Situation and cooperation

Key challenges for Brazil’s gov­ern­ment are reducing poverty and in­equal­ities in in­come dis­tri­bu­tion, and es­tab­lish­ing a better balance bet­ween eco­nom­ic de­vel­op­ment and en­vi­ron­men­tal protection.

Brazil is rich in nat­u­ral resources, has a relatively well educated pop­u­la­tion and a significant in­dus­tri­al sector. Its main exports are agricultural and mineral products such as coffee, sugar, iron ore and crude oil, but it is also starting to export more and more high-end industrial products. Brazil is a founding mem­ber of Mercosur (the South American common market) and is keen to play a leading role in this Latin American economic union. In the Doha development round of WTO (World Trade Organisation) negotiations, Brazil is an important representative of the in­ter­ests of the developing countries with regard to agricultural policy and trade protection. In addition, Brazil is campaigning for an en­large­ment of the UN Security Council and is seeking a per­ma­nent seat on that body.

The UNDP Human Development Index (HDI 2010) ranks Brazil 73rd out of 169 countries, putting the emerging country narrowly within the group of states ranked as having "high human development". The country is on track to achieve the Millennium Development Goals. However, despite positive developments and favourable global economic conditions, Brazil has so far not man­aged to fully realise its economic potential. Economic growth rates have been markedly lower than those in many other de­vel­op­ing and emerging countries. The global economic and financial crisis caused the country’s economy to shrink by 0.2 per cent in 2009. However, in 2010, Brazil’s economy recovered, growing by 5.5 per cent, and 2011 is expected to show growth of around four per cent.

The official unemployment rate was around seven per cent in 2010, but in reality the rate is probably higher. Certain groups within the population are not benefiting from Brazil’s positive development because their lack of education keeps them from moving up. Such a group are the ten per cent or so of Brazilians who are illiterate.

Obstacles to investment include a heavy burden of taxes and social insurance contributions, poor quality public services, inequality of opportunity in the education system, infrastructure deficits (for example in the transport and energy sectors), an inadequate judicial system, lack of transparency, corruption and growing environmental problems.

Brazil is hoping to gain international recognition and is looking to boost its development by hosting two of the world’s most im­por­tant sports events: the football World Cup in 2014 and the Olym­pic Games in 2016. The country has plans for significant private and public-sector investments. According to estimates, some 35 billion euros are to be invested up to 2014 just in Rio de Janeiro.

Success in fighting poverty

The situation of the poor has improved markedly in the past few years thanks to the country’s economic stability and a targeted policy of poverty reduction. Some 50 million people are benefiting from the government programme to support families (Bolsa Família), making it the biggest social programme of its kind in the world. The financial support that families receive as part of this programme obliges the recipient families to fulfil certain ob­li­ga­tions such as sending their children to school and taking part regularly in immunisation programmes.

Another way the government has managed to fight poverty is by con­tin­ually increasing the minimum wage and min­i­mum pension. This has improved the situation of those on low incomes amongst the formally employed and pensioners. Further­more, in 2009, the government in­tro­duced a social housing programme called "Minha casa, minha vida" ("My home, my life"), which is providing homes for millions of poor people. Other government programmes are seeking to expand the country’s power supply to provide full cover­age, and to change the dis­trib­u­tion of land ownership.

President Lula da Silva has managed with his social policies to break down patterns of poverty that have been entrenched for decades, with the result that the number of Brazilians living in absolute poverty has fallen from 15 per cent to less than 5 per cent. Despite this progress, poverty and wealth still exist cheek by jowl in Brazil. In the poor areas of large cities such as Rio de Janeiro and São Paulo, in particular, alarming social problems are evident: hunger, drug abuse, crime and gang culture are part of everyday life for many young people there. The social inequalities that exist in urban areas are a major cause of the growing crime rates and social tensions. Brazil’s murder rate is one of the highest in the world.

The inequitable land distribution in Brazil is also causing conflicts. Brazil is the country with the world’s second highest con­cen­tra­tion of land ownership, with 0.9 per cent of landowners owning more than 45 per cent of Brazil’s agricultural land.

Environmental and climate protection

Brazil has the world’s greatest diversity of animal and plant species, however, it has to cope with enormous environmental problems. The progressive destruction of the rainforests is a matter of global concern. In the Amazon region, over a hectare of forest is cut down every minute. Although it has been possible with the help of government programmes and international assistance to reduce the rate of deforestation taking place each year by more than 70 per cent compared with the record level reached in 2003/2004, some 6,500 square kilometres of rain­for­est – an area over seven times the size of Berlin – still disappear each year. Along Brazil’s Atlantic coast, only seven per cent of the original forest area still remains. The destruction of the tropical forests is having a negative impact on the climate of the Earth as a whole. In addition, an ecosystem unlike any other in the world, with flora and fauna that scientists have barely begun to study, is in danger.

Brazil was quick to recognise that its increasing environmental problems, such as air and water pollution, deforestation and large-scale soil erosion, are affecting an ever increasing pro­por­tion of the population. Environmental protection has been a goal of state policy since 1988 and Brazil’s comprehensive en­vi­ron­men­tal legislation is on a par with European standards. In De­cem­ber 2008, Brazil’s president announced the country’s first na­tion­al plan on climate change, and a year later these very am­bi­tious climate protection goals were even adopted in a new law. In that law, Brazil has set itself voluntary deadlines to meet spe­ci­fic targets to reduce greenhouse gas emissions.

However, the rigidity of the regulatory instruments, capacity def­i­cits in Brazilian institutions, the geographic scope of the Amazon, along with problems in relation to transparency and clientilism are hampering the consistent implementation of these laws. An added difficulty is that the government, torn between the de­mands of economic growth and environmental protection, often gives precedence to economic interests.

Protecting natural resources and increasing the use of alternative sources of energy are therefore priority areas of Brazilian-German development cooperation.

Priority areas of German development cooperation

The Federal Republic of Germany is Brazil’s second biggest bi­lat­er­al donor, after Japan. The country’s growing economic power means that development cooperation with Brazil is of much greater political than financial significance. In addition, Brazil is itself investing substantial amounts in bilateral development projects. Depending on the sector and the region, Brazil covers between 30 and 90 per cent of the project costs.

German cooperation with Brazil is focused on political and struc­ture-building activities in a few, clearly defined sectors. The in­ten­tion is to have an impact not only in Brazil itself but also in the whole of Latin America and – in the case of climate protection – worldwide.

What is more, Germany also sees its development cooperation activities as a means of paving the way for private sector in­volve­ment. An improved political and legal environment together with the transfer of know-how and technology are making it easier for German companies to invest in Brazil. There is a long tradition of German entrepreneurial activity in Brazil. For example, there are some 800 German companies in São Paulo, making it the largest German business location outside Germany.

The following priority areas for cooperation were agreed with Brazil at the government negotiations in September 2009:

• The conservation and sustainable use of the rainforest

• Energy (renewable energies and energy efficiency)

Germany has made a commitment of 245 million euros to Brazil at the government negotiations in 2011.

In consultation with the BMZ, the German Environment Ministry is also supporting Brazil in its efforts to implement measures to protect the climate and climate-related biodiversity. It will do this via its International Climate Initiative (ICI).

The conservation and sustainable use of the rainforest

The conservation of the Amazonian and coastal forests, which cover about 60 per cent of the entire surface of Brazil, is very important for the protection of biological diversity and the global climate.

In the period between 1992 and 2009, Germany provided over 300 million euros within the framework of the Pilot Programme to Conserve the Brazilian Rain Forests (PPG7), to be used to protect Brazil’s rainforests. In addition to this financial support, it also assumed the lead role in the implementation of project measures.

Under the Programme, significant areas of the Amazon and of the Atlantic coastal forests have been declared protected zones. In the Amazon region, a large area of land inhabited by indigenous peoples has been officially designated as indigenous land and placed under the protection of the law. The environmental au­thor­i­ties at the federal and state levels have been strengthened, and the Brazilian public’s awareness of the importance of pro­tect­ing tropical forests has been raised. These activities have led to a variety of programmes which have influenced legislation on en­vi­ron­mental and climate protection at national, state and local government levels.

In August 2008, a fund was set up to finance reafforestation measures and sustainable development in the Amazon region. In December 2008, Germany pledged 18 million euros to Brazil for this fund.

In February 2009, Brazil’s government drew up the "Amazon Agenda 2020". The Agenda contains general environmental goals for the region, specifying that by 2020

• there shall be no more illegal logging;

• large parts of the region shall be designated officially as conservation areas and as protected land for the indigenous population;

• the area of land covered by forest shall be stabilised at a high level;

• the value of forest products and services shall have risen considerably;

• effective political programmes and instruments shall have been put in place to ensure management of the environment, forests and water resources.

Germany’s activities to protect the tropical rainforest take account of the Brazilian government’s own goals. Cooperation between Brazil and Germany focuses above all on designating more pro­tect­ed indigenous and nature conservation areas, fostering regional planning that is directed towards the sustainable use of resources, raising the priority given to environmental policy and getting civil society more closely involved. The aim is to achieve a better balance between Brazil’s interest in deriving economic benefit from the Amazon region and the exigencies of protecting tropical forests and the climate.

Renewable energies and energy efficiency

Germany is assisting Brazil in im­ple­ment­ing a climate-neutral, sus­tain­able energy policy. In October 2010, the first official meeting of the parties to the Brazilian-German energy agreement took place. The meeting set the agenda for the parties’ long-term dialogue on re­new­able energies and energy ef­fi­cien­cy. Co­op­er­a­tion in this field will be broad-based and will involve not only the BMZ but also Germany’s Foreign Office as well as its Eco­nom­ics Ministry, Environment Ministry and Food, Agriculture and Con­su­mer Protection Ministry.

Germany is providing policy advice and using new financing instruments such as development and promotional loans to help Brazil make greater use of renewable energies. Support is being provided, for example, to help with the refurbishment and main­te­nance of small-scale hydropower plants. In addition, solar roofs will be fitted on the Belo Horizonte soccer stadium with German support.

In 2008, Germany pledged to support Brazil’s development bank, BNDES, with a loan to help finance wind farms. Germany is also supporting the "Luz para todos" or "light for everyone" programme, that is supposed to bring power from regenerative sources to off-grid areas.

The use of regenerative energy sources such as wind and hydro­power is no longer unusual in Brazil – thanks in part to German efforts. More could still be done with regard to exploiting biomass and photovoltaic energy. Furthermore, there have been few efforts so far to encourage consumers to save energy. That is why Germany is supporting efforts by the state and the private sector to increase energy efficiency. The aim is a sustainable reduction in emissions that are harmful to the climate.

New forms of cooperation

As an emerging global power, Brazil can no longer be regarded as a developing country in the traditional sense. That is why Brazil and Germany have placed their cooperation on a new, modern footing. In late 2010, the two countries concluded the last of what could be called "traditional" development projects – a mea­sure to fight poverty in the northeast of Brazil.

Since Brazil is increasingly engaging in development cooperation as a donor itself, Germany is also involved in triangular co­op­er­a­tion arrangements with Brazil. For example, since 2004, German development co­op­er­a­tion has been supporting Brazilian efforts to combat HIV and AIDS as part of South-South cooperation.

In addition, Brazil and Germany are working together on two triangular cooperation projects, one in Mozambique (disaster risk management and quality infrastructure) and one in Peru (environmental technologies).

Triangular cooperation arrangements create added value in third countries. And, in addition, Brazil and Germany learn from one another and with one another, thus making an active contribution to donor harmonisation.