there are no more easy energy bonanzas left in our planet’s crust, and now the first indisputable warnings about the limits to global natural reserves have appeared. In both 2001 and 2002, for the first time ever, more natural gas was used than was found. This isn’t a blip; it’s a permanent trend” (Darley, 2004: 5).

Although Latin America’s existing infrastructure can provide enough energy for the moment and for the near future, the lack of investment in the sector may bring problems for the energy supply. As a result, current investment policy cannot be considered sufficient for future demand. A key fact to understanding the complexity of the natural gas policy is that gas is not as easily transported as oil, since it requires long-distance pipeline systems or the provision of LNG (Horsnell, 2001: 28). Indeed, the capacity to process and transport oil and gas to the markets remains deficient, while the demand of these resources has risen markedly. The current gas framework strategy is being carried out according to the regional balance of supply and demand, storage capacity and gas pipeline location. Nonetheless, as Darley highlights, “natural gas cannot be imported on demand; it requires planning long in advance, especially if it comes over the ocean as liquefied natural gas or LNG” (Darley, 2004: 3). When referring to the gas markets, it should be noted that there is no unified market. Instead the market consists of tenuously linked regional submarkets. As Horsnell argues, “the gas market is primarily a series of regional markets in which separate development depends on the nature of the infrastructure and the regulatory regimes in place. In addition, transmission costs for gas represent a far higher proportion of end-user prices than is the case with oil” (Horsnell, 2001: 36). The Latin American region boasts natural gas reserves together with high-growth energy markets. The need to diversify beyond the high investments in hydroelectric power and expensive oil sources directs 360

countries to the search for natural gas, especially for generating power. The region has benefitted from the abundant gas reserves in several countries, particularly Venezuela, Argentina and Bolivia and their interconnection with other markets. Furthermore, additional changes play a significant role in the process, such as: competition between hydro and thermal generation in a highly hydro balanced region; the need to build it up which could lead to breaking cross-country natural gas agreements later; increasing competition between gas and other power resources and the development of the natural gas industry in a volatile international market (Hammons, 2011: 1). As already observed, Brazil’s energy matrix does not rely heavily on international resources with the exception of coal and natural gas, with onethird of the latter’s supply being imported as opposed to oil, the majority of which comes from local production for the internal supply and whose import volume (light oil) is similar to its export volume (heavy oil). In recent years, shifting the country’s energy matrix laid the groundwork for other energy sources such as natural gas, ethanol and biofuel production.23 In the case of gas, policies have been adopted by Brazil to restrict dependence on Bolivian gas and project an increase in exports (Sennes and Narciso, 2009: 24). In the Brazil-Chile approach, it should be considered that liquefied natural gas (LNG) started to be considered as an option to ensure an adequate natural gas supply, targeting the generation of power in particular. Interestingly enough, Brazil and Chile are leading the implementation process of regasification system facilities. As Hammons argues, “the region also has the potential to become an exporter of LNG in the mid-term, once the potential gas reserves that require deep drilling become commercially available” (Hammons, 2011: 2). Despite being formed from regional markets, the gas market is connected 23

The significance of natural gas is on the rise due to the Gas Law, passed on 2nd December 2009, which regulated natural gas activities in Brazil. The decree, which was passed a day after the approval of the new regime for the exploration of pre-salt reserves, provides rules for the transportation, handling, processing, storage, liquefaction, regasification and trading of natural gas. However, the decree did not end Petrobras’s control, since the government-owned company enjoyed a transportation monopoly. As a result, the National Agency of Oil, Natural Gas and Biofuel adopted new rules to restrict Petrobras’ participation in the natural gas market. Ramalho, André (2014), “Abertura pra valer?”, Brasil Energia Patróleo & Gás, ano 33, no 400. São Paulo: Editora Brasil Energia.

361

to the general energy market. As already mentioned in this chapter, energy is firstly a political issue and even countries that have attempted to depoliticise the energy market in the past have made the decision in recent years that there is no possible way of isolating the energy field from policy.24 Secondly, energy prices are generally political, both in the domestic and the international market.25 Thirdly, energy security issues still need to be settled by governments. Last but not least, environmental issues play an increasingly important role in international debates, mostly contradicting governments’ energy policies26 (Horsnell, 2001: 39). There is no other region in the world where the issues of energy and policy are so interconnected as in Latin America. The ownership of an oil or gas state enterprise is considered a symbol of national sovereignty. As opposed to the United States, where energy resources are not associated with national identities, state-owned enterprises have a far higher impact on the creation of national symbols in Latin America27. This has to do with the fact that the nationalisation of resources allows their use to benefit the country. Moreover, state-owned enterprises avoid transnational corporations and get involved in politics of a domestic nature also functioning as a security policy against foreign powers. 24

The conflicts of the 1990s led to the disintegration of the European unified energy system, which stretched from the Adriatic to the Black and Aegean Seas. What was once a single system was suddenly was a patchwork of several systems. In this context, the Energy Community, established in October 2005, brought together the European Union and countries from South Eastern Europe and the Black Sea region. The key aim of this organisation was to extend the European Union’s internal energy market to South East Europe and beyond, on the basis of a legally binding framework. Energy Community, https://www.energy-community.org/portal/page/portal/ENC_HOME. 25 The example of German energy policy will be used to illustrate this point. It must be emphasised that German coal mining is still a powerful political tool for lobbying, since without that subsidy, coal would not maintain a dominant position in the energy sector. The German coal lobby prevents the liberalisation of the European gas market (Horsnell, Paul, 2001: 39). 26 A good overview on environmental issues can be found in Estenssoro Savedra, J. Fernando. “Antecedentes para una historia del debate político en torno al medio ambiente: la primera socialización de la idea de crisis ambiental (1945-1972)”. Universum, no 22, vol. 2, 2007, Universidad de Talca, Chile. 27 The issue of national symbols and identity has been studied in the chapter about national identity and nation branding. In general, Latin Americans have a strong sense of national identity. According to Linkohr, this occurs frequently in heterogeneous societies where the huge differences between the wealthy and the poor lead to the neede for national symbols in order to maintain social cohesion – Linkohr, Rolf, 2007: 92).

362

Nonetheless, the potential of South American internal gas market has not yet developed the necessary infrastructure to withdraw the potential energy’s resources. On the one hand, Argentina, Peru, Venezuela, Colombia and Bolivia are being transformed into significant gas producers, inasmuch as some of these countries can already be considered gas exporters. On the other hand, Brazil, Chile, Uruguay and Paraguay have a growing demand for gas imports. These circumstances have led to the proposal of building regional gas pipelines in order to connect producers with consumers. Despite considerable problems, the trading of Latin American energy, which basically consists of oil and natural gas, is on the increase due to the creation of gas pipelines, oil pipelines and electricity connections. Mercosur has developed an integrated internal electricity market with interconnected electricity transmission among its four members (Argentina, Brazil, Uruguay and Paraguay). The natural gas produced in Bolivia is transported to Brazil and Argentina through transnational pipelines. Indeed, the problem stated should take into account the uncertainty of the South American market, due to the Argentine economic collapse in 2002 as well as the continuous political instability of Bolivia.28 It should be taken into account that there is no short-term market for either gas or electricity or for the energy market that encompasses both (Horsnell, 2001: 34). Therefore, longterm energy policies should be established in the regional energy context. Despite the difficulties and complexities involved in the Latin American energy market, the region believed infrastructure mechanisms should be rethought and therefore efforts to connect the gas market increased. Connections in the gas sector are a considerable step forward towards a common Latin American energy market. There is a tendency towards electrical connection projects in South America, for example the existing projects between Peru and the north of Chile, Colombia and Ecuador and the south of Bolivia and the north of Argentina.29 The Great Gas Pipeline of the South will have a profound impact on the 28

In the case of Bolivia, the nationalisation of its gas and oil resources could have a profound impact on access to technology. Furthermore, there is disagreement about how the PDVSA (the Petroleum of Venezuela company) will cover the production of international enterprises, without jeopardising long-term investments. 29 Research by the OLADE (Organización Latinoamericana de Energía) calculated that energy integration will allow for savings of around US$ 4,500 million per yearhttp://www.olade.org.ec/siee.html. Consulted on 8 November 2009.

363

Latin American energy market. The huge project will begin in Southern Venezuela, cross Brazil and finally reach Argentina. Bolivia, Chile and Paraguay will be integrated afterwards. In this way, the Great Gas Pipeline of the South will become a symbol of the region’s energy integration. Nevertheless, as Wittelsbüerger says, “until now, however, no laws have been adopted to furnish the legal certainty required for progress in energypolicy integration. Similarly, hopes were raised by the 2007 Mercosur summit in Rio de Janeiro, when members professed their intention to enhance cooperation in the energy as well as in other sectors of the economy. Still, it is not clear how this intention is to be implemented” (Wittelsbürger, 2007: 1). Additionally, it should be mentioned that both gas pipelines and LNG are very expensive methods of acquiring natural gas. The scale of investments required to expand the gas pipeline network presupposes a single main investor (Landau, 2007: 272). Furthermore, according to Linkohr, it is not profitable to transport natural gas any distance over 4,000 km, because the loss of pressure is very high. It is therefore better to transport natural gas as a liquid (LNG) over the ocean (Linkohr, 2006: 94-5). It should also be mentioned that there is disagreement on the advantages of a gas pipeline at the cost of LNG. Darley highlights that the continuous pipeline method of gas transportation is clearly preferable, not only because it is cheaper but also because it is continuous. Like electricity, gas supply is needed in a continuous stream (Darley, 2004: 48). Another controversial point concerns accidents involving pipelines. In general, pipelines have a fairly good safety record, although there have also been disastrous accidents for different reasons, such as weakened constructions or impoverished local people who live in the area and try to collect the leaking fuel for themselves and sell it on the black market. The increased use of gas may contribute to more natural gas leaks in the near future, unless they are serious improvements made to the pipelines’ quality, security and safety. Moreover, when a native tribe or village gets in the way of a pipeline or a hydroelectric plant, they are usually forced to leave, with little or no compensation. 30 30

Temis Gomes Parente (2008). Impactos da construção da Usina Hidrelétrica Luis Edurdado Magalhães - TO: narrativas e memórias de mulheres. In: Linguagens Plurais: cultura e meio ambiente. Temis Gomes Parente e Hilda Gomes Dutra Magalhães (eds),

364

5.1.2 Chile’s natural gas issue The Chilean natural gas supply highlights how complex the Latin American gas issue is. Natural gas represents one-third of Chile’s energy supply and is imported exclusively from Argentina. The fact that Argentina was consolidated as Chile’s exclusive gas exporter contributed to what some authors called an international link between both countries that was far too premature (Mares, 2004: 11). In 2004, the partial interruption of Argentine natural gas exports to its neighbouring Chile worsened the relationship between both states.31 The politicisation of energy affairs lead President Lagos to stress that the relationship between them should not take into account the natural gas supply (Calle, 2008: 1). However, the lack of investment in exploiting new natural gas deposits is one of the reasons for supply shortages in Argentina. As a result, natural gas supplies from Argentina were cut off, threatening Chilean production of electricity. In accordance with research about Chile’s energy supply published by the ‘Centro de Estudios Públicos de Chile (2007)’, between 2006 and 2010, the Chilean economy was expected to experience an energy deficit, with 2009 to early 2010 the most critical period. One proposal to avert the gas crisis was converting gas plants into diesel ones. This measure would reduce Chile’s vulnerability to interruptions in Argentine gas exports. On a theoretical level, even though Argentina’s gas exports have not been interrupted, Chile’s energy scenario demands constant attention. The Chilean consul Horacio del Valle stress: “Chile is urgently seeking to solve its energy problem and this has become the main aim of Chilean foreign policy. In this context, we cannot separate the existing energy shortage from the country’s diplomatic aims” (interviewed on 19th April 2010 at the Consulate of Chile in Rio de Janeiro).

President Michele Bachelet confirmed that the country’s top priority was to achieve energy autonomy. This means that energy was considered a national Bauru, SP - EDUSC, 2008). 31 See H. Rudnick (2005), “South American reform lessons – twenty years of restructuring and reform in Argentina, Brazil, Chile”, Power and Energy Magazine, vol. 3, issue 4. IEE, pp. 49-59.

365

security issue. In February 2006, Bachelet created the Ministry of Mineral Resources and Energy, combining both areas as opposed to the Ministry of Mineral Resources of Lagos’ government. This change was definitely a result of the endeavours of the Minister of Economy and Energy to deal with the Argentine natural gas supply crisis in 2003. The energy problem was circumscribed by some proposals, such as the installation of LNG regasification plants from Australia and Indonesia and the hydroelectric project in Aysen. These other sorts of energy will be analysed in the following subtopics (Martner, 2007: 125). Nonetheless the LNG proposal requires a lot of investment, plus time to deal with suppliers and to build terminals, which means that Chile could suffer a shortage of energy at least during the installation of the regasification plants. On a theoretical level, LNG sounds like a simple concept, but in reality it is not. Despite the fact that it must be cooled repeatedly in order to be carried in considerable volume, for example by ship, it is not easy to maintain these low temperatures (-260oF or –160oC), since it requires special vessels and a great deal of energy. In the case of Chile, shipping natural gas seems a good idea, whereas LNG requires a complex and extremely expensive infrastructure (Darley, 2004: 59). Although, Chile’s shortage of natural gas is considered a matter of great urgency, it must be taken into account that dependency on LNG can also turn into an economic problem. Furthermore, it will be seen that the huge demand for gas is not a centralised South American problem. There is a parallel between the gas production decline worldwide and the increasing demand for natural gas. Therefore, it would be imprudent to consider natural gas as the main fuel for the Chilean energy sector in the coming years. On the other hand, environmental leaders have demanded the dramatic diversification of energy sources in response to the cutting of natural gas supplies from Argentina, which threatens local electricity production. The president of the Institute of Political Ecology, Manuel Baquedano, said that “Chile must change its energy matrix immediately”. Given the shortage of gas, “suppliers announced that they would use diesel to alleviate the natural gas deficit. The national copper corporation, Codelco, Chile’s leading source of revenue, plans to follow suit” (González, 2007: 1). The energy shortage has had a major impact on the north of Chile where the mining regions are situated. Indeed, for geographical reasons, the 366

country’s north, south and the centre are not connected in terms of the energy web and thus cannot depend on a mutual supply in periods when there are energy shortages. This means that Argentina restrictions on exporting Bolivian gas to supply the Chilean markets produced real concerns in the mining sector (especially in the region of Chuquicamata one of the world’s largest copper mines). The following graph shows the impact of a gas crisis on mining production: Source: http://www.kitcometals.com/charts/copper_historical_large.html#5years

As the graph illustrates, the gas crisis had an impact on the copper extraction mining cycle and, as a result, this process became more expensive.32 In the last two years, copper prices have remained extremely high, thanks to its use in the houses worldwide, the construction boom and 32

On 14th May 2014, President Michelle Bachelet inaugurated an onshore storage tank at the Mejillones Liquefied Natural Gas (GNLM) regasification terminal, the biggest in Latin America. Marianela Jarroud (2014), “Natural gas: both crisis and solution in Chile”, Terramérica/Environment and Development, 16 November 2014. Inter Press Service. http://www.ipsnews.net/2014/06/natural-gas-crisis-solution-chile/

367

its use in electrical and electronic products. However, in the current scenario and due to the uncertain future of the market, enterprises are not encouraged to invest in energy, given the drop in copper prices by more than 50% (Kitco Metals). It is clear at this point that the meteoric growth and continuous demand for gas poses severe problems not just for Latin America - and specifically the Chilean-Brazilian scenarios - but also for the United States and Canada. Since the United States and Canada have declining supplies, while others in the world still have gas to spare, this should serve as a warning to the other world regions of the world and to Latin America as well. Since natural gas is a fossil fuel and a finite commodity, a nation like the United States becomes considerably more dependent on imported energy resources as worldwide gas production declines. Another problem that should be mentioned is that, when production begins to slow in the gas field, it does so very quickly and without the timely warning signals as the same problem in oil fields. Darley reminds us that “the past century has seen numerous oil wars. World War II, the most destructive conflict in history, was largely fought over access to petroleum reserve. With increasing international trade in the diminishing supplies of natural gas, we may begin to see gas wars as well” (Darley, 2004: 8). Latin America has in recent years, been one of the most dependent countries on the natural gas power that electricity development demands. Heavy hydropower dependency does not only occur in Brazil and therefore there is a need to diversify because of the high investments in hydropower and oil, which has led many countries to redirect their domestic policies towards alternative energy sources.33 Energy issues have encouraged a profound multilateral debate, since the region is extremely diverse in size, installed electrical capacity and electrical power demand, which depends on the natural gas network. The Latin America energy scenario has had a positive effect on Brazil and Chile dialogue, given the fact that energy strategy policies demand long-term targets.

33

Climate change directly affects hydropower production. Hydroelectric dependency refers to the percent of total installed capacity dedicated to hydropower. See Ben Blackshear (2011), Hydropower vulnerability and climate change. Middlebury College. http://www. middlebury.edu/media/view/352071/original/

368

5.1.3 Brazil-Chile natural gas demand in the foreseeable future The future Brazilian supply of natural gas has gone from a situation with hardly any availability in the past two years to promising availability in the coming months. The Petrobras plan called ‘Plangás’ intends to increase the offer of natural gas from 15.8 million cm/d to 24.2 million cm/d, with this additional volume to gas imported from Bolivia.34 Bolivian President Evo Morales’ announcement on 1st May 2006 about the decree nationalising his country’s oil and gas industry provoked specific reactions from Petrobras and the Brazilian public. The fact that the nationalisation decree was expected should be taken into account: what raised concerns was the way it was done through the military occupation of Petrobras’ gas fields (Landau, 2007: 273). The instability of the Bolivian gas supply has led to a decrease of Brazilian dependence on Bolivian gas. In the current context, it should be considered that, contrary to the shortage of gas from Bolivia in the past two years, the offer has now increased significantly. Although it is an understatement to say that Bolivia’s future as a supplier of natural gas to its neighbours is uncertain, further steps have been taken in order to decrease dependency on Bolivian gas. In the present circumstances, with a more abundant offer of Bolivian gas, the creation of a secondary market may be a relevant strategy for maximizing the benefits of the growing offer. The director of Petrobras’ Gas and Energy sector, Graça Foster, points out that, in the coming years, southeast Brazil will be able to export natural gas through the creation of onshores LNG export terminals. 35 Currently, Bolivian gas accounts for roughly half of Brazil’s natural gas consumption (about 48 million cm/d). Because of political uncertainty in the neighbouring country, the Brazilian government has prioritised developing domestic gas reserves. In this respect, Petrobras is looking for alternative sources of energy to reduce its dependence on Bolivian gas (Landau, 2007: 272-3). It is relevant that policy makers realise that managing the variations of the energy market plays an important role in energy provision. However, Brazil’s gas supply situation changed dramatically, similar to the difficult period Chile underwent when Argentina began restricting gas 34 35

O Globo, 10 July 2006, caderno Economia, p. 13. O Globo, 18 January 2009, Economia, entrevista com Graça Foster, p. 21.

369

exports. The worst drought in decades caused significant damage to hydroelectricity supplies in the country’s north-east. As a result, Petrobras was forced to pay premium prices to secure spot cargoes of LNG, due to strong demand for the fuel from Asian countries hit hard by cold winter weather and ahead of the planned purchase by Argentina. Given drought in the north-east, Petrobras had to purchase LNG, which is used in Brazil as a subsidiary energy power that substitutes hydroelectricity in the dry months.36 As has been seen, Chile will face serious problems in the coming years if it continues to formulate its energy policy based on one major fossil fuel, without diversifying its energy matrix. At the present time, Chile’s main problem in foreign affairs is its energy supply security dilemma, which means that it has become extremely dependent on a fuel now in sharp decline. Indeed, the whole industrial world is now looking to natural gas for its electrical power. For this purpose, Chile’s current energy policy must seek to generate an uninterrupted, environmentally sustainable and available energy supply. Chile’s energy problems encourage dialogue in the field of foreign affairs to solve its energy shortage. The public-private partnership needed in the energy sector demonstrates the relevance of public diplomacy in the energy issue. As far as public diplomacy’s focus on the interaction between decentralised actors is concerned, the Brazil-Chile energy dialogue has fostered dialogue between non-official actors, which has led to a better understanding between the two, based on the public diplomacy concept.37 The mainstream media and newspapers with a large circulation continue to treat natural gas as a local subject that exclusively concern historical or present rivalries between neighbouring countries. For instance, Brazilian reports about the Bolivian nationalisation of the production and distribution of natural gas and oil in May 2006 treated the situation as sovereignty issue between both countries. The majority of the reports even considered the 36

McAllister, “Brazil seen paying high price for emergency natural gas imports”. Reuters. Tuesday, 8th January 2013. http://www.reuters.com/article/2013/01/08/brazil-energy-lngidUSL1E9C88NV20130108 37 The deep fear surrounding the safety of the energy supply led to an emerging debate on energy topics in international relations. The importance of energy cannot be exclusively understood from a state-centric perspective, since one country’s energy security does not mean another’s lack thereof. Andreas Goldthau and Jan Martin (2010), Global energy governance: the new rules of the game. Berlin and Washington, DC: Global Public Policy Institute /Brookings Institutions Press.

370

complexity of the energy supply for the continent as a whole in the short and long-term. These fragmentary reports are no help at all to understanding that the focus on gas or other energy sources cannot exclusively be on a certain country, but rather the overall context, including the international energy scenario and its future demands, must be studied. The current situation requires serious rethinking, in the sense that it is not only a problem about substituting one energy source for another and the use of alternative energy sources should also be learnt about. In the following sections, we will analyse the issue of nuclear energy, alternative energy sources, the importance of oil and ethanol within Brazil’s foreign policy and energy efficiency as strategic alternatives for energy security. 5.2 Nuclear Energy A point made earlier in this text concerns the constant increase in energy supply and demand, as well as the notion of supply security, which has received special attention from international policy in recent years. Another way of stating the same point is to say that countries want to increase their energy supplies in order to have a better bargaining position in the international arena. Combining current energy demand with concerns over the impact of carbon and other emissions on the global climate, global warming and climate change leads to the emergence of one of the most appropriate scenarios to discuss the use of nuclear power. Moreover, the current debate should mention that state ownership of nuclear technology can be translated into energy independence, which is considered a top priority in terms of national development. The influence of all these factors questions the role nuclear energy will play in this context. There is certain optimism concerning the use of nuclear power for peaceful purposes, if it is taken into account that, at present, nuclear energy and hydropower are the only options for generating noncarbon gases and being commercially deployed on a large scale. All of these factors help create the perfect scenario for expanding both types of energy. Hydropower is still considered a natural and renewable energy source, despite the lack of studies about the emissions of greenhouse gas through the hydroelectric reservoir.38 38

The anaerobic degradation of organic material, mainly the material that rests on the

371

Furthermore, the economic and environmental limitations of hydropower in certain countries and regions are recognised. In this regard, nuclear energy tends to be developed on a wider scale, considering its viable environmental potential. The preceding discussion has focused on the advantages and disadvantages of the use of nuclear energy (Goldemberg, 2002: 231-2). Since the nuclear issue often leads to an irrational evaluation of its impact on human lives and the environment without considering the technology and safety methods available in recent years, the following discussion will attempt to analyse both sides of the argument.39 This section will examine whether nuclear power will need to be used as a sustainable energy source in the future, the problem of the radioactive waste associated with nuclear power electricity generation and the safety standards are only effective when applied in practice. Last but not least, since regulating nuclear and radiation safety is a national responsibility, it will study the fact that radiation risks may transcend national borders, demonstrating that this is not an issue that concerns a specific country’s policy. The complexity of the issues at stake is such that they are not problematic domain of one country’s decisions and that there must be international cooperation and standardisation to enhance global safety instead. Another fact is that open debates on the opportunities and risks of nuclear energy have not taken place in either Chile or Brazil. 40 On the one hand, decision-makers have not shown an interest in promoting open discussions. bottom of the river where there is little oxygen, results in the emission of greenhouse gases. This is a common phenomenon that occurs naturally in swamp areas worldwide. However, in the current circumstances, no universal concept exists to establish a relationship among the percentage of production and liberalisation of methane, the percentage of renewable water, the reservoir geometry and the vegetation of the flooded area in order to measure greenhouse emissions. Jerson Kelman, Carlos Tucci, Benedito Braga e Luiz Pinguelli Rosa. “As hidrelétricas e o efeito estufa”. Brasil Energia, no 334, September 2008, p. 193. 39 Nuclear power encourages important debate in domestic politics and diplomatic affairs. In the European Union, which has different opinions on the energy issue, its members use different energy matrix. Germany, for instance, is giving up nuclear power while France has an energy matrix committed to nuclear energy. “The storm over new European Union climate-change targets”. The Economist, 26 January 2014, vol. 410, p. 46. 40 Latin American states have different stances on nuclear energy. For instance, according to President Evo Morales, “Bolivia is ready to pursue nuclear energy”. Patricia Rey Mallén (2014), “Bolivia wants nuclear energy, but Brazil and other Latin America countries are abandoning it”, International Business Times, 3rd January 2014.

372

On the other, there is a lack of interest in the issue among the citizens from both countries. This situation could be described by saying that when large quantities of electricity are produced cheaply and safely, people tend to ignore the energy issue. Nonetheless, when things start going wrong at an operational level, such as when there is the threat of lights going out or energy only being available at high prices, people become interested. From Chile’s perspective, the lack of consistent debate over the use of nuclear energy is even worse than in Brazil, since the absence of a diversified energy matrix could lead to a severe shortage of energy in the coming years. The accident at a nuclear plant in Japan in May 2011 has diminished - if not totally paralysed - Chile’s attempts to create a rational domestic discussion on the advantages and disadvantages of a nuclear project for peaceful purposes. Neither the energy crisis nor the droughts that affect the main sources of the country’s energy production have been considered solid arguments to open up the energy debate after the nuclear accident in Japan. Indeed, social inequalities may play a role in the general ignorance about nuclear power. Concerning Latin America’s social complexities, Wesson suggests “inequality, the separation of the rich from the poor or top from bottom, of educated from ignorant or illiterate, or the refined and proud elite from the despised masses” (Wesson, 2001: 205). The difficulties that this inequality creates for an open and well-informed debate may lead to a lack of discussion. Since there have not been many discussions about energy matters, it also suggests that opinion can be easily influenced one way or another.41 Not only in Chile and Brazil but also in Latin America in general there is little public debate on nuclear energy. This may have to do with the fact that 41

According to the IAEA (the International Atomic Energy Agency is the world’s centre for cooperation in the nuclear field. It was set up as the worldwide ‘Atoms for Peace’ organisation in 1957 within the family of the United Nations. The agency works with its member states and multiple partners worldwide to promote safe, secure and peaceful nuclear technologies-http://www.iaea.org/About/index.html). “If we look at the United States, it is clear that the vastly improved public perception of nuclear power has its roots in the superb operating performance of its 104 plants in recent years. Producing large quantities of energy cheaply, safely and with due regard for the environment is far more effective than any fancy communication strategy. It is only when things start to go wrong at the operational level that the public becomes interested” (http://www.iaea.org/ Publications/Magazines/Bulletin/Bull501/50107293233.pdf).

373

nuclear plant projects are associated with military governments and, given that there is a feeling of distrust concerning the military, this also implies to this source of energy. However, a considerable number of the continent’s countries have been developing nuclear energy technology for peaceful purposes under democratic governments. To give one example, President Chavez’s administration in Venezuela has demonstrated great interest in the use of nuclear power, leading to a nuclear cooperation agreement between Venezuela and Brazil (Linkohr, 2006: 102). In fact, nuclear cooperation between both countries also occurred in 1983 during the government of Luis Herrera Campins. Since then, there has been a nuclear energy agreement between both countries that has been applied to developing this source of energy for peaceful purposes.42

5.2.1 The historical background of Brazil’s nuclear programme As mentioned at the beginning of this chapter, hydroelectricity corresponds to 80% of Brazil’s energy matrix. However, according to the Brazilian Association of Nuclear Energy, hydroelectric power will cease to be the main energy source in 2030, when it will start to lose capacity. The future discrepancy between demand and supply will play a significant role in ensuring a diversified energy supply in the following years. In this respect, nuclear power becomes a strategic source of energy because of its low operational costs and its almost complete absence of gas emissions into the atmosphere. From a historical viewpoint, the first research on nuclear energy in Brazil began in the decade of the 1930s and was determined by European scientists, whose arrival in the country occurred because of their political persecution in Europe.43 As a result of the political context after the Second World War, the first type of nuclear agreement between Brazil and the 42

An article from Julio García Montoya, Ambassador of Venezuela in Brazil. http://www.midiaindependente.org/pt/blue/2005/06/318402.shtml 43 Brazil, a party to the Non-Proliferation Treaty, is reportedly planning on developing a nuclear propulsion system and the country’s first nuclear submarine is expected to be operational by 2017. Debalina Ghoshal (2013), “South America goes nuclear: now Brazil”, Gatestone Institute, International Policy Council, 20th August. http://www. gatestoneinstitute.org/3941/nuclear-brazil

374

United States was signed in 1945. 44 This agreement concerned the possibility of exporting of Brazilian nuclear materials to the United States as well as to other countries with United States’ consent as a prerequisite. Despite the difficulties that emerged in the field of nuclear cooperation between both countries during the government of the Brazilian Café Filho (1954-1955) regulations were set in place for the nuclear programme, executed by the CNPq (the National Council of Scientific and Technological Development), on mineral prospection, the construction and functioning of nuclear plants and the formal participation of other countries. Since 1955, the Ministry of Foreign Affairs has been the body that deals with nuclear issues and controls the export of nuclear materials. Moreover, during the government of Juscelino Kubitschek (1955-1960), there was an institutional development with the creation of the National Nuclear Energy Commission (Comissão Nacional de Energia Nuclear – or CNEN) and the Institute of Atomic Energy (Instituto de Energia Atômica – or IEA), to focus on the training of experts and research. Thereafter, during the presidency of João Goulart (1961-1964), the state monopoly of radioactive ore was recognised and the government decided to construct a nuclear plant using natural uranium, a project that was later abandoned. During that period, the first Brazilian nuclear reactor for research was built by the Institute of Nuclear Engineering (Instituto de Engenharia Nuclear – or IEN), mainly using its own resources (Almeida and Marzo, 2006: 192-193). The development of the nuclear programme to generate electrical energy was launched by the military government in the 1970s, as a result of the increase in demand, which rose to 14% in that period (Ibid, 193). The implementation of a large-scale nuclear programme was underpinned by the idea of foreign cooperation. Furthermore, the availability of uranium reserves, combined with the German and American technology available, substantially contributed to the construction of two nuclear plants - Angra I and II - in the city of Angra dos Reis in the state of Rio de Janeiro. At that time, another project for a nuclear plant was also developed - Angra III 44

There is a continuing military influence in Brazil’s nuclear programme. Brazil is the only non-nuclear weapon state in which the military leases uranium enrichment technology to the civilian nuclear programme and the navy drives technological advances in the nuclear sector. Brazil is also the only non-nuclear weapon state developing a nuclear-powered submarine. “Nuclear power in Brazil”, World Nuclear Association, October 2014. http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/Brazil/

375

although it was not eventually built 45 (Landau, 2008: 249). In 1979 the government created an autonomous programme for the development of nuclear technology, seeking to acquire the specialised knowledge needed to prevent Brazil from being vulnerable in areas as sensitive as nuclear materials. Brazil has made important progress since 1987 in the nuclear arena, as demonstrated by the development of the necessary technology for enriched uranium, induced by an ultra-centrifugal force. At that time, both the Brazilian and the Argentine nuclear programmes were regarded with suspicion by the international community, since both countries’ interest in developing this type of energy could have been for military purposes. Therefore, the Brazilian National Constituent Assembly approved Article 21 of the Federal Constitution of 1988, indicating that nuclear power be used exclusively for peaceful purposes.46 The second initiative adopted by the Brazilian government was an attempt to cooperate with Argentina in nuclear matters, through the creation of a Permanent Committee on Nuclear Policy.47 The implementation of technical-scientific cooperation between both countries in the sector contributed to enhancing the transparency of Brazilian-Argentine nuclear programmes, despite the fact that an agreement 45

Despite the Brazilian-German nuclear agreement’s emphasis on the increasing demand for energy, this demand did not increase like it was supposed to. Therefore, changes in the international context played a major role in the lack of financing for investments and Brazilian foreign debt. The combination of all these factors meant that the construction of nuclear plants may not occur, given the socio-economic circumstances. Regardless of the economic problems, this agreement did not guarantee Brazilian autonomy in the nuclear fuel cycle. Regarding the technological, commercial and strategic importance of this sector, there was a huge effort on the part of industrialized countries to maintain their markets (Silvio Gonçalves de Almeida and Marco Antonio Saraiva Marzo, 2006: 194). 46 It should be noted that after New Zealand, Brazil was the second country in the world to explicitly recognise this issue in its Constitution. Moreover, all of Brazil’s nuclear activities must be submitted for the approval of the National Congress (Gonçalves de Almeida, Silvio and Saraiva Marzo, Marco Antonio, 2006: 195). 47 Despite the focus on Brazilian-Argentine cooperation in this research, it is important to note that there is a strong parallel between this attempt and the European Coal and Steel Community (ECSC) created in 1951. The ECSC was a major step towards developing an organisation based on the principles of supranationalism aiming at security and the creation of a common political system. The European Economic Community (ECC) and the European Atomic Energy Community (EAEC or EURATOM) emerged afterwards as a result of the ECSC. In order to compare Brazilian-Argentine and European initiatives of cooperation, see Barbosa, Rubens Antônio. América Latina em perspectiva: a integração regional da retórica à realidade. Edições Aduaneiras: São Paulo, 1991.

376

for the peaceful use of nuclear energy only occurred in 1991 as a result of a system of mutual inspections. Thereafter, both countries signed an agreement with the Brazilian-Argentine Agency for Accounting for and Controlling Nuclear Materials (ABACC) and the International Atomic Energy Agency (IAEA) seeking safeguards. The ABACC is an important example of the consolidated cooperation between two Latin American countries – Brazil and Argentina - in a strategic field such as the nuclear sector, as mentioned at the beginning of this chapter. Moreover, it demonstrates the high level of mutual trust that countries must have in order to develop a common policy for accounting for and controlling nuclear materials. 48 The ABACC demonstrates that, in the future, there is no speculation that there will be pragmatic energy cooperation among Latin American countries. In the long run, Chile will have to attempt to solve its energy shortage by adopting nuclear energy, contributing to the development of a diversified energy matrix. In the coming years, there may be a possibility of cooperation between Chile and Brazil, since on one hand, Brazilian knowhow of the nuclear programme exists and, on the other, Chile has an energy supply deficit associated with its interest in developing nuclear power. In the integrative energy context of both countries, there has been one Brazilian-Chilean attempt in the nuclear sector, summarised by the Memorandum of Understanding about Cooperation in the Scientific, Technological, Development and Practical Application of Nuclear Energy for Peaceful Purposes Between Brazil and Chile, signed on July 19th 1974. The memorandum’s aims are self-explanatory. However, after the signing of the memorandum between both countries no further progress was made towards cooperation in the nuclear sector.

5.2.2 Brazil-Chile nuclear power dialogue On 13th March 2007, Chilean President Michelle Bachelet officially announced the constitution of the Nucleoelectric Working Group through Decree No 49 of the Ministry of Mining. The mission of this group of ten professionals from different fields of specialisation was to advise the 48

Details of the ABACC in http://www.abacc.org/home.htm

377

government on studies focusing on identifying the opportunities, benefits and risks involved in the use of nuclear energy, with the aim of producing electricity in the country in accordance with the framework of international treaties that deal with the issue (Zanelli, 2009). Despite institutional support from the Ministry of Mining and the National Energy Commission, the Chilean group worked autonomously and independently from the government and other political influences. The study also involved interaction between different state bodies, since it promoted dialogue with different sectors such as the environment, international relations and defence, nuclear energy and health and radioprotection in order to achieve a better basis for the study. Thus, meetings were held with national and foreign specialists in nuclear energy, electric energy planning and regulation, as well as with operators of nucleoelectric generation plants. The study also considered the vision of civil society, the business sector and the academic field and of representatives from environmental movements. This complex study was not carried out all at once and several observations on it were made by the International Atomic Energy Agency. In the meantime, the Nucleoelectric Working Group was dissolved and the National Energy Commission, under the direction of minister Marcelo Tokman was given the task of carrying out studies for the report. These studies functioned to assess the feasibility, costs and challenges that Chilean society would face if it opted to embark on a nuclearpower programme. The study sought to form a basis so that the next administration could make a knowledgeable commitment to carrying out a nuclear programme in Chile (Zanelli, 2008: 5-6). Energy is a commodity that has a direct bearing on development and foreign policy strategy. As previously discussed, a lack of energy affects national foreign policy aims, given that energy matters need urgent solutions. Therefore, other issues are relegated to second place to the detriment of the energy shortage. The energy topic establishes a direct link between countries, to the extent that it maintains a constant dialogue between the technical field, the business sector and official and non-official state actors. The vulnerability a country faces because of energy shortages, increases the importance of the energy topic in the analysis of international relations. The energy issue brings three core elements to the Brazil-Chile bilateral analysis: the ideas of interdependency, cooperation and 378

harmonisation. In practical terms, confidential dialogue between the military fields in both states occurred, even though civil society did not know how good the source of the information obtained was. Indeed, dialogue at an academic level with Brazil’s Nuclear Engineering Institute (IEN) has taken place, especially because of Chile’s increasing interest in the study of nuclear technology. Brazil’s has the most developed position in the region regarding the use of nuclear power and also has one of the largest thorium deposits in the world, although it has not yet established a thorium-based fuel cycle. At the same time, Chile is highlighted as the country with the best resources to implement a nuclear programme in the coming years (Berry, 2009: 1). As seen in the previous paragraph, Chile and Brazil are at totally different stages of their nuclear power policies. While Brazil developed its autonomous nuclear technology programme at the end of the 1970s, seeking to apply technology in accordance with its energy needs, Chile preferred to purchase its nuclear reactor from abroad rather than take the time to develop its own nuclear programme. 49 In fact, Chile’s neoliberal policy does not sit easily with the developmente of an autonomous nuclear plan, since it relies to a great degree on state involvement. In this sense, Chile has had modest development in this area, summarised in only two experimental nuclear reactors.50 Moreover, the current international financial crisis may also contribute to restricting the expansion of such programmes for some time. Brazil is nowadays part of the India-Brazil-South Africa Dialogue Forum (IBSA), a recent alliance (from 2003) of countries who have or have had nuclear ambitions of their own in the past and present. One of IBSA’s main targets is to galvanise south-south cooperation and greater understanding between three key continents in the developing world. The forum provides the three countries with a platform to engage in discussions for cooperation in various fields, including defence. Nevertheless, the forum has not openly made any pronouncements on the nuclear issue. In addition, as previously mentioned, Brazil’s nuclear activities come under the full scope of AIEA safeguards, in conjunction with the ABACC (Berry, 2009: 9-10). 49

An interview with a nuclear chemist from the ABACC, Silvio Gonçalves de Almeida, took place on 17th December 2008 at ABACC headquarters. 50 Biblioteca del Congreso Nacional de Chile – BCN. http://www.bcn.cl/carpeta_temas_p rofundidad/energia-nuclear.

379

It should be remembered that an absence of the use of nuclear energy does not mean that Chile is not an important country in nuclear power discussions. On the contrary, Chile occupies the position of an active nuclear player in the international debate. Among the group of countries interested in acquiring the capacity to develop nuclear energy, Chile has the greatest potential and technical and financial knowledge to develop this energy source. As noted in the second chapter, the country has the financial mechanisms to deal with power shortages, since it is the world’s largest producer of copper. Recent studies demonstrate that planners have had some initial concerns over Chile’s lack of human resources to run a nuclear power programme. However, nuclear power companies from Canada, France and the United States are already lining up to offer assistance. Relying on international financing, Chile could have a nuclear programme in the next decade or so. Chile’s nuclear programme does not aim to be large, since it would not exceed 1 GM in output taking into account the small size of the territory. However, the fact that it is located along a significant tectonic fault line in a very active country seismically has caused discomfort within civil society and among some politicians. However, both countries have taken the opportunity to cooperate in radiation protection and the application of safety procedures. In this way, bilateral cooperation measures involve procedures for the use of technology with regards to worker protection, the use of nuclear energy in medicine and industry and its effects on the population.51 The possibility of affecting the public and workers’ health has fostered increasing interaction between the technical fields of both states. In brief, Brazilian-Chilean bilateral cooperation on nuclear energy at the current time has been restricted to applying radioprotection measures, although it should be recognised that there is some form of interaction between the two countries in the nuclear field. Chile’s need to diversify its energy matrix encourages a closer energy approach between the two countries. Moreover, global warming is a relevant element, encouraging the use of nucleotechnology, given its less significant impact on the environment compared to other energy sources. The international 51

Interview with nuclear chemistry of ABACC Silvio Gonçalves de Almeida, took place in 17 December 2008 in the seat of ABACC.

380

community together with the market has increased its pressure to reduce the emission of greenhouse gases (GHG) and therefore the energy approach is an important component of the Brazil-Chile foreign policy agendas. 5.3 Renewable Energy Sources Although conventional energy sources such as oil, natural gas and coal still occupy the largest part of most countries’ energy matrixes, a transition to renewable energy-based systems is gaining support from several countries worldwide. Furthermore, traditional fossil fuel-based energy forces are facing increasing pressure on environmental fronts, illustrated by the episode when the use of coal in the future was challenged by the Kyoto Protocol’s greenhouse gas (GHG) reduction targets. The potential to develop the use of renewable energy sources is enormous, with biomass, wind and solar energy increasing their participation in the energy matrix. From a sustainable development perspective, it is important to ensure that the decline of the petroleum supply and the security of the energy supply are combined with the impact of climate changes and global warming, generating a new scenario for energy demands. In this way, dependence on non-renewable fossil fuels faces a new reality, which entails environmental concerns and the option of renewable energy sources as a trend (Bush, 2007: 6-7). In these circumstances, Brazil emerges as the only country in the world that can play a major role in the production of biofuels without jeopardising the security of its food supply. Since the beginning of the current boom of corn ethanol production in the United States, Brazil’s success with ethanol from sugarcane has been cited as an example of how the United States could avoid importing oil (mainly from Middle East), substituting ethanol for gasoline. 52 The issue with corn ethanol is that the progressive use of corn as a biomass contributes to a rise in feed prices. There is one vital difference between Brazilian and the United States’ ethanol, Brazil does not require fossil energy to produce

52

Ethanol can be made synthetically from petroleum or by the microbial conversion of biomass materials through fermentation. In 1995, about 93% of the ethanol in the world was produced using the fermentation method and about 7% using the synthetic method – Badge, P.C., “Ethanol from cellulose: a general review”, http://newcrop.hort.purdue. edu/newcrop/ncnu02/pdf/badger.pdf, p. 17.

381

ethanol but the North Americans do.53 For this reason, producing ethanol from sugarcane and molasses without the additional costs of raw materials for industry makes Brazilian ethanol more economically competitive (Andreoli, 2008: 7). In the current situation, according to Petrobras, ethanol from sugarcane and molasses can be generated sustainably given that sugarcane farming occupies 1% of Brazilian territory. Moreover, Paulo Roberto Costa, the company’s supply director argues that the 25% of ethanol added to gasoline for the use of flexi-fuel vehicles has caused significant changes to the Brazilian fuel market. To give one example, in the state of São Paulo, more ethanol is sold nowadays than gasoline. Ethanol production grew strongly by 404% from 2007 to 2008 and for the first time in January 2009, Brazil exported ethanol to Costa Rica.54 Nevertheless, it must be emphasised that the large-scale production of biofuels requires other raw materials for production, apart from the corn and sugarcane available. In this context, cellulose is designed to fill the gap between market needs and the commodities on offer. In summary, cellulose conversion of biomass into ethanol could reduce the cost of converting sugarcane into ethanol in the future. Nevertheless, the enormous quantity of biomass that the conversion process demands currently is not available. In this sense, there is an optimistic analysis of the production process in the foreseeable future, with biomass for the production of biofuel in the coming years becoming available (Perlack, 2005: 5). In the meantime, however, it is recognised that the improvement of genetic studies and agriculture practices is an indispensable step towards creating sustainable agricultural system. In other words, the agricultural system is able to produce food, rations and fuel at the same time, without the inefficiency associated with the current production of raw materials and its market logistics system (Andreoli and Souza: 2008: 5). On one hand, Chile’s stance on renewable energy sources, specifically ethanol production is not particularly defined for many reasons. First of all, diversifying its energy sources needs a well-planned, high-quality 53

O Globo Newspaper, 9th December 2008, Suplemento Projetos de Marketing, p. 32. In order to understand the variety of raw materials needed to create biofuel, see Macedo, Isaias de Carvalho and Nogueira, Luiz Augusto Horta (2004). “Biocombustíveis”. Parcerias Estratégicas, no 19, December. Brasília: CGEE. 54

382

government investment; secondly legal procedures must be instated to allow for the use of renewable energy sources; thirdly, there is not specific raw material that can be used in large scale ethanol production and fourthly, promoting a renewable biomass energy source raises concerns over the risk of mono-cultivation. To sum up, Chile’s current liberalised energy market with no government intervention raises many concerns about the development of a well-balanced energy mix. Government investment in a serious energy plan is a prerequisite for any progress in this sensitive area (Wittelsbürger, 2007: 910). Moreover, the mechanisms that must be created to promote renewable energy are still complex at the moment and the costs are high. In this sense, it seems that the generation of biomass requires knowledge and skills that are not yet available in Chile. On the other hand, if no action is taken on energy by policy-makers to redress the energy policy in the coming years, a shortfall between supply and demand will once again occur. In the current Chilean circumstances, the implementation of renewable energy sources is a tangible alternative, inasmuch as the government seeks a well-balanced energy matrix. There are initiatives to increase Chile’s capacity for producing renewable power, mostly through hydroelectric dams. Hydroelectric power currently covers more than one fifth of its primary energy needs and is expected to give the country an ample power supply by 2012.55 However, as highlighted in this chapter, environmentalists and people living in the regions where hydroelectric dams are being built are opposed to their construction. There are other alternative sources such as wind, solar, wave, tidal and geothermal power, which should be examined in the future, although it is seen that they are not government priorities. Generating power from wave and tidal forces is still in its infancy. Photovoltaic plants in the north of Chile are being discussed as a possible source of energy, even though the technology available to generate this type of energy source is still very costly and is inadequate in terms of energy efficiency. However, the country’s capacity for producing solar energy is more developed in areas of lower consumption and in the process of heating industrial water. Indeed, the mining sector in the north has made use of solar 55

Bloomsbury Minerals Economics Ltd, www.bloomsburyminerals.com. Consulted on 11 March 2009.

383

and wind power to supply. In this context, there are favourable conditions for the use of solar energy. One of the advantages of the use of wind energy is that it its generation process is totally clean and neither the supply of wind nor solar energy is threatened by periods of drought.56 Finally, geothermal energy is something of a remote possibility, since no serious national policy has yet been developed (Wittelsbürger, 2007: 3-10). As far as Chile is concerned, the only way the country will be able to cover its demand is through the creation of a well-balanced energy matrix. Among other things, the development of new technologies and the costly demand for fossil fuel indicate that it is only a matter of time before a move is made towards the use of renewable sources. In any case, it is clear that a profound transformation of world energy and the replacement of fossil fuels by alternative sources of energy are taking place. There are undeniable implications for the current Chilean circumstances, with the generation of a short and mid-term energy deficit. Due to the Chilean energy deficit, its supply cannot be based on renewable sources in the short-term, given that the process of conversion can take years to be developed. Although the energy sector may be an obstacle to Brazil’s fast rates of growth, it is also a window of opportunity for the ethanol sector - as well as for the country itself - to assume a leading position in the international energy market. According to the current scenario, ethanol producers are making investments to connect mills to the grid, although they claim the price paid by the government in energy auctions is not enough to convert these investments into profits. Another important challenge for the ethanol sector is reducing transportation costs by investing in pipelines. From a market perspective, there are three projects being planned for ethanol pipelines in Brazil. The main issue is not building the pipelines themselves but making them economic viable, with the variables of international markets for ethanol playing a key role in the process. Pipelines have been planned to transport ethanol from the producing regions to ports for exports (Nassar, 2009: 78). Several conclusions emerge regarding this topic. Firstly, the issue is not 56

More information about diversified energy sources in Fres, Cristian. “Energías alternatives: el hidrógeno, las mareas y las olas”. Revista Futuros, no 15, 2006, vol. IV. http://www.revistafuturos.info/and at Star Media - http://html.rincondelvago.com/ energiasalternativas_4.html

384

only about markets, but also about the infrastructure necessary to transform the export of ethanol into a profitable business. Brazil could become the world leader in ethanol production, which means it is also about exporting the know-how with which to manufacture the product in other countries. One of the major bottlenecks that Brazil faces is transforming ethanol into a prosperous international commodity in the foreseeable future. In terms of renewable energy resources, it is difficult to make a parallel analysis between Brazil and Chile and what has been seen in this chapter is that Chile has not developed a clear energy policy to reduce its dependence on external sources of energy. Whether or not Chile will be interested in importing either Brazilian ethanol or the know-how to produce it is hard to predict. The Brazilian ethanol market would have to be well-consolidated for Chile to show some kind of interest. At the same time, due to the central importance energy has acquired in foreign affairs, this subject cannot be excluded from our analysis. Brazil continues to play the role of mediator and cautious ally in the regional energy context, while Chile attempts to solve its energy shortage in its own way without much regional involvement. Moreover, energy is a new force in understanding Brazil-Chile bilateral relations, since a shortage of energy exerts an influence over the foreign policy aims of both states.57 Therefore, energy is equally important in our study, to the extent that it affects foreign affairs and how countries establish their relationships in accordance with domestic needs. Energy requires multi-sector partnership and to foster transnational cooperation, which helps intensify political dialogue. Energy cooperation is in accordance with the core element of our study, which means building up links with diverse sectors should also be taken into account in Brazil-Chile bilateral ties. That said, Brazil-Chile relations go beyond traditional diplomacy and their bilateral links can be approached in a much broader way, rather than being restricted to diplomatic circles.

57

Energy promotes bilateral dialogue between state-centric actors and the business sector. For instance, the energy topic has strengthened Brazil-US dialogue, with government-togovernment and business-to-business dialogue evolving. “US-Brazil bilateral dialogues”, Brazil-US Business Council. http://www.brazilcouncil.org/ BilateralDialogues

385

5.3.1 Brazil as an emerging energy leader vis-à-vis Chile The impact of pre-salt reservoirs should not be forgotten, given that Brazil is beginning to develop its largest ever hydrocarbons discovery. While oil prices remain as high as they are and the proposed new legal framework unlicensing pre-salt reservoirs is adjusted and implemented in some areas, Brazil has a chance to embark on a long-term path towards an innovationdriven economy. The increasing importance of the energy context means that the country will become an oil and gas supplier as well as an exporter of energy services. Obviously, Brazil must undergo significant structural changes, involving institutional maturity and economic development, in order to deal with pre-salt’s impact on domestic and foreign policy. Faced with this potential wealth, Brazil’s government has already implemented policies to decrease social inequality and promote sustainable economic growth. Brazil faces significant changes, given that it is the position of moving from being a net-importer of oil to a net-exporter in the near future. This shifting scenario will make core changes to Brazil’s international insertion, given that this is only going to be possible because of the development of new technology. These new technical mechanisms made it viable to extract oil from deep water, as far as 200 miles from the coast and thousands of feet down (Graefe, 2009: 10). This oil can only be produced using cutting-edge techniques and is classified as unconventional oil.58 The pre-salt reservoirs contribute a significant dimension to Brazil’s international ambitions, while changing external perceptions of Brazil’s new position in the world order. There is no doubt that pre-salt discoveries have already changed Brazil’s emerging role on the international scene. Brazil’s position as a net hydrocarbon products exporter and sugar-cane ethanol producer has been caused an enormous impact on how the country’s nation brand is projected. As in Chapter 1, Brazil’s brand help sell any youth-oriented product on the market from food to music, meaning that old clichés and stereotypes, as analysed in the survey, turn into something different and original to project 58

Experts use the phrase ‘unconventional source of oil’ as a term for a variety of methods that produce liquid fuels. It has a higher production cost compared to conventional oilfields, demands a much more complex extraction and may require additional processing in order to be refined (Graefe, 2009: 7).

386

the country’s main features. In other words, the old-fashioned stereotypical vision of Brazil has been manipulated in order to transform the negative components into something that coincides with the country’s new emerging power. An association with energy sources has rich elements to help export a sustainable economic-political image, paving the way for the new international image Brazil aims to project. The new Brazil brand exerts an influence on Brazil-Chile links, given the fact it is impossible to ignore the country as an emerging energy superpower. Increasing economic indicators, decreasing social inequalities and the development of a diversified energy matrix are some of the arguments that maintain the strong Brazil-Chile bilateral approach. Instead of the economic difficulties os past decades, the current optimism encourages new approach mechanisms between the two states. Although the possibility of strengthening political bilateral dialogue is not something that has tended to be consolidated over the years, the two countries demand new instruments of cooperation and harmonisation in the business sector, transport infrastructure, tax agreements and cultural exchanges among others. The perception of public diplomacy, presidential diplomacy, nation branding and paradiplomacy help turn the traditional perspective into a dynamic approach.

387

Conclusion Since they became independent in the early nineteenth century, the relationship between Brazil and Chile has been significant for both countries’ foreign policy. From 1808, Brazil’s centralised monarchical system brought relevant gains in the establishment of a very strong institutional presence. The conservation of the monarchy in Brazil was a key element to understanding the stable scenario in which the country established its bilateral links with Chile. The fact that Brazil took a different path to other Latin American republics made the other nations skeptical about the region’s only monarchy. This was a determining factor in the difficulties faced when shaping relations with other Latin American countries. The difficulty in cementing relations with other Latin American nations did not, however, occur with Chile, with whom Brazil achieved important bilateral ties in the post-independence period. From Chile’s perspective, boundary disputes in the nineteenth century, such as the War of the Pacific (1879-1884), led to a difficult relationship with Bolivia and Peru, since both countries were defeated by and lost territory to Chile. The aforementioned circumstances brought Brazil and Chile’s traditional diplomatic links closer even though Brazil did not express its official support of Chile during the War of the Pacific. Chile was the first Latin America country to establish traditional diplomatic links with Brazil. This symbolic representation of traditional diplomacy highlights the importance of the relationship between Chile and Brazil. According to Melissen (2005), traditional diplomacy goes hand in hand with mid-term objectives and long-term aims, demonstrating the strategic character of the Brazil-Chile partnership. Therefore, Chile became a key nation for building a bridge between monarchical Brazil and other Latin American republics. Ever since, the absence of a conflict of interests, of territorial disputes and of mutual affinities between Brazil and Chile has demonstrated that bilateral relations should be observed from a public diplomatic approach. Brazil and Chile developed multi-level cooperation to complement traditional diplomacy and the two countries consolidated their informal geopolitical relations after the post-independence period. As Cann (2012) emphasises, non-institutional 388

actors also play a key role, given the growing participation of the media, political parties, organised interest groups and the Legislative and Executive bodies in international affairs. In this way, the multi-level nature of BrazilChile relations and the importance of public-private partnerships in bilateral affairs illustrate the importance of public diplomacy. Since the post-independence period, Brazil and Chile have enjoyed significant traditional diplomatic links. An informal bilateral alliance was important for building proactive public diplomatic relations. Maintaining this informal bilateral alliance demonstrated the ongoing long-term orientation of Brazil-Chile relations by contrast to other Latin American nations. Their mutual trust and perceived friendship was a core component of the regional geopolitical context. The ABC Pact of 1915 between Argentina, Chile and Brazil illustrates the commitment to creating stronger levels of cooperation between the three states. Coordination between Brazil and Chile in the pre-ABC Pact years endorsed talks and helped strengthen common positions. The ABC Pact had important results for traditional diplomacy, counterbalancing Argentina’s geopolitical influence and the power of the United States in the region. However, the treaty was only ratified in Brazil and the programme lacked a clear focus; in fact, the declaration of mutual friendship was more related to public diplomacy, given the importance of the informal bilateral ties created by the pact. The period before the ABC Pact provides an opportunity to analyse Brazil-Chile cooperation from a public diplomacy perception, since the initiative also demonstrated their informal bilateral links, given the fact that the pact was never ratified by Chile and Argentina. In fact, public diplomacy shaped the boundaries of the Brazil-Chile relationship, even though the post-independence period considered bilateral links from a traditional diplomacy perspective. From 1870 to the end of the nineteenth century, the perception of a partnership between Rio de Janeiro and Santiago, encouraged by rivalry from their common neighbour Argentina, was in Chilean-Brazilian interests. Therefore, the idea of public diplomacy explains bilateral relations in a broader perspective. Since this period, the Brazil-Chile long-term perception of easy communication directly influenced political relations and the participation of non-official actors in the long-standing partnership. While diplomacy is exclusively responsible for managing state-state 389

relations, contemporary diplomacy is shaped by the participation of nonstate actors. Therefore, traditional diplomacy has, to a certain point, seen its role in the world order lose importance, given the interdependence between the government and the private sector and between civil society and institutions. By contrast to what Von Bülow (2010) states, traditional diplomacy’s role in foreign affairs has not diminished and state representatives still play an important role, with contemporary international relations demanding, in fact, a multifaceted approach. Therefore, traditional diplomacy’s secrecy and exclusivity goes against the current demand that negotiations and international agreements need to be public. At the same time, diplomacy cannot be totally open and proper measures should be taken regarding discretion and publicity. In general, there is consensus, since Szondi (2008) argues that diplomacy has achieved a much more public aspect. Foreign policy strategy has had a significant impact on the private sector and, therefore, public diplomacy also explores the interaction between the public and private sectors in international affairs. Public diplomacy has a lot to do with Schneider (2005) perception of the exchange of ideas, information and aspects of culture. However, new forms of media communication, such as the internet and intervention in public opinion make it difficult to maintain a coherent foreign policy. In extremely large countries like Brazil, domestic political crises, like those during President Dilma Rousseff’s second term have led to difficulties in maintaining collaborative diplomatic relations with multiple actors. Openness and transnational cooperation are key elements to understanding current international relations as Copper (2003) indicates, whereas the participation of diverse actors in foreign policy can cause political turmoil, given the increasing number of multiple voices in international relations. Whilst the increase of non-traditional issues on the international agenda favoured closer interaction between official and non-official actors as Riordan (2005) points out, transnational problems demand the adoption of collective and coherent approaches. From this perspective, domestic political instability has generated a difficult scenario for carrying out public diplomacy, since civil society tends to participate in internal politics. As Serra (2009) indicates, in the context of a central domestic crisis, paradiplomatic relations and decentralisation play an important role in international relations. Despite the political instability of central 390

governments, local governments maintain high levels of cooperation with decentralised actors. Brazil-Chile decentralised relations illustrate the capacity of local governments to participate in international affairs despite domestic political turmoil. The Brazilian 475/2005 Constitutional Amendment Project provides legal support for establishing decentralised international links, while in Chile, the participaiton of the so-called ‘Intendencias’ and municipalities in international affairs has increased in recent years. As Saraiva (2006) states, federal entities have shown more spirit in recent years, which has facilitated interaction between local governments. The respective significance of subnational entities in Brazil-Chile bilateral relations allows for dynamic interaction, like that between the Brazilian state of Ceará and Santiago de Chile. Subnational ties have emerged to become an integrated part of Brazil-Chile relations. Apart from diplomats, subnational authorities have also adopted an active role in bilateral relations. In this context, public diplomacy and the communications approach are not the only adequate approaches for analysing Brazil-Chile relations, given the important interaction between local authorities. Today, diplomacy operates in a network environment, whereby not only state-centric but also non-official actors play a relevant role in foreign affairs as White (2011) and Figueira (2009) highlight. This does not mean that diplomats and official actors have no direct role in conducting foreign policy and they continue to engage in the formulation of foreign policy strategy. However, non-traditional actors from civil society, such as NGOs, the private sector and individuals, have come to participate more in foreign affairs, to the extent that diplomacy involves a two-way message. This means that people have also a ‘voice’ in international relations and exert influence on how the country’s foreign policy is carried out. People should have confidence in their country’s foreign policy objectives so as to support their implementation. Public diplomacy also encompasses what people have to say in terms of foreign policy creation and implementation. The international agenda requires collaboration between governments and decentralised actors in order to deal with emerging issues, such as the Brazilian Access to Information Law, which shows that diplomacy is open to participation from society. Indeed, bilateral technical cooperation has become an important decentralised cooperation initiative, as seen in the 391

Basic Agreement on Scientific, Technical and Technological Cooperation in 1998 and the Cooperation Agreement in the Field for the Peaceful Use of Nuclear Energy in 2002. Public diplomacy deeply embraces the idea of the need to strengthen the communication between different actors for a dynamic approach of foreign affairs. The increasing participation of decentralised actors in the international community shows that interstate relations cannot be restricted to a state-centric perspective as long as non-official actors exert an increasing influence in foreign policy. However, the study of international relations has still not sufficiently stressed the fact that public diplomacy has increased in Brazil-Chile relations. In addition, paradiplomacy and nation branding also play an important role in Brazil-Chile relations, since foreign investments, tourism, trade and bilateral agreements are core elements in both countries’ relationship. In fact, public diplomacy was only taken into consideration in the Brazilian Ministry of Foreign Affairs (Itamaraty) after it became evident that there was an increasing interest in sectors of civil society in the way foreign policy was conducted. In the last few years, the Itamaraty’s efforts to make its activities more transparent and improve its channels for interaction with civil society have been seen. The Ministry initiative to promote events, such as the ‘Dialogue on foreign policy’, on 26th February 2014, encouraging debate and the like demonstrates a commitment to foster a more open debate of the country’s foreign policy implementation. The growing participation of non-official actors has contributed to the adoption of a dynamic approach of international relations. Nonetheless, official groups still play a significant role, given the increase in open debates initiatives carried out by government actors. Chile focus on an intense trade flux, foreign direct investment activity, free trade agreements and a network of alliances led to its well-kown pragmatic approach to foreign affairs. Chilean foreign policy favours so-called business diplomacy, insofar as public-private interaction is an important tool in carrying out the country’s foreign policy. The involvement of the local business community is relevant to the country’s foreign affairs, hence the lack of significant Brazil-Chile political ties does not mean an absence of important bilateral relations. As Hurrell (2006) states, international organisations, NGOs and multinational companies are also important actors 392

in international affairs when look at the Brazil-Chile relationship. The increasing importance of trade, infrastructure and investments in international relations means that the relationship between states should not exclusively take into account the state-centric approach, since public-private partnership has became a relevant component. As Cabral and Weinstock (2004) argue, bilateral technical cooperation has become a significant mechanism for strengthening ties. Public diplomacy is becoming an important part of Chile’s foreign policy, despite the fact that the concept of public diplomacy has not yet been adopted by the Chilean diplomatic academy. Chile’s dynamic foreign policy approach allows for links to be established with the private sector to develop policy strategy without the official participation of public diplomacy in foreign policy, as occurred in Brazil. The collaboration of decentralised actors means that Brazil-Chile relationship goes beyond traditional diplomatic links, given that the coordination of projects in the area of trade, investment and infrastructure are core elements to understanding bilateral relations. However, not everything is dominated by economic or commercial interests. Both countries have the same democratic and human rights values, a policy of non-interference in the international affairs of other states and favour international security and the peaceful resolution of controversies. Whilst Brazil-Chile relations remain strongly influenced by the traditional diplomacy approach, bilateral links cannot only be observed from a classic diplomacy standpoint, since public diplomacy, paradiplomacy and presidential diplomacy should be the prevailing concepts when trying to understand current bilateral relations. The over-competitive international scenario has led to the growing importance of the projection of the country’s image as a brand on the world stage. Although the projection of a nation’s image is not something new, the field of nation branding has grown insofar as countries have launched sophisticated brand campaigns to attract foreign investments, trade and tourism, to improve their private sector’s competitiveness and to secure geopolitical influence, as stated by Anholt (2005). As long as nation branding is a relevant marketing concept in the study of foreign affairs, Brazil-Chile relations cannot be studied without incorporating this phenomenon into the analysis. Chile’s well-organised economic 393

management, respects for institutions and rule of law is widely recognised by the international market and its foreign policy that focuses on projecting a nation brand with public-private partnerships should be taken into account when studying Brazil-Chile ties. Brazil and Chile have not historically developed strong political ties; however, multifaceted cooperation between both countries goes hand in hand with the contemporary concepts of public diplomacy and nation branding. The famous statement of Baron of Rio Branco that “the relationship between Brazil and Chile are limitless” has been proved by the stable bilateral relations between the countries throughout the course of history. Although nation branding is an important mechanism for understanding Chile’s foreign policy strategy, the concept has also became important to the study of Brazil’s brand projection, given the country’s association with renewable energy and ethanol production. When Brazil’s Operation Car Wash in 2015 uncovered widespread corruption, the country had to build a new nation branding. The domestic political turmoil when Michel Temer was interim president, after the impeachment of President Dilma Rousseff demanded a new strategic nation branding. However, Operation Car Wash legitimimised the Brazilian legal system, since the operation revealed bribery and illegal campaign financing in all Brazilian political parties. In the Brazilian nation branding context, energy is an important component when analysing Brazil-Chile ties, given its increasing importance in both contries’ foreign affairs. On the one hand, Chile’s difficult energy scenario, demonstrated by the diplomatic energy crisis with Argentina in 2004, provides a platform for discussion between Brazil and Chile, since energy security is overwhelmingly important in South American international relations. On the other, Brazil’s unique energy matrix, in which renewable sources - particularly sugar cane and hydropower, in addition to traditional fossil fuels (with pre-salt discoveries announced in 2007) and nuclear energy - reveal that the country’s recent economic development has been closely related to energy development. Presidential diplomacy has also achieved significant results regarding Brazil-Chile bilateral relations and how presidents play an active role in foreign policy. This was particularly illustrated by the Brazilian Presidents Cardoso, Lula and Rousseff and the Chilean Presidents Lagos and Bachelet. President Cardoso’s international prestige and friendship with president 394

Lagos were always highlighted in Brazil-Chile official summits, as on the occasion of the agreements signed in 2002 between both countries to reduce import dues and implement quotas to facilitate trade. Cardoso and Lagos’ close relationship laid the groundwork for promoting better bilateral dialogue between both countries. Despite the differences between presidents Cardoso and Lula, the personal participation of President Lula in the foreign policy agenda and his support for regional cooperation efforts favoured Brazil-Chile bilateral ties. Lula created ways of developing bilateral trade and promoting infrastructure cooperation, given that Chile was a strategic partner for gaining access to the Pacific because of Brazil’s soy exports to China. President Rousseff gave priority to Latin America, particularly under the second madate of President Bachelet, when the two countries had proactive bilateral foreign policy in order to foster economic and trade relations. Linking Brazil’s Atlantic coast to Chile’s Pacific coast via Bolivia constitutes an important infrastructure project in terms of regional cooperation and also as part of a strategy for Brazil’s international insertion. The project emphasised the importance of the business sector for BrazilChile relations, given the public-private coordination necessary to carry out the initiative. Both countries’ infrastructure cooperation is overwhelmingly significant to strengthening long-term bilateral ties. Brazil’s urgent need for access to the Pacific coast has demonstrated that Chile is a key partner to facilitate Brazil-China business relations. The importance of the Pacific for global trade and the lack of Brazil’s access to it currently put domestic products at an unfair disadvantage. The emergence of Brazil as a global player means it requires access to the Pacific Ocean to facilitate growing trade and foreign investments and enhance cooperation while the Brazil-China economic and trade relationship continues to steadily expand. Moreover, Chilean investments and trade with Brazil has shown the importance of the Brazilian market to the Chilean economy, given that, since 2010, Brazil has emerged as Chile’s largest South American trading partner. Bilateral trade has increased throughout the years, particularly in aircraft, locomotives and subway cars. Brazil-Chile business cooperation has achieved significant results, as shown by the fusion between the Chilean airline company LAN with the Brazilian TAM, which led to the creation of LATAM as the region’s current leader in 395

passenger air transportation. Thus, Brazil-Chile relations cannot be restricted to political and traditional diplomatic links, since trade, investments, infrastructure cooperation and tax agreements demonstrate that bilateral ties embrace a more complex approach than the state-centric perspective. Brazil and Chile have an increasing number of common interests, with growing collaboration in multilateral forums. Chile has supported Brazil’s application to be a permanent member of the United Nations Security Council, which is an important mechanism for promoting greater cooperation between both countries. The Brazil-Chile peacekeeping mission in Haiti has shown that security has become an important field of cooperation between both states. Brazil-Chile’s relationship in the multilateral field has contributed to creating a new architecture for regional cooperation in multilateral forums. Topics such as organised crime, immigration, energy security, phytosanitary measures, infrastructure collaboration, environmental issues, drug trafficking, trade, judicial cooperation, human rights among others have promoted new forms of dialogue between Chile and Brazil. The emerging topics on the regional agenda cannot be treated in isolation and demand closer interaction to encourage dialogue between countries in order to deal with contemporary issues. The analysis of Brazil-Chile relations has always taken into account their relationship with their common neighbour Argentina, since both countries enjoy strong diplomatic ties with their Argentine counterparts. Brazil and Chile have strong cooperation links in security matters with Argentina. Brazil has developed strong collaboration links with Argentina summarised in the Brazilian-Argentine Agency for Accounting for and Controlling Nuclear Materials (ABACC). The strong connections between Chile and Argentina in security matters can be seen through the creation of the Standing Committee on Chile-Argentina Security (COMPERSEG), in which issues related to defence and security are discussed bilaterally as well as at the multilateral level. Since the ABC Pact and the creation of their informal links, the public diplomacy approach has shown the relevance of multifaceted analysis in Brazil-Chile-Argentina relationship. Brazil and Chile share relevant economic and political links with Argentina, given that the three countries are members of Mercosur, UNASUR and 396

IIRSA, all of which require constant dialogue and negotiations. The nature of Brazil-Chile discreet relations can be easily understood through both countries’ relationship with Argentina. Brazil and Chile tend to avoid strong bilateral links in order to raising Argentine suspicions. Therefore, both countries have historically and constantly maintained intense dialogue but without exhibiting this relationship excessively in public. In accordance with the contemporary international scenario, Brazil-Chile relations cannot be understood through a state-centric approach, given that dynamic bilateral links embrace the increase of non-official actors in both countries’ foreign affairs. Common democratic values and pragmatic bilateral cooperation between Brazil and Chile have laid the groundwork for the upkeep of a long-term partnership. The inability of traditional diplomacy to encompass Brazil-Chile relationship has shown that ongoing bilateral ties should be studied from the multifaceted approach of public diplomacy, paradiplomacy, nation branding and presidential diplomacy.

397

References Abramovay, Ricardo (2009), Biocombustível: a energia da controvérsia. São Paulo: Editora Senac. Abreu, Marcelo de Paiva (2006), “The external context”, in BulmerThomas, Victor et al., The Cambridge economic history of Latin America, volume II, The long Twentieth century. Cambridge: Cambridge University Press, pp. 101-134. Acosta, Alberto et al. (20009), Análisis de coyuntura económica: Una lectura de los principales componentes de la economia ecuatoriana durante el primer semestre del año 2009. Ecuador: Flacso. Aftalion, Fred (2001), A history of the international chemical industry, from the early days to 2000. Philadelphia: Chemical Heritage Press. Agirreazkuenaga, Joseba (2009), “De Monarquías transoceánicas a Estados Nación y al Estado plurinacional post-soberano em la Unión Europea: governance multinivel y paradiplomacia (1776-2008)”, in Rezende Martins, Estevão and Saraiva, Mirian Gomes, Brasil, União Europeia, América do Sul: anos 2010-2020. Rio de Janeiro: Fundação Konrad Adenauer. Alexander, Robert J. (1992), The ABC Presidents: conversations and correspondence with the Presidents of Argentina, Brazil, and Chile. London: Praeger. Almeida, Jorge T. (2008), Brazil in focus: Economic, political and social issues. New York: Nova Science Publishers, Inc. Almeida, Paulo Renan (1998), Perón - Vargas - Ibañez - Pacto ABC: Raízes do Mercosul. Porto Alegre: EDIPUCRS. Almeida, Paulo Roberto de (2003), “A política internacional do partido dos trabalhadores: da fundação à diplomacia do governo Lula”, Revista de 398

Sociologia Política, June, no 20. Curitiba: Editoral RSP. Almeida, Paulo Roberto de (2012), Relações Internacionais e política externa do Brasil: a diplomacia brasileira no contexto da globalização. Rio de Janeiro: LTC. Altemani, Henrique (2005), Pólítica externa brasileira. São Paulo: Editora Saraiva, 2005. Amal, Mohamed and Seabra, Fernando (2007), “Determinantes do investimento externo direto (IDE) na América Latina: uma perspectiva institucional”, Revista Economia, May/August. p. 2. http://www.anpec.org. br/revista/vol8/vol8n2p231_247.pdf Amaral, Rodrigo (2002), “Lula diz nos EUA que não vai pedir nada a Bush”, BBC Brasil, 10/12/2002. http://www.bbc.com/portuguese/noticias/ 2002/021210_lulara.shtml. Andrade, Ednilton Tavares et al. (2009), “Programa do Proálcool e o etanol no Brasil”, Engevista, vol. 11, no 2, pp. 127-136. http://www.uff.br/enzimo/ arquivos/arqix001.pdf. Andreoli, Claudinei (2008), “Convergência de agricultura e energia: produção de biomassa celulósica para biocombustíveis e eletricidade”, Revista Economia e energia, no 66, February-March: 6-7. Anholt, Simon (1998), “Nation-brands of the twenty first century”, Journal of Brand Management, no 5, pp. 395-406. http://www.palgrave-journals. com/bm/journal/ v5/n6/pdf/bm199830a.pdf. Anholt, Simon (2005), “Three interlinking concepts: intellectual property, nation branding and economic development”, WIPO International Seminar on Intellectual Property and Development, Geneva, 2nd-3rd May 2005. Anholt, Simon and van Gelder, Sicco (2005), “Branding for good?”, in Nicholas Ind, Beyond branding: How the new values of transparency and 399

integrity are changing the world of brands. London: Kogan Page Limited. Aronczyk, Melissa (2008), “Living the brand: nationality, globality, and the identity strategies of nation branding consultants”, International Journal of Communication, New York University: 4-65. http://ijoc.org Axline, W. Andrew (1994), “Comparative case studies of regional cooperation among developing countries”, in Axline, W. Andrew (ed.), The political economy of regional cooperation: comparative case studies. London: Pinter Publishers. Ayad, Nabil (2012), “Rethinking strategic public diplomacy: the role of social media”, Strategic Public Diplomacy. Diplomatic Academy Ministry of Foreign and European Affairs. Croatia. http://www.mvep.hr/custompages/ static/hrv/files/120228_diplomatska_izdavastvo_ vol9.pdf. Badger, P.C. (2002), Ethanol from cellulose: a general review. Alexandria, ASHS Press: 17-21. http://newcrop.hort.purdue.edu/newcrop/ncnu02/pdf/badger.pdf. Baer, Werber (2001), The Brazilian economy: Growth and development. London: Greenwood Publishing Group. Baer, Werner (2002), A economia brasileira, tradução de Edite Sciulli – 2. ed. rev. e atual. São Paulo: Nobel. Baeza, Rafael Sagredo (2008), “An empire in the tropics: Historiographic analysis”, Historia, vol. 41, no 1, January-June. Santiago: RIL Editores, pp. 267-282. Barbosa, Rubens Antonio (1991), “América Latina em perspectiva: a integração regional da retórica à realidade”. São Paulo: Edições Aduaneiras: 37-38. Biblioteca del Congreso Nacional de Chile – BCN. http://www. bcn.cl/carpeta_temas_profundidad/energia-nuclear Bloomsbury Minerals Economics Ltd. http://www.bloomsburyminerals.com

400

Baronov, David (2000), The abolition of slavery in Brazil: The liberation of Africans through the emancipation of capital. London: Greenwood Publishing Group, Inc. Barros, Daniel (2013) “Striving for quality: the four central points that Brazil must fight in order to take a leap forward in basic education”. Exame, number 5, December. São Paulo: Editora Abril. Basu, Susanto and Taylor (1999), Alan M. NBER Working Paper Series. “Business cycles in international historical perspective”. National Bureau of Economic Research, Cambridge, April 1999, p. 3. http://www.nber. org/papers/w7090. Batista, Henrique Gomes (2016), “Para FMI, América Latina repete inicio da década perdida”, O Globo. 22/01/2016. http://oglobo.globo.com/ economia/para-fmi-america-latina-repete-inicio-da-decada-perdida18520113. Batista Junior, Paulo Nogueira (2005), O Brasil e a economia internacional: recuperação e defesa da autonomia nacional. Rio de Janeiro: Elsevier. Beltrame, Cristian (2008), “O etanol na diplomacia presidencial do governo Lula”, São José: Universidade do Vale do Itajaí, UNIVALI/Curso de Relações Internacionais. Benedikter, Roland et al. (2015), “The fiscal dimension: greater fairness at the price of a solowing economy? The ideological debate behind Bachelet’s envisaged tax reform” in Benedikter, Roland and Siepmann, Katja, Chile in transition: Prospects and challenges for Latin America’s forerunner of development. Washington D.C.: Springer. Bernal-Meza, Raúl (1998), “As relações entre Argentina, Brasil, Chile e Estados Unidos: política exterior e Mercosul”, Revista Brasileira de Política Internacional, vol. 41, no 1. Brasília: IBRI. Bernal-Meza, Raúl and Christensen, Steen Fryba (2012), “Latin America’s 401

political and economic responses to the process of globalization” in Nilsson, Manuela and Gustafsson, Jan, Latin American responses to globalization in the 21st century. New York: Palgrave Macmillan. Bernhardt, Rudolf (1983), Regional cooperation, organisations and problems. Amsterdam: Elsevier. Berry, Ken (2009), “Background paper Latin America: nuclear facts and figures”. April, International Collaboration for the Development of Neutron Detectors. http://icnd.org/publications.html. Besley, Tim and Zagha, Roberto (2005), Development challenges in the 1990s: leading policymakers speak from experience. Washington DC: Oxford University Press. Bethell, Leslie (1998) “História da América Latina: A América Latina Colonial I, volume 1”, 2a ed. São Paulo: Editora da Universidade de São Paulo. Brasília: Fundação Alexandre Gusmão, 1998, pp. 412-439. Betsill, Michele M. and Bulkeley, Harriet (2006), “Cities and multilevel governance of global climate change”, Global Governance: a Review of Multilateralism and International Organisations, vol. 12, no 2. Colorado: Lynne Rienner, pp. 141-159. Boeninger, Edgardo (2009), Chile rumbo al futuro: propuestas para reflexionar. Santiago de Chile: Uqbar editors. Bolewski, Wilfried (2007), Diplomacy and international law in globalized relations. Berlin: Springer. Bonis, Gabriel (2011), “Avanço do Brasil assusta vizinhos da América do Sul”, Carta Capital. São Paulo: Editora Abril. Bonomo, Diego Zancan (2011), “As relações econômicas Brasil-EUA”, Política Externa, vol. 19, no 4: 97-109, Mar/Abr/Mai. São Paulo: Editora Paz e Terra. 402

Branco, Catullo (2002), Política energética e crise de desenvolvimento. São Paulo: Paz e Terra. Brands, Hals (2010), Dilemmas of Brazilian grand strategy. Strategic Studies Institute. http://www.strategicstudiesinstitute.army.mil. Bruit, H. H (2002), “Burguesia nacional e internacionalismo do capital – a burguesia chilena no século XIX”, in H. H. Bruit (ed.), Estado e burguesia nacional na América Latina. Curitiba: UFRP. Brum, Argemiro J. (2012), O desenvolvimento econômico brasileiro. 29a Edição. Petrópolis-RJ: Editora Vozes. Bueno, Clodoaldo et al (2014), “Uma perspectiva de longo periodo sobre a integração, vista pelo Brazil”, Contexto Internacional, vol. 36, no 2, July/December. Rio de Janeiro: Editora PUC-Rio, pp. 549-583. Bull, Benedicte (2008), “Policy networks and business participation in free trade negotiations in Chile”, Journal of Latin American Studies, vol. 40, issue 2, pp. 195-244. Bülow, Marisa von (2010), “Civil society, organisations and their pathways to transnationality”, Building transnational networks: civil society networks and the politics of trade in the Americas. New York: Cambridge University Press. Bulmer-Thomas, Victor (2014), The economic history of Latin America since independence. Cambridge: Cambridge University Press. Buono, Dello R. A. (2006), “Actually existing integration and the emerging South American dialogue: another integration is possible”, in Diana Avila, South America’s new dialogue. Lima: Project Councelling Service. Burns, E. Bradford (1983), The Poverty of Progress: Latin America in the Nineteenth Century. Berkeley: University of California Press. 403

Burr, Robert N. (2013), “The balance of power in Nineteenth century America: an exploratory essay” in Jorge I. Dominguez (ed.), Latin America’s international relations and their domestic consequences: War and peace, dependency and autonomy, integration and disintegration. London: Routledge. Bush, 2007; Foust et al., 2007; Perlack et al.; Smith et al., “Convergence of agriculture and energy: producing cellulosic biomass for biofuels apud Andreoli, Claudinei (2008). https://www.ars.usda.gov/ARSUserFiles/ np202/REAPfiles/Biomass%20Revised%209-21-07.pdf. Cabral, Lídia and Weinstock, Julia (2010), “Brazilian technical cooperation for development: drivers, mechanics and future prospects”. Overseas Development Institute. London. http://www.odi.org/sites/odi.org.uk/files/ odi-assets/publications-opinion-files/ 6137 .pdf. Cairncross, Frances (2001), The death of distance: How the communications revolution is changing our lives. Cambridge, Mass.: Harvard Business School Press. Calle, Fabián (2008), “El panorama energético de Chile en un escenario de sequía y su relación con la Argentina”, Nueva Mayoría - el portal sociopolítico de Iberoamérica. Canaveze, Rafael (2008), “O Brazil e guerra do Pacífico: as relações do governo brasileiro com Chile, Bolívia e Peru (1879-1890)”. Texto integrante do Anais do XIX Encontro Regional de História: Poder, Violência e Exclusão. ANPUH/SP. São Paulo, 8th-12th September 2008. Cann, Matthew A. (2012), “Institutional and Noninstitutional actors in the policy process”. http://www.pearsonhighered.com/assets/hip/us/hip_us _pearsonhighered/samplechapter/0205856330.pdf. Cardoso, Fernando Henrique and Foxley, Alejandro (2009), A médio caminho: nuevos desafios de la democracia y del desarrollo en América 404

Latina. Santiago de Chile: Uqbar Editores. Cardoso, José Luís (2009), “The transfer of the court to Brazil, 200 years afterwards”, e-JPH, vol. 7, no 1. Lisbon: Institute of Social Sciences, University of Lisbon. http://www.brown.edu/Departments/ Portuguese _Brazilian_Studies/ejph/html/issue13/pdf/jc.ardoso.pdf. Carranza, Mario E. (2004), “Mercosur and the end game of the FTAA negotiations: Challenges and prospects after the Argentine crisis”, Third World Quarterly, vol. 25, no 2. London: Taylor Francis Ltd, pp. 319-337. Casella, Paulo Borba (2014), Direito Internacional no tempo modern de Suarez a Grócio. São Paulo: Editora Atlas. Cavieres F, Eduardo (2006), Entre continuidades y câmbios: las Américas en la transición (s. XVIII a XIX). Valparaíso: Pontificia Universidad Católica de Valparaíso. Cavlak, Iuri (2008), A política externa brasileira e a argentina peronista (1946-1955). São Paulo: Annablume. Chade, Jamil (2016), “Crise no Brasil é um dos principais riscos internacionais em 2016”, Estadão, Economia, 4 January 2016. São Paulo: Editora Abril. Chasteen, John Charles (2008), Americanos: Latin America’s struggle for independence. New York: Oxford University Press. Chester, Sharon R. (2008), A wildlife guide to Chile: Continental Chile, Chile Antarctica, Easter Island. New Jersey: Princeton University Press. Clegg, Michael (2001), “Concluding Observations”, in The future of natural gas in the world energy market. The Emirates Center for Strategic Studies and Research. Abu Dhabi: ECSSR. Clerc, Louis and Glover, Nikolas (2015), “Representing the small states of 405

Northern Europe: Between imagined and imaged communities” in Clerc, Louis et al. Histories of public diplomacy and nation branding in the Nordic and Baltic countries. Leiden: Brill Nijhoff. Codato, Adriano Nervo (2005), “Uma história política da transição brasileira: da ditadura militar à democracia”, Revista de Sociologia e Política, no 25, November. Curitiba. http://www.scielo.br/scielo. php?script=sci_arttext&pid=S0104-44782005000200008. Coes, Donald V (1995), Macroeconomic crisis, policies and growth in Brazil, 1964-1990. Washington D.C.: World Development Bank. Collier, Simon and Sater, William F. (2004). A History of Chile, 1808-2002. Cambridge: Cambridge University Press. Collins, Stuart (2015), “Brazil’s stable politics, economy offset by higher taxes”, Business Insurance, January 24th 2015. http://www. businessinsurance.com/article. Colvero, Ronaldo Bernardinho (2011), “Entre interesses e possibilidades: a aproximação da política bragantina ao Rio da Prata”, Estudos IberoAmericanos. Revista do Departamento de História, PUCRS, v. 37, n. 2, July/December. Cook, Olivia (2012), “El congresso nacional en la política exterior de Chile, marzo 1990-marzo 2010”, in Artaza, Mario and Ross, César, La política exterior de Chile 1990-2009, del aislamiento a la integración global. Santiago: RIL Editores. Copper, Robert (2003), The Breaking of Nations: Order and Chaos in the Twenty-First Century. London: Atlantic Books. Corbo; Foxley; Hasting; Ramos (1996), “The political economy of financial internationalization in the Developing World”, in Keohane, Robert O. and Milner, Helen V. Internationalization and domestic politics. Cambridge: Cambridge University Press. 406

Cromwell, Thomas (2016), “Why nation branding is important for tourism”, Diplomatic Traffic. http://www.diplomatictraffic.com/nation_branding. asp?ID=18. Cruz, Patrick and Stefano, Fabine (2011), “We are our own biggest risk”, Exame, 29/12/2011, no 3. Curado, Marcelo and Cruz, Marcio José Vargas (2008), “Investimento direto externo e industrialização no Brasil”, Revista de Economia Contemporânea, vol. 12, no 3. Rio de Janeiro, sep-dec. http://www.scielo.br/scielo. php?script=sci_arttext&pid=S1415-848200800 0300001. Danese, Sergio (1999), Diplomacia presidencial: história e critica. Rio de Janeiro: Topbooks. Darcy, Ribeiro (1995), O povo brasileiro: a formação e o sentido do Brasil. São Paulo: Companhia das Letras. Darley, Julian (2004), High noon for natural gas: the energy crisis. White River Junction: Chelsea Green Publishing Company. Dawson, Alexander (2015), Latin America since independence: A history with primary sources. New York: Routledge. Dennison, Stephanie (2006), Joaquim Nabuco: Monarchim, Panamericanism and Nation-Building in the Brazilian Belle Epoque. New York: Peter Lang. Derolle, Patricia Galves (2015), “What does it mean to be an emerging power”, Modern Diplomacy. http://www.moderndiplomacy.eu/ index.php?option=com_k2&view=item&id=6 52:what-does-it-mean-to-bean-emerging-power& Itemid=768. Ding, Sheng (2008), “To build a harmonious world: China’s soft power wieldening in the global south”, in Guo, Sujian and Blanchard, Jean Marc. 407

F., Harmonious world and China’s new foreign policy. Playmouth: Roeman Littlefield Publishing Group, pp. 105-124. Dinius, Oliver J. (2011), Brazil’s steel city: developmentalism, strategic power and industrial relations in Volta Redonda 1941-1964. Stanford: Stanford University Press. Dinnie, Keith (2012), “More than tourism: The challenges of nation branding in Asia”, Global Asia, vol. 7, no 3, pp. 13-16. Duce, Maitena (2001), “Definitions of foreign direct investment (FDI): a methodological note”, Banco de España, Final draft, July 31st, p. 3. www.bis.org/publ/cgfs22bde3.pdf. Elizondo, José Rodríguez (2009), De Charaña a la Haya: Chile, entre la aspiración marítima de Bolivia y la demanda marítima de Perú. Santiago de Chile: La Tercera Ediciones. Escobedo, Ávaro Góngora; Clavel, Patricia Arancibia; Correa, Gonzalo Vial and Meza, Aldo Yávar (2000), Chile (1541-2000): una interpretación de su Historia Política. Santiago de Chile: Santillana. Essex, Stephen and Chalkey, Brian (2003), Urban transformation from hosting the Olympic Games. Barcelona: Centre d’Estudis Olimpics. Falkner, R. (2008), Business power and conflict in international environmental politics. Basingstoke: Palgrave Macmillan. Fausto, Boris (1999), A Concise History of Brazil. Cambridge: Cambridge University Press. Fernandez, J. J. (2002), La República de Chile y el Imperio de Brasil: historia de sus relaciones diplomáticas. Santiago: Andrés Bello, 1959, pp. 89-90 apud Santos, Luis Claudio. Figueira, Ariane C. Roder (2009), Processo decisório em política externa no 408

Brasil. Tese de Doutorado, Departamento de Ciência Política, Universidade de São Paulo (USP). Orientador, Prof. Dr. Rafael Duarte Villa. Figueiredo, Luis and Lamazière, George (2012), “Brazil has credentials for a permanent seat at the United Nations Security Council, Ambassador says”. Chile. Senado Federal, Portal de Notícias. http://www12.senado.gov.br/ internacional/en/2012/brazil-has-credent ials-for-a-seat-at-the-un-securitycouncil-ambassador-says. Fonseca, Carlos (2007), “Fora dos radares de Washington: as relações EUAAmérica Latina e a questão do déficit de atenção”, Política Externa, vol. 15, no 3. São Paulo: Editora Paz e Terra, pp. 65-90. Foster, David William et al. (1998), Culture and customs of Argentina. London: Greenwood Press. Foxley, Alejandro (2005), “Lessons from Chile’s development in the 1990s” in Besley, Timonthy and Zagha, Roberto, Development challenges in the 1990s: Leading policymakers, speaking from experience. New York: Oxford University Press, pp. 133-153. Franco, Gustavo H. B. (2006), in Lacerda, Antonio Corrêa, Crise e oportunidade o Brasil e o cenário internacional. Fräss-Erhfeld, Clarisse (2009), Renewable energy sources: A chance to combat climate change. New York: Kluwer Law. Fuentes, Claudio and Álvarez, Gonzalo (2011), “Argentina e Chile: mudança de paradigm?”, Contexto Internacional, vol. 33, no 2. http://www. scielo.br/scielo.php. Funari, Pedro Paulo A. and Paulo César Manduca, (2009), “Strategic development in Brazil: The contribution of R & D”, in Pim, Joám Evans, Brazilian defence policies: Current trends and regional implications. London: Dunkling Books, pp. 215-230.

409

Furtado, Celso (1976), Formação Econômica do Brasil. São Paulo, Comapnhia Editorial Nacional, apud Baer, Werner, A economia brasileira tradução de Edite Sciulli – 2 ed. rev. e atual. São Paulo: Nobel. Galdame, Luis (1941), “A History of Chile”. Chapel Hill: University of North Carolina. Gayá, Romina and Campos, Rosario (2009), “The transport and trade infrastructure growth gap in Latin America”, Bulletin Fall no 276, Number 8. ECLAC. United Nations. http://repositorio.cepal.org/bitstream/ handle/11362/36337/FAL_276_infrastructural_gap_en.pdf?sequence=1. Georgescu, Anamaria and Botescu, Andrei (2004), “Branding National Identity”. Lund University. http://theses.lub.lu.se/archive/sob//soc/ soc04020.pdf. Goldemberg, José (2002), “Energia no Brasil e no mundo”, in Branco, Catullo. Política energética e crise de desenvolvimento. São Paulo: Paz e Terra. Gonçalves, Reinaldo (2005), “Investimento Externo Direto”, Economia Política Internacional: fundamentos teóricos e as relações internacionais do Brasil. Rio de Janeiro: Elsevier. González, Felipe (2010), “Human rights and democracy in Chile”, in Serrano, Mónica and Popovski, Vesselin Human rights regimes in the Americas. New York: United Nations University Press. González, Gustavo (2010), “Elecciones-Chile: Piñera lanza la segunda transicion”, Tierramérica Medio Ambiente y Desarrollo. http://www. tierramerica.info/. Grimsey, Darrin and Lewis, Mervyn (2004), Public private partnerships: The worldwide revolution in infrastructure. Cheltenham: Edward Elgar. Pinheiro, Armando Castelar et al. (1999), “O desempenho macroeconômico 410

do Brasil nos anos 90” in Giambiagi, Fábio and Mesquita Moreira, Maurício, A economia brasileira nos anos 90. Rio de Janeiro: BNDES. Graefe, Laurel (2009), “The Peak Oil Debate”. Economic Review 94, no 2. Griffth-Jones (1996), “The political economy of financial internationalization in the developing world”, in Robert O. Keohane and Helen V. Milner (eds), Internationalization and domestic politics. Cambridge: Cambridge University Press. Guitian, José Miguel Sánchez et al. (2013), ¿Cómo se gestiona una marca país? Madrid: Esic Editorial. Haas, Ernest B. and Philippe C. Schmitter (1994), “Economics and differential patterns of political integration: Projections about unity in Latin America” in Jorge I. Domínguez (ed,), Latin America’s international relations and their domestic consequences: War and peace, dependence and autonomy, integration and disintegration. New York: Garland Publishing Inc, pp. 25-58. Haggard, Stephan and Maxfield, Sylvia (1996). “The political economy of financial internationalization in the developing world”, in Keohane, Robert O. and Milner, Helen V.. Internationalization and domestic politics. Cambridge: Cambridge University Press. Hammons. James Thomas (2011), Integrated Natural Gas-Electricity Resource Adequacy Planning in Latin America, Electricity Infrastructures in the Global Marketplace (Ed.). http://cdn.intechopen.com /pdfs/16033/InTech-Integrated_natural_gas_electricity_resource_adequa cy_planning_in_latin_america.pdf. Hanley, Anne G. (2010), “Financing Brazil’s industrialization” in Horn, Jeff et al. Reconceptualising the industrial revolution. Cambridge: The MIT Press, pp. 251-270. Hanson, Stephanie (2012), “Brazil on the international stage”, Council on 411

Foreign p19883.

Relations.

http://www.cfr.org/brazil/brazil-international-stage/

Harvey, Charles and Press, John (1990), International competition and industrial change: Essays in the history of mining and metallurgy 18001950. London: Frank Cass. Heberlein, Regine I. (2008), Writing a national colony: The hostility of inscription in the German settlement of Lake Llanquihue. New York: Cambia Press. Hermann, Margaret (2002), “One field, many perspectives: Shifting from debate to dialogue”, in Donald J. Puchala (ed.), Visions of international relations: Assessing an academic field. Columbia: University of South Carolina Press. Herz, Monica (2013), “Assumptions on intervention and security in South America” in Kai Michael Kenkel (ed.), South America and peace operations. London: Routledge. Hespanha, António Manuel (2012), “O constitucionalismo monárquico português”, Historia Constitucional, no 13, pp. 477-526. Lisboa: Universidade Nova de Lisboa. Hirst, Mônica (2005), The United States and Brazil: a long road of unmet expectations. New York: Routledge. Hirst, Monica. ‘Los claroscuros de la seguridad regional en las Américas’ apud Mulins, Martin, (2006), In the shadow of the generals: foreign policy making in Argentina, Brazil and Chile. Hampshire: Ashgate, p. 104. Hirst, Mônica (2008), “Segurança na América do Sul: dimensão regional de seus desafios políticos”, Política Externa, vol. 16, nº 3, December 2007January/February 2008. São Paulo: Editora Paz e Terra. Hobsbawm; Guibernau apud Gonçalves, Reinaldo (2005), “Investimento 412

Externo Direto”, Economia Política Internacional: fundamentos teóricos e as relações internacionais do Brasil. Rio de Janeiro: Elsevier. Holden, Robert and Zolov, Eric (2011), Latin America and the United States: A documentary history. Oxford: Oxford University Press. Horsnell, Paul (2001), “Liberalization of the European natural gas industry and its implications”, in The future of natural gas in the world energy market. The Emirates Center for Strategic Studies and Research. Abu Dhabi: ECSSR. Hurrell, Andrew (2006), “Hegemony, liberalism and global order: what space for would-be great powers”, International Affairs, vol. 82, Issue 1, pp.1-19. Hutchison, Elizabeth Quay (2001), Labors appropriate to their sex: Gender, labor and politics in urban Chile, 1900-1930. London: Duke University Press. Jacomé, Francine, “Regional responsibilities: The role of UNASUR”, The impact of organised crime in Latin America, pp. 29-40. http://citeseerx.ist. psu.edu/viewdoc/download?doi=10.1.1.467.6309&rep=rep1&type=pdf#pag e=31. Jones, Geoffrey and Lluch, Andrea (2015), The impact of globalization in Argentina and Chile: Business enterprises and entrepreneurship. Massachusetts: Edward Elgar Publishing. Josephson, Amelia (2013), “Chile: Nation wins two-year seat on UN Security Council”, Pulsamérica. http://www.pulsamerica.co.uk/2013/10/21/ chile-nation-wins-two-year-seat-on-un-security-council/. Jussim; Judd and Park (2002), “One field, many perspectives: Shifting from debate to dialogue”, in Puchala, Donald J., Visions of international relations: Assessing an academic field. Columbia: University of South Carolina Press. 413

Kelman, Jerson; Tucci, Carlos; Braga, Benedito and Rosa, Luiz Pinguelli (2008), “As hidrelétricas e o efeito estufa”, Brasil Energia, no 334: 193-196, September. Rio de Janeiro: Editora Brasil Energia. Kim, Hwajung (2012), “The importance of nation brand”, Cultural Diplomacy. http://www.culturaldiplomacy.org/pdf/case-studies/Hwajung_ Kim_The_Importance_of_Na tion_Brand.pdf Knight, Andy W. et al (2014), “Re-mapping the Americas” in Knight, Andy W. et al, Re-mapping the Americas: Trends in Region-making. Burlington: Ashgate. Kotler, P. and Gertner, D. (2002), “Country as brand, product, and beyond: a place marketing and brand management perspective”, The Journal of Brand Management, vol. 9, number 4, pp. 249-261. Lake, David A. (2000), “British and American hegemony compared: Lessons from the current era of decline” in Jeffry A. Frieden and David A. Lake, International political economy: perspectives on global power and wealth. New York: Routledge. Lamounier, Lucia (2000), “The labour question in nineteenth century Brazil: Railways, export agriculture and labour scarcity”, Working Paper 59/00. London. http://eprints.lse. ac.uk/22379/1/wp59.pdf. Landau, Georges D. (2007), “Brazil”, (Eds.) Sidney Weintraub, with Annette Hester and Veronica R. Prado, Energy cooperation in the Western Hemisphere: benefits and impediments. Washington, D.C: The CSIS Press. Landau, Georges (2008), “Brasil”, (Eds.) Sidney Weintraub, Annette Hester and Prado, Veronica. Cooperação energética nas Américas: entraves e benefícios. Translated by Donaldson Garschagen. Rio de Janeiro: Elsevier. Larosa, Michael J. and Mejía, Germán R. (2015), An Atlas and survey of Latin American history. New York: Routledge. 414

Lazarau, Eleva (2014), Multilateralismo nas relações internacionais: visões cruzadas. Rio de Janeiro: Elsevier. Lederman, Daniel (2005), The political economy of protection: Theory and the Chilean experience. Stanford: Stanford University Press. Leite, Paulo Moreira (2016), “Bachelet e a derrota dos Chicago Boys”, Isto é. São Paulo: Editora Abril. http://www.istoe.com.br/colunas-eblogs/coluna/340388_BACHELET+E+A +DERROTA +DOS+CHICAGO+ BOYS. Levine, Robert M. (1999), The history of Brazil. New York. Palgrave Macmillan. Lima, Oliveira (1996), D. João VI no Brasil. São Paulo: Topbooks. Lima, Rodrigo Torres de Araújo (2009), A participação da sociedade civil organizada na formulação da política externa brasileira: as conferências sociais da ONU na década de 90. Programa de Pós-Graduação em Relações Internacionais. Universidade de Brasília. Linkohr, Rolf (2006), “La política energética latinoamericana: entre el Estado y el mercado”. Pensamiento Propio. Julio-Diciembre, no 22. Buenos Aires: publicación trilingüe de Ciencias Sociales de América Latina y el Caribe. Linville and Jones; Quattrone; Judd and Park; Ostrom and Sedikides (2002) “One field, many perspectives: Shifting from debate to dialogue”, in Puchala, Donald J., Visions of international relations: Assessing an academic field. Lira, Erygeanny Machado (2014), A celebração da unidade: um estudo sobre as concepções de soberania na Assembleia Constituinte de 1823. Faculdade de Filosofia Letras e Ciências Humanas. São Paulo. http://www. teses.usp.br/teses/disponiveis/8/8131/tde-25052015-161617/en.php. 415

Lockard, Craig A. (2015), Societies, networks and transitions: A global history. Stamford: Cengage Learning. Lohbauer, Christian (2010), “A inserção internacional do Brasil e o papel das associações de empresas exportadoras”, Política Externa, vol. 19, no 2, pp. 69-80. São Paulo: Paz e Terra. London, Manuel (1999), Principled leadership and business diplomacy: values-based strategies for management development. London: Greenwood Publishing Group, Inc. López, Andrés and Starobinsky, Gabriela (2009), “El panorama regional”, in López, Andrés (coordinador), La industria de bicombustibles en el Mercosur. Montevideo: redmercosur. López, Dorotea G. and Muñoz, Felipe N. (2008), Inversiones Brasilenãs en América del Sur. La perspectiva de los países andinos: el caso de Chile. Santiago de Chile: Universidad de Chile. Luchetti, Javier Fernando (2015), “Political dialogue in South America: The role of South American nations unions”, in Dosenrode, Søren, Limits to regional integration. Surrey: Ashgate, pp. 95-108. Luz, Rodrigo (2012), Comércio internacional e legislação aduaneira. Rio de Janeiro: Elsevier. Macaulay, Neill (1986), Dom Pedro: The struggle for liberty in Brazil and Portugal. Durham: Duke University Press. Macaulay, Fiona (2010), “Human rights in context: Brazil”, in Serrano, Mónica and Popovski, Vesselin, Human rights regimes in the Americas. New York: United Nations University Press. Maestri, Mário (2014), “O imperialism do Brasil na Bacia do Prata”, Revista História: Debates e Tendências, vol. 14, no 1, jan/jun. Passo Fundo, pp. 416

241-246. Magnoli, Demétrio (2016), “Síndrome de Allende”, Partido Popular Socialista. http://www.pps.org.br/2016/02/27/demetrio-magnoli-sindromede-allende/. Malamud, Andrés (2005). “Presidential diplomacy and the institutional underpinnings of Mercosur: an empirical examination”. Latin American Research Review, vol. 40, Number 1, 2005. Malamud, Andrés (2009), “Leadership without followers: the contested case for Brazilian power status”, in Rezende Martins, Estevão and Saraiva, Mirian Gomes, Brasil, União Europeia, América do Sul: anos 2010-2020. Rio de Janeiro: Fundação Konrad Adenauer. Malamud, Andrés (2011), “A leader without followers? The growing divergence between the regional and global performance of Brazilian foreign policy”, Latin American Politics and Society, vol. 53, issue 3, pp. 124. Malerba, Jurandir (2006), A independência brasileira: novas dimensões. Rio de Janeiro: Editora FGV. Mancilla, Sergio (2009), La crisis energética en Chile. Santiago: RIL editores. Marangoni, Gilberto (2012), “Anos 1980s década perdida ou ganha?”, Revista de Informações e debate do Instituto de Pesquisa Econômica Aplicada, ano 9, edição 72, 15/06/2012. http://www.ipea.gov.br/ desafios/index.php?option=com_content&view=article &id=2759:catid=28&Itemid=23.Acesso. Marco, Miguel Angel (1998), La Guerra del Paraguay. Buenos Aires: Editora Planeta. Mares, David R. and Aravenas, Francisco Rojas (2001), The United States 417

and Chile: Coming from the Cold War. New York: Routledge. Mares, David (2004), “Natural gas pipelines in the Southern Cone”. Stanford University. http://pesd.stanford.edu. Marreiro, Flávia et al (2014), “Na política externa Dilma prioriza a América do Sul; e Aécio EUA e Europa”, Folha de São Paulo, 21st October. Marzo, Marco Antonio S. and Almeida Silvio G (2006), A evolução do controle de armas nucleares. Rio de Janeiro: Editora Ciência Moderna Ltda. Mattli, Water (1999), The Logic of Regional Integration, Europe and beyond. Cambridge: Cambridge University Press. Medina, Juan Pablo and Soto, Claudio (2006), “Copper, price, fiscal policy and business cycle in Chile”, Central Bank of Chile: Research Department. Melissen, Jan (2005). The new public diplomacy: soft power in international relations. New York: Palgrave Macmillan. Melissen, Jan (2006), “How has place branding developed?” Place Branding, vol. 2, no 1. The Hague: Clingendael Institute. Meyer, Peter J. (2016), “Brazil: Background and U.S. relations”, Congressional Research Service. https://www.fas.org/sgp/crs/row/ RL33456.pdf. Milani, Carlos R. S. and Ribeiro, Maria Clotilde Meirelles (2011), “International relations and the paradiplomacy of Brazilian cities: crafting the concept of local international management”, Brazilian Administration Review, Curitiba, v. 8, n. 1, art. 2: 21-36. Jan./Mar. Miller, Rory (2002), “Globalization and retreat, 1870-1945”, in Lamontagne, Monique and Heenan, Patrick The South America handbook. London: Routledge, pp. 17-28.

418

Monardes, Raúl Concha (2010), Chile y el Subdesarrollo: El passado que nos espera. Santiago de Chile: CESOC. Monge, C. (2013), “Brasil: las razones del reventón”. America Economía, Análisis Opinión. http://www.americaeconomia.com/analisis-opinion/brasillas-razones-del-reventon. Moniz Bandeira, Luiz Alberto (1998), O expansionismo brasileiro e a formação dos Estados na Bacia do Prata (Da colonização à Guerra da Tríplice Aliança). 3a ed. Rio de Janeiro: Revan. Moniz Bandeira, Luiz Alberto (2002), “As políticas neoliberais e a crise na América do Sul”, Revista Brasileira de Política Internacional, vol. 45, no 2, July-December. Brasília: IBRI. Moniz Bandeira, Luiz Alberto (2003), Brasil, Argentina e Estados Unidos (Da Tríplice Aliança ao Mercosul 1870-2003). Rio de Janeiro: Revan. Montecinos, Verónica (2009), “Economics: The Chilean story”, in Verónica Montecinos and John Markoff, Economists in the Americas. Cheltenham: Edward Elgard Publishing. Mora, Frank O. and Jeanne A.K. Hey (2003), Latin America and Caribbean foreign policy. Oxford: Rowman & Littlefield Publishers. Morandé, José A. (2003), “Chile: the invisible hand and contemporary foreign policy, Latin American and Caribbean foreign policy, in Frank O. Mora and Jeanne A.K. Hey (eds). Oxford: Rowman & Littlefield publishers, pp. 243-264. Moreira, Luiz Felipe Viel (2010), As relações internacionais da América Latina. Petrópolis: Editora Vozes. Mullins, Martin (2006), In the shadow of the generals: foreign policy making in Argentina, Brazil and Chile. Hampshire: Ashgate.

419

Muñoz, Heraldo (2001), “Good-bye U.S.A?” in Joseph S. Tulchin and Ralph H. Espach, Latin America in the new international system. Colorado: Lynne Rienner Publishers. Murphy, Sean D. (2005), United States practice in International Law, vol. 2, 2002-2004. Cambridge: Cambridge University Press. Nasirov, Shahriyar and Silva, Carlos (2016), “Diversification of Chilean energy matrix: Recent developments and challenges”, International Association for Energy Economic. https://www.iaee.org/en/.../ newsletterdl.aspx?id=256. Nassar, André Meloni (2009), “Brazil as an agricultural and agroenergy superpower”, in Brainard, Lael and Martinez-Diaz, Brazil as an economic superpower: understanding Brazil’s changing role in the global economy. Washington D.C.: Brookings Institution Press. Neack (2003), Laura. The new foreign policy: Complex interactions, competing interests. New York: Rowman & Littlefiel Publishers. Nelson, Marcel (2015), A history of the FTAA: from hegemony to fragmentation in the Americas. New York: Palgrave Macmillan. Niesing, Eva (2013), Latin America’s potential in nation branding: a closer look at Brazil’s, Chile’s and Colombia’s practice. Hamburg: Anchor Academic Publishing. Noya, Javier (2007), “Diplomacia Pública para el siglo XXI: La gestión de la imagen exterior y la opinion pública internacional”, E-Journal of International Relations, vol. 1, no 1, pp.122-125. http://janus.ual.pt/ janus.net/pt/arquivo_pt/pt_vol1_n1_pdf/pt_vol1_n1_rec1. pdf. Nye, Joseph (2008), “Public diplomacy and soft power”, The Annals of the American Academy of Political and Social Science, vol. 616, no 1, pp. 94109.

420

Oelsner, Andrea (2007), “Friendship, mutual trust, and the evolution of regional peace in the international system”, Critical Review of International Social and Political Philosophy, vol. 10, Issue 2. pp. 257-279. Olins, Wally (2005), “Making a National Brand”, in Melissen, Jan, The New Public Diplomacy, soft power in International Relations. New York: Palgrave Macmillan. Oliveira, Amâncio Jorge and Pfeifer, Alberto (2006), “O empresariado e a política exterior do Brasil”, in Relações Internacionais do Brasil: temas e agendas, Henrique Altemani de Oliveira and Antônio Carlos Lessa. São Paulo: Saraiva. Oliveira, Marcelo Fernandes (2007), “Multilateralismo, democracia e política externa no Brasil: Contenciosos das patentes e do algodão na Organização Mundial de Comércio (OMC), Contexto Internacional, vol. 29, no 1, jan-jun. Rio de Janeiro: IRI, pp. 7-39. Oliveira, Marcos Aurélio Guedes (2010), “Interpretações da política externa do governo Lula: hegemonia negociada, unilateralismo ou escapismo”, Revista Política Hoje, vol. 19, no 1. http://www.revista.ufpe.br/ politicahoje/index.php/politica/article/viewFile/64/26. Oppenheim, Lois Hecht (2007), Politics in Chile: socialism, authoritarianism, and market democracy, 3rd edition. Boulder: Westview Press. Özcan, Abdullah (2013), “Role of public diplomacy in establishing nation branding and public diplomacy possibilities of Turkey”, European Journal of Research on Education. http://iassr.org/rs/020501.pdf. Outhavong, Sounthaly (2007), “Branding ‘Nation Brand’”. Requirement for the degree of Doctor of Philosophy UMI: University of Texas. Pamplona, Marco A. and Stuven, Ana María (2010), Estado e nação no Brasil e no Chile ao longo do século XIX, 3rd edition. Rio de Janeiro: 421

Garamond. Paquin, Stéphane and Lachapelle, Guy (2005), “Why do sub-state and regions practive international relations?” in Lachapelle, Guy and Paquin, Stéphane, Mastering globalization: New sub-states’ governance and strategies. London: Routledge. Pedroso, Ledi Cerdote and Pedroso, Márcia N. Cerdote (2007), “Brasil e Chile dos regimes militares ao século XXI: política econômica e distribuição de renda”, Revistas Sociais e Humanas. http://cascavel.ufsm.br /revistas/ojs-2.2.2/index.php/sociaisehumanas/.../549. Pennaforte, Charles (2001), América Latina e o neoliberalismo: Argentina, Chile e México. Rio de Janeiro: E-Papers Serviços Editoriais Ltda. O Globo Newspaper, Monday 10th July 2006, caderno Economia. O Globo Newspaper, 18th January 2009, Economia, interview with Graça Foster. O Globo Newspaper, 9th December 2008, Suplemento Projetos de Marketing. Olopade, Dayo (2014), “The end of the developing world”, The New York Times, 28th February 2014. http://www.nytimes.com/2014/03/01/ opinion/sunday/forget-developing-fat-nations-must-go-lean.html?_r=0. Perlack et al., 2005, Smith et al., 2004 apud Andreoli, Claudinei. 2008: 5 Pecequilo, Cristina Soreanu (2004), Introdução às relações internacionais: temas, atores e visões. Petrópolis: Vozes. Pecequilo, Cristina Soreanu (2011), As relações Brasil-Estados Unidos. Belo Horizonte: Fino Traço. Pim, Joám Evans (2009), Brazilian defence policies: current trend and 422

regional implications. London: Dunkling Books. Pintos, Martín (2010), La ruptura: historias secretas del conflicto con Argentina. Montevideo: Fin de Siglo Editorial. Pochet, Carlos Araya (2005), Historia de América: en perspectiva latinoamericana. San José: EUNED. Pontual, Fernanda (2008), “Vizinhos exemplares ou nem tanto”, Brasil Energia, no 334: 112-114, September. Rio de Janeiro: Editora Brasil Energia. Porta, Paula (2004), A corte portuguesa no Brasil. São Paulo: Editora Saraiva. Pregger-Roman, Charles (1991), “Nineteenth century Chile: a case study, subordination, the class process, and the relative autonomy of states”, in Latin America perspectives, vol. 18, no 1: 113-135. Preto, Alessandra Falcão (2006), O conceito de diplomacia presidencial: o papel da presidência de república na formulação da política externa. São Paulo: Universidade de São Paulo. Rahn, Richard W. (2014), “Socialist policies undoing success of South America’s strongset economy”, The Washington Times, 15th December. http://www.washingtontimes.com/ news/2014/dec/15/richard-rahn-michellebachelet-socialist-economy-r/. Reis, José Carlos (2007), As identidades do Brasil: de Varnhagen a FHC. 9a Edição ampliada. Rio de Janeiro: Editora FGV. Resende-Santos, João (2007), Neorealism, states and the modern mass army. Cambridge: Cambridge University Press. Reyes, Javier A. and Sawyer, Charles (2016), Latin American economic development. London: Routledge. 423

Ribeiro, Maria Clotilde Meirelles (2009), Globalização e novos atores: a paradiplomacia das cidades brasileiras. Salvador: EDUFBA. Riordan, Shaun (2005), “Dialogue-based Public Diplomacy: a new foreign policy paradigm?” Risse-Kappen, Thomas (1995), Bringing transnational relations back in: Non-state actors, domestic structures and international institutions. Cambridge: Cambridge University Press. Robert Wesson (2001), apud Wiarda, Howard and Kline, Harvey, An introduction to Latin American politics and development. Boulder: Westview press.

Rodrigues, Manoel Gonçalves (2001), “Um estudo sobre a expansão do gás natural no Brasil num contexto de integração regional”. Universidade Estadual de Campinas. Faculdade de engenharia mecânica. Departamente de engenharia térmica e fluidos. (Ph.D. thesis). “The future of natural gas in the world energy market”. The Emirates Center for Strategic Studies and Research. Abu Dhabi: ECSSR. Rohter, Larry (2012), Brazil on the rise: the story of a country transformed. New York: Palgrave Macmillan. Rombo, Arthur Blasio (2003), “Integração alemã na AL nos séculos 19 e 20: Argentina, Brasil e Chile”, Estudios Ibero-Americanos, v. XXIX, no 1: 107-135, June. Porto Alegre: PUCRS. Rubio, Rafael (2014), “La diplomacia pública: nuevos actores en un escenario nuevo” in La Diplomacia pública como reto de la política exterior. Madrid: Escuela Diplomática. http://www.exteriores.gob.es/Portal/es/ SalaDePrensa/Multimedia/Publicaciones/Documents/2015_ABRIL_FOLLE TO%20SEMINARIO%20DIPLOMACIA%20PUBLICA.pdf.

424

Russell R. (1990) apud Oliveira, Henrique Altemani (2005), Política Internacional Contemporânea. São Paulo: Saraiva. Saeger, James Schofield (2007), Francisco Solano López and the ruination of Paraguay: Honor and egocentrism. New York: Rowman & Littlefield Publishers, INC. Salles, Ricardo (2010), “A Guerra do Paraguai, ‘a questão servil’ e a questão nacional no Brasil (1866-1971)”, in Estado e nação no Brasil e no Chile ao longo do Século XIX/ Marco A. Palmplona e Ana Maria Stuven (organizadores). Rio de Janeiro: Garamond. Santos, Raquel Paz (2014), “O impacto do projeto do Pacto ABC nas relações Brasil-Argentina durante o Segundo governo Vargas”, Revista Estudos Históricos. Rio de Janeiro: Fundação Getúlio Vargas, pp. 38-59. Saraiva apud Nunes, Carmen Juçara da Silva (2005), “A paradiplomacia no Brasil: o caso do Rio Grande do Sul”. Porto Alegre: Universidade Federal do Rio Grande do Sul. Saraiva, José Flavio Sombra (2006), Federalismo e relações internacionais do Brasil. São Paulo: Saraiva. Sater, William F. (1990), Chile and the United States: Empires in conflict. London: The University of Gerorgia Press. Saylor, Ryan (2014), State building in boom times: Commodities and coalitions in Latin America and Africa. New York: Oxford University Press, p. 83. Schneider, Cynthia (2005), “Culture Comunicates: US diplomacy that works” in Melissen, Jan, The new public diplomacy: soft power in international relations. New York: Palgrave Macmillan. Schneider, Axel and Woolf, Daniel (2011), The Oxford history of historical writing. Vol. 5, Historical writing since 1945. New York: Oxford University 425

Press. Schott, Jeffrey J. (2005), “Does the FTAA have a future?” Institute for International Economics. http://www.iie.com/publications/papers/ schott1105.pdf. Scully, Timothy R. (1992), Rethinking the Center: party politics in nineteenth and twentieth century Chile. Stanford: Stanford University Press. Securato, José Cláudio (2011), Economia brasileira: história, conceitos e atualidades. São Paulo: Saint Paul Editora. Sennes, Ricardo Ubiraci and Narciso, Thais (2009), “Brazil as an International Energy Player”, in Brainard, Lael and Martinez-Diaz, Leonardo, Brazil: as an economic superpower? Washington, D.C.: Brookings Institutions Press. Serra, Ana Amélia Alvarez (2009), “Cooperação descentralizada: o caso europeu”, in Cidades em Relações Internacionais: análise e experiências brasileiras, Gilberto M. A. Rodrigues et al. São Paulo: Desatino. Sfeir-Younis, Alfredo (2004), “The role of civil society in foreign policy: a new conceptual framework”, Sector Hall Journal of Diplomacy and International Relations. p. 29. http://www.isn.ethz.ch/Digital-Library/ Publications/Detail/?ots591=0c54e3b3-1e9c-be1e-2c24a6a8c7060233&lng=en&id=17606. Sharma, Dinesh and Gielen, Uwe P. (2014), The global Obama: Crossroads of leadership in the 21st century. New York: Routledge. Shelley, Fred M. (2013), Nation shapes: The story behind the world borders. Santa Barbara: ABC-CLIO, LLC. Sicotte, Richard et al. (2008), “The fiscal impact of the War of the Pacific”, Cliometrica. Springer, pp. 97-121.

426

Silva, Francisco de Assis (1992), História do Brasil: Colônia, Império, República. São Paulo: Moderna. Silva, G. E. do Nascimento (2012), Direito internacional diplomático: Convenção de Viena sobre relações diplomáticas na teoria e na prática. São Paulo: Saraiva. Skidmore, Thomas E. (1999), Brazil: five centuries of change. New York: Oxford University Press. Skidmore, Thomas E. and Smith, Peter H. (2001), Modern Latin America. New York: Oxford University Press. Slemian, Andréa (2007), “Um pacto constitucional para um novo império: Brasil 1822-1824”, in Izaskun Álvarez Cuartero and Julio Sánchez Gómez, Visiones y revisiones de la independencia americana, la independencia de América: La constitución de Cádiz y las constituciones Iberoamericanas. Salamanca: Aquilafuente. Smith, Verity (1997), Latin America literature. London: Fitzroy Deaborn Publishers. Smith, Zachary A. and Taylor, Katrina D. (2008), Contemporary world issues: Renewable and alternative energy resources. Santa Barbara: ABCCLIO Inc. Soares, Regiane (2007), “Bush deixa o país sem discutir redução sobre tarifa de álcool brasileiro”, Folha de São Paulo, 09/03/2007. Sondhaus, Lawrence (2001), Warfare and history: Naval Warfare 18151914. New York: Routledge. Soto, Ángel; Núñez, Rogelio and Garay, Cristián (2012), Las relaciones chileno-brasileñas: de la Amistad sin límites al pragmatism del gigante (1945-1964). Santiago: RIL Editores.

427

Souza, Aprigio André Ribeiro de (2010), “Os efeitos positivos da diplomacia pública na administração Obama”, Boletim Mundorama. http://mundorama.net/2010/01/11/os-efeitos-positivos-da-diplomaciapublica-na-administracao-obama-por-andre-e-ribeiro-de-souza-apri gio/. Spies, Yolanda Kemp (2013), “Multilateral diplomats in the early twentyfirst century”. Bob Reinalda. Routledge of International Organisation. London: Routledge, pp. 205-217. Sposito, Ítalo Beltrão (2013), “Foreign policy change in Brazil: Comparing Castello Branco (1964-1967) and Fernando Collor (1990-1992)”, Brazilian Political Science Review. pp. 118-144. http://www.scielo.br/pdf/ bpsr/v7n3/v7n3a05.pdf. Steinberg, Margarethe Born (2009), “Para uma cultura política das representações culturais na América Latina”, in Haussen, Doris Fagundes and Brittos, Valério Cruz, Economia política comunicação e cultura: Aportes teóricos e temas emergentes na política externa brasileira. Porto Alegre: EDIPUCRS. Sur, Serge (2004), Relations internationales. Paris: Montchrestien. Sutter, Carmen Cariola and Sunkel, Osvaldo (1982), “El primer ciclo en expansión”, La historia económica de Chile 1830 y 1930: dos ensayos y una bibliografia. Madrid: Instituto de cooperación Iberoamericana. Szondi, Gyorgy (2008), “Public diplomacy and nation branding: Conceptual similarities and diferences”, Discussion Papers in Diplomacy. Netherlands Institute of International Relations. http://www.peacepalacelibrary.nl/ ebooks/files/Clingendael_20081022_pap_in_ dip_nation_b randing.pdf. Tarter da Rosa, Marcela (2014), “A política externa brasileira e a multilateralidade: a inserção internacional do Brasil como membro do BRICS”, Relações Internacionais no Mundo, vol. 1, Issue 19. Curitiba: Unicuritiba, pp. 29-39.

428

Tautz, Carlos (2009), “Da ALCA à IIRSA”, Le Monde Diplomatique Brasil. http://www.diplomatique.org.br/artigo.php?id=313. Taylor, Marcus (2008), “From national development to growth with equity: Nation building in Chile, 1950-2000”, in Berger, Mark T., From nation building to state-building. New York: Routledge, pp. 65-80. Teixeira, Carlos Gustavo Poggio (2012), Brazil, the United States and the South American subsystem: regional politics and the absent empire. Maryland: Lexington Books, pp. 27-29. Topik, Steve (2004), “The world coffee market in the eighteenth and nineteenth centuries, from colonial to national regimes”, Working Paper 40/04. Department of History. London. http://eprints.lse.ac.uk/ 22489/1/wp04.pdf. Torres, Ricardo Lobo (2013). Planejamento tributário: elisão abusiva e evasão fiscal. Rio de Janeiro: Elsevier. Toso, Roberto C. and Feller S, Alvaro. (1983), “La crisis económica de la década del treinta en Chile: lecciones de una experiencia”, Serie de Estudios Ecónomicos, no 21. Santiago de Chile: Banco Central de Chile. United Nation Human Settlement Programme (2010), Cities & Citizens series: Bridging the urban divided São Paulo a tale of two divide cities. Nairobi: United Nation Human Settlement Programme. Vaïsse, Maurice (2013), As relações internacionais depois de 1945. Tradução Everson Machado. São Paulo: Editora WMF Martins Fontes. Valenzuela, J. Samuel (1996), Bulding aspects of democracy before democracy: electoral practice in Nineteenth century Chile. The Kellog Institute for International Studies. Varella, Marcelo D. (2012). Direito Internacional Público. São Paulo: Saraiva, pp. 26. 429

Veiga, Pedro da Motta (2004), Foreign direct investment in Brazil: Regulation, flows and contribution to development. http://www.iisd.org/ pdf/2004/investment_country_report_braz il.pdf. Ventura, Deisy (2003), As assimetrias entre o Mercosul e a União Europeia: os desafios de uma associaçãoo inter-regional. Barueri: Manole. Vera, Cristián Garay (2008), “El Acre y los asuntos del Pacífico: Bolivia, Brasil, Chile y Estados Unidos, 1898-1909”, Historia, vol. 41, no 2, JulyDecember. Santiago, pp. 341-369. Vertzberger, Yaacov (1990), The world in their minds: Information processing, cognition, and perception in foreign policy decisionmaking. Stanford: Stanford University Press. Vigevani, Tullo (2004), Integração latinoamericana. São Paulo: CEDEC. Vigevani, Tullo (2006), “Problemas para a atividade internacional das unidades subnacionais: São Paulo e o contexto brasileiro”, Cadernos CEDEC, Centro de Estudos de Cultura Contemporânea. São Paulo: CEDEC. Vigevani, Tullo and Cepaluni, Gabriel (2012), Brazilian foreign policy in changing times: The quest for autonomy from Sarney to Lula. New York: Lexington Books. Villafañe, Gomes, O império e as repúblicas do Pacífico: as relações do Brasil com Chile, Bolívia, Peru, Equador e Colômbia. Curitiba: UFRP. Visentini, Paulo Fagundes (2013), A projeção internacional do Brasil 19302012. Rio de Janeiro: Elsevier. Visentini, Paulo “Brazil: from sleeping giant to emerging power” (2014) in Fábio Castro, Kees Kooning and Marianne Wiesebron, Brazil’s under the 430

Workers’s Party: continuity and change from Lula to Dilma. New York: Palgrave Macmillan. Von Bülow, Marisa (2010), Building transnational networks: civil society and the politics of trade in the Americas. Cambridge: Cambridge University Press. Von Hippel, Sekaquaptewa and Vargas (2002) apud Hermann, Margaret, “One field, many perspectives: Shifting from debate to dialogue”, in Puchala, Donald J., Visions of international relations: Assessing an academic field. Columbia: University of South Carolina Press. Wang, Jay (2006), “Public diplomacy and global business”, Journal of Business Strategy, vol. 7, Issue 3, pp. 41-49. Weber, Javier E. Rodríguez (2015), “Income inequality in Chile since 1850”. Programa de Historia Económica y Social. Documento online no 36. http://cienciassociales.edu.uy/unidadmultidisciplinaria/wp-content/uploads/ sites/6/2015/05/DT_PHES_No-36-Rodriguez-Weber-Income- inequality-inChile-since-1850.pdf. Wei, Shen (2008), “In the mood for multilateralism? China evolving global view”, Working Paper. Centre Asie Ifri. https://www.ifri.org/sites/default/ files/atoms/files/ Chinamultilaterali sm.pdf. Weid, Jean Marc (2009), “Agrocombustíveis: solução ou problema”, in Abramovay, Ricardo, Biocombustíveis a energia da controvérsia. São Paulo: Editora Senac. Weiner, Jerry et al. (2007), Global history volume two: The industrial revolution to the age of globalization. New York: Barron Educational Series. Weintraub, Sidney; Hester, Annette and Prado, Veronica (2007), Energy cooperation in the Western Hemisphere: benefits and impediments. Washington D. C.: The CSIS Press. 431

Weintraub, Sidney; Hester, Annette and Prado, Veronica (2008), Cooperação energética nas Américas: entraves e benefícios. Rio de Janeiro: Elsevier. Welch, David (1999), “Powers of Persuasion”, History Today, vol. 49, issue 8. Columbia: California Press. Wernik, Andrew (1991), Promotional culture – advertising ideology and symbolic expression apud “Branding National Identity”. Georgescu, Anamaria and Botescu, Andrei. London: Sage publications. http://theses. lub.lu.se/archive/sob//soc/ soc04020.pdf. White, Cristopher M. (2014), A global history of the developing world. New York: Routledge. White, Stacey (2011), “Government decentralization in the 21st century”, Washington D.C.: Center for Strategic International Studies. p. 9. http://csis.org/files/publication/ 120329_White_Decentralization_Web.pdf. Wiarda, Howard and Kline, Harvey (2001), An introduction to Latin American politics and development. Boulder: Westview Press. Wight, Martin (2002), “A política do poder”. Prefácio de Henrique Altemani de Oliveira, 2.ed. Brasília: Instituto de Pesquisa de Relações Internacionais / Imprensa Oficial do Estado de São Paulo. Brasília: Editora da UNB. Wilson, Laurie J. (2005), ‘Strategic Cooperative Communities: A Synthesis of Strategic, Issue-Management, and Relationship-Building Approaches in Public Relations’, in Hugh M. Culbertson and Ni Chen (Eds), International Public Relations: A Comparative Analysis. Mahwah NJ: Lawrence Erlbaum. Wittelsbürger, Helmut (2007), “La política energética de Chile: de la dependencia al desarrollo sostenible – el futuro es de las energías 432

renovables, Diálogo Político, no 4. p. 3. http://www.isn.ethz.ch/isn/DigitalLibrary/Publications/Detail/?id=55378. Wolff, Stefan (2009), "Paradiplomacy: scope, opportunities and challenges", vol. 12: 1-3 pring, BC Journal of International Affairs. http://bcjournal. org/2007/paradiplomacy.

Zabala, R (2008), “Inversión extranjera directa em Chile 1954-1986” apud López, Dorotea G. and Muñoz, Felipe, Inversiones Brasilenãs en América del Sur. La perspectiva de los países andinos: el caso de Chile. Santiago: Universidad de Chile. Zanelli, Jorge (2008), “The nucleolectric option in Chile”, Nucleoelectric Working Group. September. http://www.cchen.cl/mediateca/PDF/report _zanelli.pdf. Zanelli, Jorge (2009), “Strategic and policy concerns when considering the introduction of nuclear energy: The case of Chile”, Beijing 2009 International Ministerial Conference. http://www.pub.iaea.org/mtcd/ meetings/PDFplus/2009/cn169/Beijing_TS/TS3/1a%20Zanell i.pdf. Zhang, Zibin et al. (2010), “Food versus fuel: What do prices tell us”, Energy Policy, vol. 38. Issue 1. pp. 445-451. Oxford: Elsevier. This is Chile Chile’s oficial website. Bi-national cooperation. “Chile and Brazil agree to forge new academic and cultural ties”. Thursday 28 February, 2013. http://www.thisischile.cl/8511/ 2/chile-and-brazil-agree-to-forge-new-acade mic-and-cultural-ties/News.aspx Comisión Nacional de Energía http://www.cne.cl/cne/f_cne.html. Kitco Base Metals http://www.kitcometals.com/charts/copper_ historical_ large.html#5years.

433

Chile Foreign Investment Committee http://www.foreigninvestment. cl/index/plantilla3.asp?id _section=7&id_subsecciones=30. GFK Custom Research North America http://www.gfkamerica.com/ practice_areas/roper_pam/nbi_index/index.en.html/nbi_q4-portuguesepress-release.phtml Anholt, Simon. O Globo. "Diplomacia em alta". Caderno Economia, 3rd May 2009, p. 24. Folha de São Paulo, Domingo, 15/07/2007- caderno Mundo, p. 13. “How to invest in Brazil”. The International Business Center of Bahia, Promo http://www.promobahia.com.br/. Chile Foreign Investment investment.cl

Committee.

Available

at:

www.foreign

Foreign Investment Committee, FDI in Chile. Available at: http://www.foreigninvestment.cl/index.php?option=com_content&view=arti cle&id=135&Itemid=100

434

Summary in Dutch Brazilië en Chili zijn wat betreft hun grondgebied, geografie, cultuur, landschap, klimaat, economie en de relatie tussen staat en civiele maatschappij twee landen met zeer verschillende dimensies en kenmerken. Dit verklaart ten dele waarom vergelijkend onderzoek tussen de twee ZuidAmerikaanse landen naar welk thema dan ook tot op heden vrijwel ontbreekt. Deze studie poogt de bilaterale betrekkingen tussen Brazilië en Chili in de hedendaagse geschiedenis - in het bijzonder vanaf het democratisch herstel in respectievelijk 1985 en 1990 - te beoordelen. Zoals gaandeweg dit onderzoek duidelijk wordt, kunnen de bilaterale betrekkingen tussen beide landen niet uitsluitend geanalyseerd worden aan de hand van een beperkte state-centric benadering die zich slechts concentreert op de klassieke kanalen van traditionele diplomatie. Gezien het toenemende belang van niet-statelijke actoren in buitenlandse zaken, zijn hedendaagse internationale betrekkingen niet langer het exclusieve domein van regeringen en hun diplomatieke organen. De snelle expansie van wereldwijde media (met inbegrip van sociale media) in de afgelopen decennia heeft zeker bijgedragen aan de rechtstreekse betrokkenheid van een groter publiek, wiens toehoorders een stem hebben verworven in kwesties die verband houden met buitenlandse zaken. Daarom vereist dit nieuwe scenario een veelzijdige benadering, die ruimte biedt aan de betrokkenheid van de verschillende actoren die - tegenover de officiële belanghebbenden - participeren in gesprekken en discussies op het terrein van buitenlandse zaken. Sinds de jaren 90 van de vorige eeuw zijn een veelvoud aan actoren betrokken geweest bij de betrekkingen tussen Brazilië en Chili. Om deze reden introduceert dit onderzoek concepten als publieke diplomatie, nation branding en presidentiële diplomatie. De toepassing van bovengenoemde concepten faciliteert het inzicht in de gelaagdheid van de hedendaagse bilaterale betrekkingen tussen Brazilië en Chili. De relevantie van publieke diplomatie is de afgelopen jaren toegenomen. Publieke diplomatie gaat over het creëren van banden tussen state-centric en gedecentraliseerde actoren wanneer het gaat om het managen van doelstellingen op het gebied van buitenlands beleid. Publieke diplomatie is een diplomatiek instrument om zogenoemde zachte macht uit te oefenen waarbij de communicatie en 435

berichten van derde-partij-landen richting de publieke opinie essentieel zijn. De grote verscheidenheid aan sectoren die betrokken zijn bij buitenlandse zaken vereist momenteel dat theoretische verklaringen aandacht besteden aan de collaboratieve context waarbinnen internationale betrekkingen zich afspelen. Het voornaamste verschil tussen traditionele en publieke diplomatie is dat de eerste de betrekkingen tussen state-centric actoren omvat, terwijl de laatste gaat over de interactie tussen niet-officiële groepen. Trans-gouvernementele netwerken en internationale organisaties bijvoorbeeld streven regelmatig hun eigen agenda na, ongeacht en soms zelfs in strijd met het verklaarde beleid van hun eigen regeringen met betrekking tot thema’s als mensenrechten, internationale veiligheid of het mondiale milieu. Publieke diplomatie is uitgegroeid tot een belangrijk middel om internationale macht te verwerven, omdat het uitgaat van het gebruik van zachte macht als overtuigingsmechanisme in plaats van het inzetten van geweld, dwang of betaling om doelstellingen op het gebied van buitenlandse zaken te halen. Anderzijds, gezien het feit dat de wereld een markt is geworden waarbinnen partijen onderling afhankelijk zijn van elkaar, hebben landen de neiging om vanuit de gedachte van nation branding campagnes te ontwikkelen die hun internationale imago versterken. Sinds de vroege jaren 80 heeft Chili veel inspanningen en middelen gewijd aan initiatieven gericht op het verbeteren van het imago van het land in het buitenland. Brazilië heeft op haar op beurt meer recentelijk geprobeerd om het eigen internationale imago te verbeteren door de gediversifieerde energiematrix van het land te benadrukken. De indrukwekkende economische groei die Brazilië tot voor kort liet zien, zou echter niet mogelijk zijn geweest zonder een groeiend aanbod van energie. Deze studie zet het concept nation branding in als nuttig instrument voor de analyse van de bilaterale banden tussen Brazilië en Chili. Inspanningen op het gebied van nation branding in combinatie met de groeiende rol die de presidenten van de landen spelen in buitenlands beleid zijn inderdaad kernelementen in de analyse van de betrekkingen tussen Brazilië en Chili. Op deze manier vereist het onderzoek naar de hedendaagse Brazilië-Chili betrekkingen een dynamische benadering die tegelijkertijd de analyse van de rol die publieke diplomatie, nation branding en presidentiële diplomatie spelen, omvat. 436

De analyse van de bilaterale betrekkingen tussen de twee landen wordt in breed historisch perspectief geplaatst. Het belang van de verschillende Portugese en Spaanse koloniale achtergronden die elk van de landen hebben geërfd mag niet worden onderschat. Zo hebben verschillen in taal, cultuur, geschiedenis en politieke instituties in het verleden een significante rol gespeeld in het relatieve gebrek aan samenwerking tussen de twee landen. Bovendien stonden grensconflicten met andere landen tot de negentiende eeuw centraal op de Braziliaanse en Chileense buitenlands beleidsagenda’s, wat elke gunstige omgeving die eerder voor samenwerking had bestaan praktisch niet-bestaand maakte. Het delen van essentiële gelijkenissen draagt bij aan het verkrijgen van een beter begrip van het onderzoek naar de bilaterale betrekkingen tussen de twee landen vanaf de jaren 90 en daarna. In de ligging van Chili achter de hoge bergtoppen van de Andes en de uitgestrekte Atlantische kustlijn van Brazilië delen beide landen specifieke geografische kenmerken die leiden tot een zeker gevoel van isolatie van de rest van de LatijnsAmerikaanse regio. Bovendien hebben beide landen hun blik gericht op compleet verschillende gebieden waarbij Chili de Stille Oceaan beschouwt als een bron voor toekomstige welvaart, terwijl Brazilië deel uitmaakt van de Atlantische wereld. In dit opzicht worden de landen gekenmerkt door specifieke geografische realiteiten die de versterking van de betrekkingen met andere Latijns-Amerikaanse staten niet vergemakkelijken. Tegelijkertijd hebben beide landen respect voor elkaar. In feite delen ze een wederzijdse historische perceptie van elkaar als stabiele en betrouwbare landen in een regio vol onrust. In het verleden droeg de afwezigheid van een gemeenschappelijk grens bij aan het vermijden van conflicten en langdurige rivaliteit in de 19 e en 20e eeuw. In tegenstelling tot de realiteit van het Río de la Plata Bassin (en de conflicten waar landen als Argentinië, Brazilië, Paraguay en Uruguay mee werden geconfronteerd) legde het gebrek aan grensconflicten in feite de basis voor een ander type relatie tussen Brazilië en Chili. Brazilië en Chili hebben tevens verschillende momenten van spanning doorgemaakt met gemeenschappelijk buurland Argentinië. Aangezien Argentinië het zichzelf niet kan permitteren om aan twee fronten tegelijk te strijden was het Argentijnse buitenlands beleid gericht op het gelijktijdig vermijden van conflicten met Chili en Brazilië. Tegelijkertijd gingen Brazilië en Chili het 437

demonstreren van hun expliciete alliantie in bepaalde historische omstandigheden uit de weg om vergelding van Argentinië te voorkomen. Hoewel hun houding en standpunten wel blijk gaven van de steun aan elkaar. Dus, gedurende het grootste deel van de 19 e en 20e eeuw was noch Brazilië, noch Chili gespitst op het versterken van hun bilaterale banden met Argentinië. Sterker nog, geen van hen had een betrouwbare relatie met Argentinië. In het verleden hebben Argentinië en Chili strijd gevoerd over de zuidelijke Andes en de waterwegen die de Stille Oceaan en de Atlantische Oceaan met elkaar verbinden. Sinds de vroege jaren 90 is het scenario dusdanig radicaal veranderd dat de situatie is ontstaan waarin Brazilië en Chili voor het eerst nauwere betrekkingen met het gemeenschappelijke buurland delen. Door het verschuiven van de focus is Argentinië het land geworden waar Chili en Brazilië de sterkste banden uit de regio mee onderhouden. Anderzijds hebben Brazilië en Argentinië onderling ook een relatie opgebouwd op het gebied van veiligheid met betrekking tot kernenergie. Zowel de Braziliaanse als de Chileense initiatieven geven blijk van partnerschappen op essentiële terreinen, waarbij op het gebied van een scala aan kwesties – variërend van harde tot zachte macht - met Argentinië wordt samengewerkt. Dit gezegd hebbende, wordt een gunstige context waargenomen in de interpretatie van de machtsbalans binnen de Zuidkegel en hoe Argentinië op lange termijn invloed heeft uitgeoefend op de bilaterale betrekkingen tussen Brazilië en Chili. Verankerd in de dreiging van oorlog met Argentinië heeft Brazilië in het verleden getracht een goede relatie met Chili op te bouwen. Brazilië, Chili en Argentinië begrepen dat hun partnerschappen hen een aantal duidelijke voordelen zouden brengen om tegenwicht te kunnen geven aan de groeiende aanwezigheid en macht van de Verenigde Staten in de regio. Deze omstandigheden maakten de weg vrij voor het sluiten van het ABC (Argentinië - Brazilië – Chili) Pact in 1915. Hoofdstuk 1 verschaft het theoretisch kader van deze studie en gaat in op de werkdefinities van publieke diplomatie, presidentiële diplomatie en nation branding; de analytische kernconcepten van ons onderzoek. Samen met publieke diplomatie, is para-diplomatie ook het resultaat van de toegenomen participatie van gedecentraliseerde actoren als federale staten, provincies en gemeenten in buitenlandse zaken. Bovendien maakt publieke 438

diplomatie gebruik van het idee van para-diplomatie en beide concepten omvatten het idee van coöperatieve afspraken. Bovengenoemde ideeën kunnen dus bijdragen aan het ontwikkelen van een dieper begrip van de Brazilië-Chili relaties. Publieke diplomatie gaat hand in hand met het idee van het openstellen van de binnen buitenlands beleid gebruikte communicatiekanalen. Daarbij wordt gebruik gemaakt van nieuwe media en digitale middelen die meestal interactieve gebruikers met zich meebrengen. Hoofdstuk 2 analyseert de historische achtergronden van de BraziliëChili betrekkingen. De bilaterale betrekkingen tussen beide landen gaan terug tot 1915 toen het zogenaamde ABC (Argentinië – Brazilië – Chili) Pact werd gesloten. De ondertekening van het pact gaf een duidelijke boodschap af: vanuit het oogpunt van haar buitenlands beleid hechtte Brazilië belang aan het hebben van een nauwere relatie met Chili. Het delen van soortgelijke historische kenmerken zoals politieke stabiliteit en naleving van de beginselen van de rechtsstaat (in tegenstelling tot andere LatijnsAmerikaanse landen) speelde een relevante rol in het ontstaan van wederzijds respect tussen beide landen. Sterker nog, sinds het begin van de 19e eeuw werden beide landen beschouwd als duidelijke voorbeelden van stabiele politieke staten in een onrustige regio. Hoewel Brazilië en Chili in veel opzichten geen expliciete alliantie aangingen, droeg de continue en soepele relatie tussen beide landen bij aan het handhaven van de geopolitieke balans en het onder controle houden van het gemeenschappelijke buurland Argentinië. Hun historische achtergrond is onbetwistbaar bij de interpretatie van de langlopende alliantie en het wederzijds respect tussen de twee staten. Hoofdstuk 3 laat zien hoe de totstandkoming van het wederzijds begrip vanaf de jaren 90 en daarna een kernelement vormde van de betrekkingen tussen Brazilië en Chili. Dit hoofdstuk gaat in op de democratische periode waarin de twee landen de voornaamste relaties ontwikkelden die het karakter van hun bilaterale betrekkingen helpen verklaren. De combinatie van democratisch herstel met de ontwikkeling van gedecentraliseerde samenwerking biedt een nieuw kader waarbinnen de verschillende aspecten van het Brazilië-Chili partnerschap kunnen worden beschouwd. De samenwerkingsinitiatieven die in de regio tussen regionale actoren als de Mercado Común del Sur (Mercosur) en de Unión de Naciones Suramericanas (UNASUR) ontstonden, creëerden regelmatig gelegenheid 439

tot dialoog om regionale kwesties met multilaterale fora aan te pakken, waardoor een nieuwe dynamiek voor bilateraal dialoog werd geconsolideerd. Ondanks hun verschillende strategieën op het gebied van buitenlands beleid wisten de twee landen hun betrekkingen vanaf de jaren 90 en daarna te versterken en slaagden ze erin op verschillende gebieden gedecentraliseerde relaties te ontwikkelen. Hoofdstuk 4 verschaft een bredere context ten behoeve van het inzicht in de fundamentele aspecten van de Brazilië-Chili relaties, waarin Argentinië en de Verenigde Staten een significante rol spelen in cruciale periodes van hechte betrekkingen tussen de twee staten. Argentinië en de Verenigde Staten oefenen dusdanig veel invloed uit op de banden tussen Brazilië en Chili, dat nauwere banden met hetzij Argentinië of de Verenigde Staten, nauwere of meer gecompliceerde betrekkingen tussen Chili en Brazilië aanwakkeren. De verschillende standpunten die Brazilië en Chili innamen ten opzichte van het buitenlands beleid van de Verenigde Staten in de regio, was een fundamentele factor bij het bepalen van de manier waarop de twee landen hun huidige bilaterale betrekkingen hebben ontwikkeld. Hun verschillende diplomatieke perspectieven op bijvoorbeeld de Vrijhandelszone van Amerika die in december 1994 in de Verenigde Staten werd gelanceerd, hebben de beslissingen van zowel Brazilië als Chili over het wel of niet versterken van de politieke betrekkingen of de ontwikkeling van gedecentraliseerd bilaterale banden in gang te zetten, beïnvloed. De sterke banden met hun gemeenschappelijk buurland vereist een analyse van de wijze waarop de betrekkingen met Argentinië de relatie tussen Brazilië en Chili beïnvloeden. Deze invloed was niet alleen van belang in de 19 e eeuw, maar speelt ook vandaag de dag een aanzienlijke rol, aangezien Argentinië – zowel vanwege hun onderlinge economische en handelsafhankelijkheid, als de relevantie van Argentinië als politieke actor in de regio - nog steeds een fundamentele actor is in de bilaterale zaken tussen Brazilië en Chili. Rekening houdend met het feit dat energie een relevante bron van zachte macht is, beschrijft hoofdstuk 5 het toenemende belang van energiebronnen in buitenlandse zaken. De Braziliaanse offshore ontdekkingen van pre-sault in 2007 veranderden de nation branding projectie van het land op dusdanig significante wijze dat het het land een nieuw niveau van oliereserves en productie gaf. Sinds het thema de laatste jaren aan relevantie wint binnen het debat in de internationale gemeenschap, 440

stimuleert energieveiligheid een nieuwe vorm van dialoog tussen staten. Het gebrek aan aardgas in Chili als gevolg van het besluit van President Nestor Kirchner uit 2004 om de gasexporten van Argentinië te verminderen, leidde tot een onvoorspelbare energiecrisis in Chili. De goed geconsolideerde energiematrix van Brazilië en het voortdurende probleem op het gebied van energievoorziening van Chili voedde een dynamisch dialoog tussen beide landen. De Chileense overheid voorziet vanaf 2017 en daarna energietekorten. Dit betekent dat het energiedebat prioriteit heeft op de nationale agenda. Vanwege zijn positie als energieleverancier is Brazilië een interessante partner voor de van import afhankelijke Chileense energiesector. Het laatste deel van deze studie belicht de relatie tussen Brazilië en Chili. Beide landen delen gemeenschappelijke waarden, belangrijke handel, vullen elkaar vanuit economisch perspectief aan, hebben directe investeringen en belastingverdragen en geven elkaar wederzijds respect en steun; allen kernelementen voor constructieve, stabiele, betrouwbare en langdurige betrekkingen. Het doel van Brazilië om een erkende wereldspeler te worden vereist inderdaad steun van Chili in het multilaterale veld. Beide partijen delen coherente waarden en zijn belangrijke bondgenoten bij wereldtoppen. Het bestaan van een verscheidenheid aan formele en informele bilaterale afspraken tussen beide staten bieden mogelijkheden voor partnerschappen op een aantal gebieden. Brazilië is op dit moment meer dan ooit geïntegreerd in de wereldeconomie en zijn status als opkomende macht zal zeker leiden tot de herformulering van de bilaterale betrekkingen tussen Brazilië en Chili waarbij de focus komt te liggen op een multilaterale benadering. Dit onderzoek concludeert dat ondanks de opkomst van nieuwe nietstatelijke actoren in de betrekkingen tussen Brazilië en Chili, de rol van traditionele diplomatie in buitenlandse betrekkingen niet is afgenomen. In feite spelen staatsafgevaardigden nog steeds een belangrijke rol met hedendaags internationale betrekkingen die bovendien een veelzijdige aanpak vereisen. Enerzijds gaan de geheimzinnigheid en exclusiviteit rond traditionele diplomatie in tegen de huidige vraag om openheid rond onderhandelingen en internationale verdragen. Anderzijds echter kan diplomatie niet volledig openbaar zijn en zouden goede maatregelen genomen moeten worden ten aanzien van discretie en publiciteit. In het 441

algemeen is er consensus over het feit dat diplomatie in de afgelopen decennia een veel meer openbaar oogpunt heeft bereikt. De buitenlands beleidsstrategie heeft aanzienlijke impact op de private sector gehad en dus verkent publieke diplomatie ook de interactie tussen de publieke en private sector in internationale zaken. Publieke diplomatie gaat over de uitwisseling van ideeën, informatie en culturele aspecten. Echter, nieuwe vormen van communicatie via de media, zoals internet en inmenging in de publieke opinie maken het moeilijk om een coherent buitenlands beleid te handhaven. In zeer grote landen als Brazilië hebben binnenlandse politieke crises, zoals die tijdens de tweede ambtstermijn van president Dilma Rousseff geleid tot problemen rond de instandhouding van gezamenlijke diplomatieke betrekkingen met meerdere actoren. Openheid en transnationale samenwerking zijn kernelementen bij het verkrijgen van inzicht in hedendaagse internationale betrekkingen, terwijl de participatie van diverse actoren in het buitenlands beleid, vanwege het toenemende aantal stemgeluiden in internationale betrekkingen, politieke onrust kan veroorzaken. Hoewel de toename van niet-traditionele kwesties op de internationale agenda nauwere interactie tussen officiële en niet-officiële actoren begunstigt, vereisen transnationale kwesties het aannemen van collectieve en samenhangende benaderingen. Vanuit dit perspectief heeft binnenlandse politieke instabiliteit een gecompliceerd scenario voor het bedrijven van publieke diplomatie voortgebracht, aangezien de civiele maatschappij de neiging heeft om te participeren in binnenlandse politiek. In de context van een centrale binnenlandse crisis spelen para-diplomatieke betrekkingen en decentralisatie een belangrijke rol in internationale relaties. Ondanks de politieke instabiliteit van centrale overheden, behouden lokale overheden hoge niveaus van samenwerking met gedecentraliseerde actoren. De gedecentraliseerde Brazilië-Chili betrekkingen illustreren de capaciteit van lokale overheden om ondanks binnenlandse politieke onrust te participeren in internationale aangelegenheden. Publieke diplomatie is overtuigd van de noodzaak om de communicatie tussen de verschillen actoren te versterken ten behoeve van een dynamische benadering van buitenlandse zaken. De toegenomen participatie van gedecentraliseerde actoren in de internationale gemeenschap laat zien dat interstatelijke relaties niet beperkt kunnen worden tot een state-centric 442

perspectief zolang niet-officiële actoren in toenemende mate invloed uitoefenen op buitenlands beleid. Echter, de studie van internationale betrekkingen heeft het feit dat publieke diplomatie binnen de Brazilië-Chili relaties is toegenomen nog onvoldoende benadrukt. Aangezien buitenlandse investeringen, toerisme, handel en bilaterale akkoorden kernelementen zijn van de betrekkingen tussen beide landen, spelen bovendien para-diplomatie en nation branding een belangrijk rol in de Brazilië-Chili relaties. De opkomst van Brazilië als wereldspeler houdt in dat het land toegang tot de Stille Oceaan nodig heeft om groeiende handel en buitenlandse investeringen te faciliteren en samenwerking te verbeteren, terwijl de economische en handelsbetrekkingen tussen Brazilië en Chili gestaag blijven uitbreiden. Bovendien laten Chileense investeringen en handel met Brazilië het belang van de Braziliaanse markt voor de Chileense economie zien, ook gezien het feit dat Brazilië sinds 2010 de grootste ZuidAmerikaanse handelspartner van Chili blijkt te zijn. Brazilië en Chili hebben een toenemend aantal gemeenschappelijke belangen met toenemende samenwerking in multilaterale fora. Onlangs heeft Chili de aanvraag van Brazilië om permanent lid te worden van de VN Veiligheidsraad gesteund, wat een belangrijk mechanisme is voor de bevordering van meer intensieve samenwerking tussen beide landen. De Braziliaans-Chileense vredesmissie in Haïti toont al sinds 2004 aan dat veiligheid een belangrijk samenwerkingsterrein tussen beide staten is geworden. Op die manier hebben de betrekkingen tussen Brazilië en Chili in het multilaterale veld bijgedragen aan het ontstaan van nieuwe tactieken voor regionale samenwerking in multilaterale fora.

443

Curriculum Vitae Carmela Marcuzzo do Canto Cavalheiro was born in São Paulo, Brazil, on 28 November 1978. She obtained in 2004 her Master degree in Latin American Studies at Leiden University. In 2014 she received her Bachelor Degree of Law at the Faculty of Law of Santa Maria (FADISMA), Santa Maria, Rio Grande do Sul, Brazil. In 2015 she served as coordinator of the Department of International Law and she was professor of Community Law at FADISMA. Since January 2016 she works at Belmonte Law Firm in Uruguaiana, in the state of Rio Grande do Sul, Brazil.

444