It's about raw materials and infrastructure: The United Arab Emirates wants to become more involved in Brazil in the future. The total amount of investment is impressive: around one hundred billion reais (around 16 billion euros). The Emirates intends to invest in projects such as pasture restoration, industrial development, agricultural exports, infrastructure projects and defense. The investor is the state fund Abu Dhabi Investment Group (ADIG).
The idea of modernizing low-income areas in the suburbs of Rio de Janeiro has particularly attracted media attention. Around three million people live there in slums, often in unsafe conditions and with poor connections to the city center.
"The discussions between investors, the Brazilian federal government and the state government of Rio de Janeiro focused on creating new housing options in favelas (slums) and better connecting them to the city center with subways and high-speed trains," Zayed bin Aweida, CEO of the ADIG fund, told the newspaper O Estado.
There are also economic motives behind the Emirates idea: in the long term, the revenue from tickets for transporting millions of passengers by subway or high-speed train could also generate profits. “It is possible to redesign and connect cities near the capital Rio de Janeiro with roads, subways and high-speed trains,” says Bin Aweida. He even met Brazilian President Lula da Silva in person late last year.
Deepening the relationship
The investment announcements fit into a trend that has been emerging for several years: "Around two and a half billion dollars have recently been invested in the Brazilian economy," economist Felipe Rodríguez from the Getúlio Vargas Foundation business school told DW. The investments were mainly in the areas of research and the energy transition.
"Brazil is a country that is considered key to the practical implementation of the energy transition. And we are following the relationship that has developed between Brazil and the Arab countries," says Rodriguez. This means that the two sides are now cooperating more closely.
"Brazil has generally managed to retain its strategic partners and acquire new ones," the economist points out, explaining that Brazil is committed to the EU free trade agreement, but has also recently expanded its economic relations with India.
Infrastructure and energy projects
Late last year, Brazil and the United Arab Emirates signed two letters of intent on the sidelines of the G20 summit in Rio de Janeiro, which aimed to lay the foundations for future investments.
According to the Brazilian government, the funds will be used for strategic projects in Brazil, especially in the areas of infrastructure and energy. "There are great opportunities in Brazil," Mohamad Murad, secretary general of the Arab-Brazilian Chamber of Commerce, told DW.
“Key sectors of the economy, including infrastructure, port and airport concessions, renewable energy, agribusiness, real estate, defense and other areas, offer good investment opportunities for the Abu Dhabi fund,” says Murad.
How realistic are the plans?
There is particular hope for the plan to modernize the favelas and raise them to a new level of development. However, there have been many promises in the past, so there is also skepticism.
Hopes that the 2016 Olympics and the 2014 World Cup would benefit people in the slums through infrastructure connections have largely been unfulfilled. The memory of the corruption scandal surrounding the construction company Odebrecht, in which millions of dollars in bribes were paid for infrastructure projects, is still fresh. It has permanently damaged trust in Brazilian politics.
But implementing major projects also requires public support. Brazil's judiciary, however, has still not fully resolved the scandal. And the current government of President Lula da Silva shows little interest in it.
Bureaucratic and political obstacles
For the letters of intent from the United Arab Emirates and Brazil to become a reality, bureaucratic and political uncertainties must be removed, says economist Felipe Rodriguez. And Brazil must think long-term: “Projects of this size need certainty to move beyond the status of announcements. We are talking about projects that last 15 to 20 years – but at least a decade.” The biggest obstacles at the moment are the bureaucracy that must be removed.
The two sides have taken a step further in joint mining projects. In January, the governments signed a declaration on cooperation in "projects for the exploration, exploitation, processing, refining and marketing of minerals, and the transfer of Arab technology."
It is a promising prospect for both sides: "The agreement fosters innovation and competitiveness in the raw materials sector, especially for small and medium-sized enterprises, paving the way for a more sustainable and globally integrated future," said Minister of Mining and Energy Alejandra Silveira.
At least on paper, everything indicates that the plans will be implemented. Now, however, the partners must also fulfill their promises.
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