Rousseff Seeks Investment From Spain

By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Investing in Brazil’s concession plans, which represent billions of reais of infrastructure contracts, could provide the answer for troubled European economies, Brazilian President Dilma Rousseff has said during an official trip to Spain. The state of the European economy and potential business deals were top of Brazil’s agenda on the visit, overshadowing past immigration issues.

President Rousseff, who also attended the 22nd Ibero-American Summit in Cádiz, criticized “excessive austerity measures,” making reference to the IMF’s recommendations, and reiterated her belief that only by sustained growth through investment can a country emerge from such an economic crisis, pledging her country’s support:

“Brazil can and must contribute to more economic growth, more options for solving the crisis, because this must be done through growth,” President Rousseff said, speaking alongside Spanish Prime Minister Mariano Rajoy in the capital, Madrid.

The president used the opportunity to rally other countries to help Europe get itself out of the crisis, and left little doubt as to where she believed Spain should aim this crisis-averting investment.

Rousseff noted favorable conditions for concession projects, including the R$133 billion (US$64 billion) already announced for roads and railways, with more to come for ports and airports, as well as R$30 billion committed to the Rio-São Paulo high-speed train.

Contracts for telecom infrastructure would be available, an area where Spanish telecoms giant Telefónica already has a foothold through Vivo, Brazil’s second largest telecoms company.

Spain’s King Juan Carlos I said he wanted Brazil to “count on Spanish companies” for the 2014 World Cup and 2016 Olympics, advocating “the possibility of procedures facilitating highly-skilled Spanish workers to stay temporarily [in Brazil]. At the same, we want to encourage Brazilian companies to invest in Spain.”

Spain has been dealt a particularly hard blow by the financial crisis in Europe: it has also been hit by general strikes critical of austerity measures and at record 25 percent unemployment in parts of the country. President Rousseff said Spain, and Europe, had failed to find the right ‘recipe’ to improve the situation, but gave her full backing to the euro as a currency, saying that its fortunes were not just vital to Europe, but globally.

Commentators were left questioning whether Spain had the appetite, let alone the money, for billion-dollar investments, given its current situation.

Despite this, Antonio Martínez, the Director of the Spanish government-funded Instituto Cervantes in Rio, told The Rio Times that Spanish-Brazilian business relations ties are on a high, and that there was likely to be considerable enthusiasm among Spanish companies for the contracts:

He said: “A number of large Spanish multinationals are already present in Brazil, which have already invested heavily over the past twenty years – telecoms, petroleum and highways, to name a few; these companies continue to perform very well and remain relatively unaffected by the crisis. It’s now a question about getting smaller companies to invest.”

Mr. Martínez believes it is imperative companies continue this investment in traditional sectors, as well as branching into new areas, taking advantage of Spain’s considerable knowledge in terms of tourism, accommodation and the staging of large-scale events, gained in particular since the Olympics were held in Barcelona in 1992.

While Spain’s economy is not expected to return to growth until 2014, Brazil’s economy should expand by between 1.5 and two percent this year, and by more in 2013, banking on consumer spending and investment in infrastructure to get it back eventually to the kind of growth seen in 2009-2010.