British pound

The U.K.’s decision to leave the European Union is being portrayed by politicians as a unique chance to boost trade with countries outside of the EU, including Brazil, China, Mexico and South Korea. But what about the human and environmental costs?

The U.K. already has £5.1 billion of bilateral trade and investment deals with Brazil, making Brazil the U.K.’s biggest Latin American trading partner. One of the “(c)hallenges to doing business in Brazil” is “high taxes,” says the British government.

Under the Workers Party government’s of Luiz Inacio Lula da Silva and Dilma Rousseff, taxes paid for education and healthcare. With Temer’s social cut, taxes on business may no longer be a problem. By 2014, British sports companies looked to secure £250 million of contracts in the run-up to the two major sporting events held Brazil.

Benefiting big business, British special forces trained the 1960s junta on how to apply effective mental torture to socialists. Prior to and during the World Cup 2014 and the Summer Olympics 2016, private British firms supplied the militarized Brazilian police with special training in hand-to-hand combat.

British company delegates during UK Energy in Brazil 2016. Image courtesy of the British Consulate, Rio de Janeiro
British company delegates during UK Energy in Brazil 2016. Image courtesy of the British Consulate, Rio de Janeiro

Annual weapons exports were in the tens of thousands of pounds sterling and included ammunition and guns. Amnesty International found that the closer it got to the games, the more civilians were killed, as the police and military engaged in slum clearances and social cleansing.

As Brazil shifts to the right under President Temer, the U.K.’s post-Brexit political and business establishment is looking to make more deals. The Financial Times reports that the left-leaning Lula and Rousseff governments “emphasised multilateral negotiations” over bilateral deals because individual countries facing Western giants have more negotiating power as a bloc. But now that the socialists are out of the way, Temer “is seeking to launch an aggressive new phase of trade negotiations” bilaterally with the U.S. and the U.K. This follows Temer’s decision to make major cuts to social security.

The international capitalists in the British cabinet had their eyes on Brazil’s resources — crops, energy, minerals and housing — long before Brexit. But Brexit has accelerated this trend. By backing out of the E.U., the U.K. will be able to form customs unions with non-E.U. states without the permission of Brussels. In 2014, George Osborne was the first British chancellor to visit Brazil in 25 years, having cut taxes on business flights to the country.

Brazil’s housing sector has “seen a sizeable inflow of British investment,” said the Ritz Property Group, which is “capitalising on” the growth of the middle-class. Foreign land grabs have the potential to send housing costs through the roof when the economy grows again. The Rio Times reports, “By buying at a low in the country’s economic cycle investors hope to make a return on their purchases.” The newspaper notes how “the deterioration of the local market” has in part made Brazil “an attractive option for many investors.”

The massive P-52 oil platform in the Roncador oilfield off the coast of Brazil
Britain’s offshore investment: The massive P-52 oil platform in the Roncador oilfield off the coast of Brazil.

But for the poor, the options are restricted to shantytowns. A couple of years ago, the Associated Press reported a typical case: “When it rains, the dirt floor of the home where Taina Ferreira lives with her three small children turns to mud, and the contents of the open sewer that cuts in front of her front door sweep into the house.”

More recently, Kenneth Caplan of America’s Blackstone equity firm explained, “Brazil is particularly stressed because of low economic performance and political uncertainty. These situations tend to create good opportunities” for investors.

What about other sectors? Last month, it was announced that the U.K.’s Special Envoy for Trade and Investment, Mark Prisk, was in Brazil for the second time in six months to talk business. Financial services, infrastructure, mining and energy were on the table. “Trade is one of the U.K.’s top priorities,” said Prisk.

As climate change continues wreaking havoc across the world, particularly in poor countries, the governments of the U.K. and Brazil are expanding their fossil fuel economies. The U.K.’s GE Wellstream oil and gas supply company has made pipelines more efficient for carrying pollutants, following joint research projects between technicians in Newcastle (U.K.) and Niteroi (Brazil).

Last December, U.K. Export and Finance announced that JPMorgan and HSBChad facilitated a British tax-funded loan (or line of credit) to Brazil’s Petrobas “to finance the supply of oil and gas related equipment and services by U.K. exporters.” This will involve British companies helping to exploit resources in the southern Atlantic, particularly in the Campos, Santos and Espirito Basins. The report confirms that Indigenous peoples and cultural heritage concerns “do not apply as potential activity occurs in deep offshore waters,” regardless of potential inland effects.

Environmental consequences, including “emissions to the atmosphere” and “community safety” were acknowledged, but left with Petrobas to deal with. “(T)he Project was deemed to have potential to cause adverse environmental and social impacts,” says the U.K. government’s website. “However, a proposed suite of controls as part of (Petrobas) facilitates the management of these impacts.”

As Temer considered privatizing insurance companies, Prisk met with the head of the state-owned Private Insurance Regulator, Joaquim Mendanha, to set up a task force on (re)insurance “with the aim of bolstering mutual cooperation,” said Mercopress. Back in May, Reuters reported that foreign affairs minister Jose Serra was preparing a privatization “roadshow,” coming to London and New York.

As soon as the results of the Brexit referendum were in, Serra announced Brazil’s intention to work on a free trade deal with the U.K. If the recent past is anything to go by, “free trade,” or neoliberalism, will mean privatization, environmental damage and the financialization of Brazil’s economy.

 

Written by T.J. Coles, author of The Great Brexit Swindle and Britain’s Secret Wars.

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