Fundo Amazônia and Mercosul-União Europeia agreement will be the focus of encounter between Lula and Scholz

The President Luiz Inácio Lula da Silva will receive at this second fair (30) the German Prime Minister Olaf Scholz. The main focuses of the visit should be the resumption of two German contributions to the Amazon Fund, interrupted by the management of former president Jair Bolsonaro, in an agreement between the European Union and Mercosul.

Both issues are seen as relevant, from the point of view of foreign diplomacy, but specialists diverge on the practical effects.

During a visit to Brazil, to participate in the possession of Lula, German President Frank-Walter Steinmeier had already announced that Germany would release 35 million euros for the Amazon Fund.

But the German Minister of Economic Cooperation and Development, Svenja Schulze, affirmed that Berlim plans to donate an even greater amount, of 200 million euros (R$ 1.1 billion), in an interview with the newspaper Folha de S.Paulo published this Sunday (29). With the expectation that the latter officialize the contribution.

The support for the protection of forests occurs from Rio-92, but the contribution to the fund was suspended, logo at the beginning of the Bolsonaro government, during the administration of ex-minister of the environment Ricardo Salles.

Salles, now a federal deputy (PL-SP), tried to alter the composition of the Fund’s council, decreasing the participation of members of civil society and increasing the power of the federal government. Norway and Germany, the main donors of the fund, will understand that it was a breach of agreement and will freeze the reviews of verbas.

Norway, which is the main provider of resources for the protection of the Amazon, also announced the resumption of aid to the fund at the beginning of the year. The fund today is close to R$ 3.5 billion.

Guilherme Casarões, political scientist and professor at FGV EAESP, affirms that the German contribution to the Amazon Fund is an important contribution, which practically doubles the value of the Ministry of Environment’s grant.

“This contribution becomes even more sensitive in the context of a government pressured by the fiscal question and that needs to recompose the entire regulatory, fiscal and environmental preservation structure that was dismantled over the last two years.

The return of Fundo Amazônia is a reflection of the acknowledgment on the part of two European countries that Lula’s new government has two of its main commitments in the environmental (and Amazon) quest.”

For Carlo Cauti, professor of the Ibmec-SP International Relations course and specialist in the European Union, he has taken up two contributions from Germany with symbolic importance, but few practical effects.

“The Fundo Amazônia will not solve the deforestation in the Amazon, considering that the forest of a gigantic area, of 5 million square kilometers, and US$ 3 billion would not be enough to carry out the environmental protection of the entire territory. Therefore, the contribution has a merely symbolic importance.”

The professor also cites a discussion about the direction of two contributions from the fund. Secondly, the main criticism that the previous government made was about the requirement of two European countries to decide to which NGOs the resources would be transferred.

“It is a question of sovereignty, the donor countries want to have the right to decide where to direct the contributions and the previous government resisted. It is clear that the current government has another vision on this”.

Agreement between Mercosul União Europeia

Another highlight of the meeting must be the trade agreement between the European Union, which brings together 27 European countries, and Mercosul, a bloc made up of Brazil, Argentina, Uruguay and Paraguay.

The negotiations of the treaty between the blocks were concluded on June 28, 2019, but for the agreement to become effective, it must go through a process of review and ratification by two national congresses of the Mercosul countries and by the European Parliament.

Peter Adrian, president of the German Chambers of Industry and Commerce (DIHK), recently called for ratification of the agreement. Lula has also previously stated that he intends to make an effort to finalize the agreement, which would create the largest free trade zone in the world. The German government expects to take new steps toward ratification of the agreement during Scholz’s trip.

Casarões points out that in his previous mandates, despite the good political relations between Brazil and Europe, Lula did not appear particularly disappointed in the progress of the bilateral agreement negotiations.

“This happened in a context of intra-Mercosul political disagreements and protectionist industrial policies against European products. Today, as the agreement has been reached, the new government will be able to use it to favor the Brazilian agribusiness, minimizing the resistance that is still strong in relation to Lula”, he says.

The progress of the agreement faced resistance from European countries, mainly during the administration of the Bolsonaro government. European authorities argued that they could not restrict relations with Brazil given the past government’s position on the environment.

More specialists also affirm that the environmental question is used as a pretext to hide the real resistance on the part of countries such as France, who do not want the agreement to advance because of the interest of rural producers, who confirm that the agreement could represent more agreement French products.

Cauti believes that the agreement will hardly advance for this reason and also because of the resistance of Argentina. “There is a lot of resistance in the European Parliament, mainly by French, Irish and Polish producers.

But with the pressure of Germany and Italy, if the 26 countries of the European Union will defend the ratification, the resistance of France would be contornável. But in my vision, it is impossible that this agreement pass this moment mainly because of Argentina “

According to the professor, the ideological vision of the left of the current Argentine government embeds a strong rejection of a tight relationship with European countries. The Kirchnerist current also defends protectionism and argues that the Argentine industry would not have the capacity to face competition with Europe.

Scholz disembarked in Argentina on Saturday (28). In meeting with Alberto Fernández, he defended the ratification of the agreement between Mercosul and the European Union. The Argentine president said that he and Lula also want the conclusion of the agreement. For Cauti, Fernandéz’s talk is just rhetoric, it does not represent significant changes.

Germany is only 11th commercial partner of Brazil

Scholz also seeks to tighten the German trade ties with the South American countries. Even the chancellor is accompanied by a business delegation on a trip to Latin America. More than a thousand German companies do business just in Brazil, such as Mercedes-Benz, Volkswagen and ThyssenKrupp.

Still, Germany represents a small parcel of the Brazilian commercial current. It is barely the 11th export destination of Brazil. The commercial exchange between the two countries is US$ 19.1 billion in 2022, after two US$ 150.4 billion exchanged with China, the main partner of Brazil.

Also, Brazil registered a deficit of US$ 6.5 billion with Germany in 2022. In part, the negative balance of the balance is explained by the added value of two imported products, such as chemical components, items for vehicles, electronics, fertilizers and medicines . As for this, the main products sold to the Germans are raw materials, such as coffee, which represents 27% of exports, and iron ore, with 11%.