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With Lula in charge, Brazilian firms see much more potential for bilateral trade
CubaNews / June 2003

By Larry Luxner

On the 17th floor of a nondescript office building in downtown São Paulo, politician-turned-businessman Pedro Camelo Filho is pushing trade between Brazil and Cuba.

Camelo is president of the Câmara de Comércio e Indústria Brasil Cuba, founded in 1989.

Back then, few people here thought much about the prospect of business between Latin America’s largest country and a relatively small, poor, communist-ruled Caribbean island. But that changed with the recent inauguration of Brazilian President Luiz Inacio Lula da Silva, a close personal friend of Fidel Castro.

“There’s no better moment for Brazilian firms to invest in Cuba,” Camelo, 38, told CubaNews during an interview in São Paulo last month.

“People here were afraid of doing business with Cuba before, because the government of [former President Fernando Henrique] Cardoso didn’t support it. But with Lula, everything is different. Brazil doesn’t favor the U.S. blockade against Cuba, and any company that wants to invest in Cuba now has a Brazilian foreign policy that supports this investment.”

Last month, “Lula” — as he’s known throughout the world — promised to ask members of the Rio Group of 19 Latin American nations to let Cuba attend the organization’s 2004 annual summit in Brazil. The Rio Group, which serves as a forum for cooperation among members, has excluded Cuba since its creation in 1986.

“Since the next meeting is in Brazil, I plan to consult all members of the Rio Group so that Cuba could take part, at least as a special guest, in our meeting,” said Lula, speaking at the end of this year’s summit in Cuzco, Peru.

Meanwhile in Havana, a new Brazilian ambassador, Tilden Santiago, has presented his credentials to Fidel Castro.

Santiago, once a leftist Roman Catholic priest, is an ex-legislator from Brazil’s Partido dos Trabalhadores (PT), the same party that swept Lula to power after decades in the opposition.

Within months of Lula’s victory, the Cuban government invited state-owned Petrobrás to drill for oil offshore in the Gulf of Mexico (see CubaNews, April 2003, page 12). Petrobrás had spent $15 million in the late 1990s exploring for oil off the north coast of Cuba, near Cayo Coco, but didn’t find anything and left with an option to come back.

“The political will exists, though Petrobrás will decide on the basis of risk, convenience and profit, like any commercial operation,” according to a diplomatic source quoted by Bloomberg News.

Besides Petrobrás, the only Brazilian companies with any real investment in Cuba are Busscar Ônibus S.A. and Souza Cruz S.A.

Busscar, based in the Santa Catarina industrial city of Joinville, produces tourist buses in La Habana province in a joint venture with the Cuban government; it recently won a $25 million loan from Brazil’s Banco Nacional de Desenvolvimento Econômico e Social (BNDES) to expand production.

Rio de Janeiro-based Souza Cruz, through its BrasCuba Cigarrillos S.A. joint venture with Cuban state entity Tabacuba, controls 95% of the island’s hard-currency cigarette market, estimated at 1.4 billion sticks a year (see CubaNews, December 2002, page 1).

In addition, BNDES recently loaned $63 million to Cubacel so that the mobile phone provider — which is 40% owned by Canada’s Sherritt International — could expand its network through the purchase of wireless telecom infrastructure manufactured by the Brazilian subsidiary of Sweden’s Ericsson.

Other BNDES-funded projects include a $50 million credit for the value-added sugar and alcohol sector, and a separate $50 million credit involving Cuba’s nickel industry. Indeed, things are looking up for Brazilian-Cuban business ties in general.

“We closed last year with $150 million in bilateral trade, of which Cuban exports to Brazil came to $10 million,” said Camelo, whose office walls are decorated with Havana travel posters. Also displayed are Habanos cigars, canned mango juice, Caribbean Queen frozen shrimp, Havana Club rum and other well-known Cuban products.

Most of Brazil’s exports to Cuba by value is processed food — mainly frozen chicken and turkey purchased from the country’s top two poultry processors, Sadia and Perdigão. Cuba also buys an estimated 4,000 tons of hydrogenated vegetable oil from Brazil per year.

But Cuba’s poultry purchases have plummeted as U.S. competitors have entered the market, with their ability to get frozen chicken to Cuba quicker and much more cheaply.

“Five years ago the Cubans only knew Sadia and Perdigão,” said a Sadia official in São Paulo who asked not to be named. “But now, the Cuban government is diversifying with small suppliers because we are a premium brand in Brazil, and we use most of our own poultry for our own meats.”

The chamber Camelo runs has just over 100 member firms including Souza Cruz, Perdigão, Petrobrás, tour operator Bluepoint and chemical and biological laboratory Promolab. Camelo, who owns an import-export company that ships processed foods to both Cuba and Venezuela, knows Cuba well. He studied at Havana’s Escuela Nico López before becoming an advisor to Wagner Lino, a PT deputy representing the state of São Paulo.

“Today I am totally dedicated to the business world, and I understand the Cuban market,” he told CubaNews, though it’s clear he’s still an apologist for the Castro government.

“Cuba is not a dictatorship like the military dictatorships that ruled Argentina, Brazil and Chile in the 1980s,” Camelo insisted. “Cuba had a revolution, and its constitution is a dictatorship of proletariats and campesinos.”

The warmer political ties between Brazil and Cuba were evident at the ExpoCuba trade fair held two months ago in São Paulo and Goiânia, capital of the Brazilian state of Goiás. The event marked the first Cuban exhibition here in 43 years, and the first time Cuba’s minister of foreign trade, Raúl de la Nuez, visited Brazil.

Lazaro Cerino da Fonseca, commercial dir-ector of Bluepoint and a member of the chamber’s board, told CubaNews “there are no barriers [to trade with Cuba]. Credit for exports is now available. Before, it was very difficult.”

Tourism might also benefit from the new relationship. Earlier this year, 10 top Brazilian tour operators promised Cuba’s Ministry of Tourism they’d sell Cuba as a prime vacation destination through newspaper and magazine ads. Cubana now advertises round-trip flights from São Paulo to Havana for as little as $620.

“Cuba is opening up to the world, and Brazil must have a presence there,” said Camelo. Yet when asked if Cuba’s dissident crackdown might deter some Brazilians from doing business there, Camelo evaded the question. “We don’t want to interfere with the internal politics of other countries,” he said.

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