U.S. Treasury Secretary John Snow arrives in Brazil today to hail the country as a model of economic success even as a vote-buying scandal erodes confidence in its government
Good! Very good!
<<Snow, who will turn 66 while he's in Rio de Janeiro, said in an interview.>> I hope he doesn't overdo in the party :-)
U.S.'s Snow Is Walking Into Political Storm in Brazil (Update1)
July 31 (Bloomberg) -- U.S. Treasury Secretary John Snow arrives in Brazil today to hail the country as a model of economic success even as a vote-buying scandal erodes confidence in its government.
Brazil's currency, the real, had its second monthly loss of the year in July as lawmakers in South America's most populous nation probe allegations that President Luiz Inacio Lula da Silva's Workers' Party paid bribes to win votes in Congress.
That may complicate what was supposed to be a routine diplomatic trip: the third visit by a Bush administration official since March to a country whose global influence is rising. Lula's economic policies cut inflation to 6.6 percent last year from 14.8 percent in 2003 and sparked the fastest economic growth in a decade.
``There are political issues, but the important thing is to keep those good economic policies on track,'' John Taylor, Snow's former undersecretary for international affairs, said in an interview from Palo Alto, California, where he teaches economics at Stanford University. ``The encouragement of the United States is important.''
Taylor said Snow would likely steer clear of domestic politics during his visit. Tony Fratto, Treasury's spokesman, said Snow's trip has been planned for months and the timing had nothing to do with Lula's political troubles.
While Snow probably won't discuss the scandal, his appearance alone may give Lula's government a lift, investors and analysts said.
`A Net Positive'
``To the extent that Treasury is back in the region, and is interested, that has to be viewed as a net positive,'' said Peter Geraghty, head of emerging markets at Dresdner Kleinwort Wasserstein LLC in New York.
``A visit by someone like Snow always conveys a sense of support,'' said Christian Lohbauer, manager of international relations at the Sao Paulo Industrial Federation. ``The markets tend to make associations like that.''
David Fleischer, a political science professor at the University of Brasilia, said the business people and government officials who will welcome Snow at a dinner in Brasilia today will want to know his thoughts on the scandal. ``Investors are starting to wake up to this,'' said Fleischer, who is on the guest list for the dinner.
Currency
Brazil's currency appreciated in five of the first six months of the year against the dollar and had gained about 12 percent by the end of the May, when the first congressional hearing into the scandal began. The currency fell 1.2 percent in July.
Snow is scheduled to hold separate meetings with Finance Minister Antonio Palocci, central bank President Henrique Meirelles and Lula tomorrow and to speak to the chamber of commerce in Rio de Janeiro on Aug. 2. Snow is set to return to the U.S. overnight on Aug. 3.
``The large purpose of the meeting is simply to affirm the close ties and strong relationship and to commend the government for its good macroeconomic policies,'' Snow, who will turn 66 while he's in Rio de Janeiro, said in an interview.
Affirming `Positive Things'
Asked if he thought the corruption scandal would threaten Lula's ability to advance those policies, Snow said, ``They've already put in place a lot of reforms,'' citing an independent central bank, a narrowing budget deficit and falling inflation. ``I want to affirm the positive things.''
Lula appointed Meirelles to run the central bank after taking office in January 2003 and can fire him as the constitution doesn't allow fixed terms for the position. The central bank is part of the Finance Ministry under Brazilian law, and Lula has delayed pressing for legislation to guarantee its independence. The government says it allows the bank operational autonomy in making decisions.
The Finance Ministry in Brazil declined to comment on its expectations for Snow's visit with Palocci.
Brazil's economic and political influence is rising and the U.S. wants to improve ties, said analysts such as Anthony Harrington, a U.S. ambassador to Brazil under former President Bill Clinton. U.S. Defense Secretary Donald Rumsfeld visited Brazil in March and Secretary of State Condoleezza Rice followed in April.
White House Attention
``The Bush White House has paid more sustained and constructive attention to Brazil than has normally been the case,'' said Harrington, who is president of Washington-based consulting company Stonebridge International LLC and has advised the administration on Brazilian affairs. ``The president has realized success for Brazil is important to the hemisphere and beyond, and very much in the U.S. interest.''
Brazil is pushing for a permanent seat on the United Nations Security Council, and organized developing nations into a negotiating bloc to counter the U.S. and the European Union at the World Trade Organization. Brazil, along with China, India and South Africa, was invited to join the Group of Seven finance ministers and central bank governors at meetings in London this year.
``As the second-largest country to us in the hemisphere, we and Brazil are in some sense rivals,'' said Edwin Truman, who was assistant secretary for international affairs at Treasury in 1999. ``There is a certain arm's length relationship, and there always will be.''
Truman, who is a senior fellow at the Washington-based Institute for International Economics, said Snow ``thinks it's important to pay attention to Latin America, and the biggest country in particular.'' |
