Brazil: Platform for growth

By Joe Leahy/Financial Times

Font: http://www.ft.com/cms/s/0/fa11320c-4f48-11e0-9038-00144feab49a.html#axzz1HYIXoGn1

On the Cidade de Angra dos Reis oil platform, surrounded by the deep blue South Atlantic, a Petrobras engineer turns on a tap and watches black liquid flow into a beaker.

It looks and smells like ordinary crude oil. But for Brazil, this represents something much more spectacular. Pumped by the national oil company from “pre-salt” deposits – so-called because they lie beneath 2,000m of salt – 300km off the coast of Rio de Janeiro, it is some of the first commercial oil to flow from the country’s giant new deepwater discoveries.

Already estimated to contain 50bn barrels, and with much of the area still to be fully explored, the fields contain the world’s largest known offshore oil deposits. In one step, Brazil could jump up the world rankings of national oil reserves and production, from 15th to fifth. So great are the discoveries, and the investment required to exploit them, that they have the potential to transform the country – for good or for ill.

“This could be the largest private sector investment programme in the history of mankind – more than actually putting a man on the moon,” says Pedro Cordeiro of the Bain & Company consultancy in São Paulo. He estimates the total investment could be roughly equivalent to the annual gross domestic product of Australia. “Not counting new concessions, you will have $1,000bn of investment over the next 10 years. It’s huge.”

Deepwater oil production is hazardous, as the leak last year at BP’s Macondo well in the Mexican Gulf showed. But if all goes to plan, the discoveries will provide Brazil with a full tank of petrol at a time when its exports of iron ore, soyabeans and other commodities are already driving a boom. Latin America’s biggest economy grew 7.5 per cent last year and is expected to grow by nearly 5 per cent in 2011. Longer term, expected increases in the oil price driven by the nuclear crisis in Japan and political unrest in the Middle East will only help to make drilling deepwater oil more profitable.

Having seen out booms and busts before, Brazilians are hoping that this time “the country of the future” will at last realise its full economic potential. The hope is that the discoveries will provide a nation already rich in renewable energy with an embarrassment of resources with which to pursue the goal of becoming a US of the south.

The country’s scientists and industrialists see in the deposits the seeds of an oil-driven technological renaissance, which would speed Brazil’s race towards developed nation status. Economists, however, see a threat as well as a promise.

The danger for Brazil, if it fails to manage this windfall wisely, is of falling victim to “Dutch disease”. The economic malaise is named after the Netherlands in the 1970s, where the manufacturing sector withered after its currency strengthened on the back of a large gas field discovery combined with rising energy prices.

Even worse, Brazil could suffer a more severe form of the disease, the “oil curse”, whereby nations rich in natural resources – Nigeria and Venezuela, for example – grow addicted to the money that flows from them. This leads to poor governance and corruption.

Some argue that, oil finds aside, Brazil is already in the early stages of Dutch disease. Exporters and domestic manufacturers are struggling to compete globally as Chinese demand for the country’s commodities drives up the value of the real. The currency has strengthened about 40 per cent against the dollar in two years. The problem has become so acute that Brazil has condemned what it calls a worldwide “currency war”, alleging its trading partners are manipulating their exchange rates to keep them artificially low.

“[Brazil’s] Dutch disease comes from timber and meat, and all kinds of natural resources, not just oil,” says Professor Kenneth Rogoff of Harvard University, a former chief economist at the International Monetary Fund. “The oil could bring it to a whole new level.”

José Sergio Gabrielli, Petrobras chief executive, says neither the company nor the country’s oil industry has so far been big enough to become a government cash cow. But with the new discoveries, which stretch across an 800km belt off the coast of south-eastern Brazil, this is going to change. The oil industry could grow from about 10 per cent of GDP to up to 25 per cent in the coming decades, analysts say. To curb any negative effects, Brazil is trying to support domestic manufacturing by increasing “local content” requirements in the oil industry.

Without a “firm local content policy”, says Mr Gabrielli, Dutch disease and the oil curse will take hold. However, “if we have a firm and successful local content policy, no – because other sectors in the economy are going to grow as fast as Petrobras”.

The company has set a target of 53 per cent local content for new oil projects, compared with the old compulsory minimum of 30 per cent. This policy will be put to the test by the new discoveries, which will require scores of oil tankers, platforms and drilling rigs. Petrobras is planning to invest an initial $224bn in the discoveries by 2014. Last year, it raised $70bn from the world’s largest equity offering to finance the plan.

The other long-term dividend Brazil is seeking from the discoveries is in R&D. Extracting oil from beneath a layer of salt at great depth, hundreds of kilometres from the coast, is so challenging that Brazilian engineers see it as a new frontier. If they can perfect this, they can lead the way in other markets with similar geology, such as Africa.

Segen Estefen of Coppe, the Federal University of Rio de Janeiro’s engineering centre, says the institution is developing a technology hub at llha do Fundão in the city’s Guanabara Bay to help exploit the discoveries. International oil services companies, including French-based Schlumberger, and multinationals such as IBM and General Electric, are setting up laboratories. “The example of Silicon Valley can be applied here,” he says.

For its part, Petrobras is spending $800m-$900m a year over the next five years on R&D, and has invested $700m in the expansion of its research centre, Cenpes, located near Coppe.

However, analysts believe that some government efforts to capitalise on the discoveries risk backfiring. To try to enforce the local content system, Brasília has made Petrobras the sole operator of fields in the new discoveries, with a minimum 30 per cent stake in any project in the area. In the past, any company could bid for a block on an equal footing. It has also set up a 100 per cent government-controlled company that will have the power of veto over investment decisions in each block.

Making Petrobras the sole operator will reduce competition, analysts say. In addition, there are worries that both the oil company and its local suppliers are becoming overstretched. Petrobras recently pulled out of oil exploration in Cuba, for example, citing investment commitments at home.

“Given that local suppliers are already struggling to meet Petrobras’ current demands . . . the risk of cost overruns and delays is significant,” Eurasia Group analyst Erasto Almeida wrote in a recent research note on the new discoveries.

Ultimately, Brazil’s ability to avoid Dutch disease will depend not just on how the money from the oil is spent. The country is the world’s second biggest exporter of iron ore. It is the largest exporter of beef. It is also the biggest producer of sugar, coffee and orange juice, and the second-largest producer of soyabeans.

Exports of these commodities are already driving up the exchange rate before the new oil fields have fully come on stream, making it harder for Brazilian exporters of manufactured goods. Industrial production has faltered in recent months, with manufacturers blaming the trend on a flood of cheap Chinese-made imports.

“Brazil has everything that China doesn’t and it’s natural that, as China continues to grow, it’s just going to be starved for those resources,” says Harvard’s Prof Rogoff. “At some level Brazil doesn’t just want to be exporting natural resources – it wants a more diversified economy. There are going to be some rising tensions over that.”

The government might try to counter any decline in Brazil’s industrial strength by increasing its investment in “local champions” in agriculture and mining. Other areas of industry, such as defence, which has local content requirements, could benefit too. Brazil’s development bank, BNDES, has lent nearly $200bn in the past two years to large companies. It is reducing lending this year but will remain one of the nation’s biggest creditors.

TECHNOLOGY

‘The spillover impact from research is going to be very important’

Far from the sands of Copacabana, on one of many islands in the large Guanabara Bay to the north-east of Brazil’s most famous city, the Federal University of Rio de Janeiro and Petrobras aim to derive a technological dividend from the country’s huge Atlantic Ocean oil finds.

As the national oil company admits, the fields represent a new frontier for the industry. The crude is encased beneath a 2km-thick layer of salt that, unlike rock, shifts during drilling. The fields contain corrosive substances such as hydrogen sulphide. Because of their depth, water pressure can be twice normal levels. No one knows how the reservoirs will behave once large-scale commercial production begins.

The challenges of deepwater oil drilling were highlighted by last year’s BP’s leak in the Mexican Gulf but scientists at Petrobras are undaunted. “We are not scared about pre-salt at all – it’s very important for us to say that,” Carlos Tadeu da Costa Fraga, executive manager of Cenpes, the company’s research centre, says of the form the deposits take.

Tackling the demands of extracting pre-salt oil has become the main research project for Cenpes and neighbouring Coppe, the university’s engineering centre. Coppe has built an “ocean tank” that it says is the world’s largest. Housed in the equivalent of an eight-storey building, the tank simulates wave patterns and currents in the Atlantic to measure the effects on oil platforms and other equipment.

The layers of salt make it tricky to use seismic imaging techniques. But José Sergio Gabrielli, Petrobras’s chief executive, says that to process data the company has assembled computing power of about 190 teraflops, the largest such capacity in Latin America. It is equivalent to more than 25,000 personal computers.

The research will “have a spillover impact on Brazilian technology that’s going to be very important”, he says.

Analysts say Brazil is right to try to capitalise on the technological side of its pre-salt discoveries. Norway was able to use its 1960s discoveries to convert itself from a fishing exporter into an oilfield services expert.

Pedro Cordeiro, a partner with the Bain & Company consultancy in São Paulo, likens the task to a chocolate soufflé. Brazil has all the right ingredients to create an oil services centre to rival Houston, Texas – but the skill is in the baking.

“If the government plays its cards right – and so far there’s no reason to believe that they won’t – you could actually have one of the oilfield services poles for the world here,” he says. “Multinationals will have to come.” But if the system became too protectionist, Brazil might lose out. “Many countries tried to create an oil industry and it just didn’t happen.”

 

Tomorrow!!! Brasil em pauta na University of Chicago

O Center for Latin America Studies, da Universidade de Illinois em Chicago, apresentará o seminário “Oil, Euphoria and Brazil’s Future: The Politics of Potential and Limitation”.

O palestrante será Norman Gall.

In English: Norman Gall, executive director of the Fernand Braudel Institute of World Economics, which is engaged in research, public debate and social action on Brazil’s institutional problems, with emphasis on education, energy policy and public finance. Norman received the 2010 Maria Moors Cabot Prize from the Columbia University Journalism School for his 50 years of reporting and research on Latin America.

Mr Gall is the editor of the Braudel Papers, a bi-monthly newspaper of research and opinion, published in English, Portuguese and Spanish.
He has been engaged in reporting and research on Latin America since 1961 with his work appearing in The New York Times, The Wall Street Journal, The Washington Post, The Economist, among others. He has also been consultant to Exxon Corporation (1979), World Bank (1984-85; 1989-90), United Nations (1985), Technoplan (1993).

Será dia 31, próxima sexta-feira, às 17h30, na SS122 – 1126 E 59th St.
The University of Chicago
O evento é gratuito e aberto ao público.

BRAZIL AND THE UNITED STATES: BILATERAL PARTNERSHIP AND GLOBAL PERSPECTIVES

By Mauro Vieira, Ambassador of Brazil to the United States

Brazil is the first and lengthiest stop on President Obama’s March 2011 visit to Latin America – a testament to its growing global importance. Brazil’s economy is now the seventh largest in the world and one of the fastest growing – in 2010, its rate of growth exceeded seven percent. An increasingly important trading partner for the United States, it is also gaining political clout on the world stage. This presents an opportunity for increased cooperation between the two countries on a range of global issues from nuclear proliferation and unrest in the Middle East to energy and human rights. Please join us for a conversation with Ambassador Mauro Vieira who will discuss the evolution of the relationship between Brazil and the United States, taking into consideration the opportunities and challenges offered by the current state of global affairs and the new perspectives opened by President Obama’s visit to Brazil.

Mauro Vieira became the Ambassador of Brazil to the United States in January, 2010. Prior to being appointed to this post, he was the Brazilian Ambassador to Argentina since 2004. Vieira has held several positions at the Brazilian Ministry of Foreign Relations, including Chief of Staff to the Minister of External Relations and Chief of Staff to the Secretary-General. He has also held positions at other Brazilian federal agencies, having served as Secretary for Managerial Modernization at the Ministry of Science and Technology, Assistant Secretary-General for Science and Technology, and National Secretary for Management at the National Institute for Social Security at the Ministry of Social Security and Assistance. His previous positions abroad include postings at the Embassy in Paris (1995-1999), the Embassy in Mexico City (1990-1992), the mission to the Latin American Integration Association in Montevideo (1982-1985), and the Embassy in Washington (1978-1982). Vieira has received decorations from the governments of Brazil, Argentina, Chile, Peru, Mexico, Portugal, Spain, France, Denmark, Norway, the Netherlands, Poland, and Romania. He holds a J.D. from the Federal University of Rio de Janeiro and graduated from Instituto Rio-Branco, the Brazilian diplomatic academy.

Fonte: The Chicago Council

Dilma Rousseff: ‘Welcome to Brazil, president Obama!”

Now read the remarkes of president of Brazil.

Excelentíssimo senhor Barack Obama, presidente dos Estados Unidos da América,

Senhoras e senhores integrantes das delegações dos Estados Unidos da América e do Brasil,

Senhoras e senhores jornalistas,

Senhoras e senhores,

Senhor presidente Obama,

A sua visita ao meu país me enche de alegria, desperta os melhores sentimentos de nosso povo e honra a histórica relação entre o Brasil e os Estados Unidos. Carrega também um forte valor simbólico.

Os povos de nossos países ergueram as duas maiores democracias das Américas. Ousaram também levar aos seus mais altos postos um afrodescendente e uma mulher, demonstrando que o alicerce da democracia permite o rompimento das maiores barreiras para a construção de sociedades mais generosas e harmônicas.

Aqui, senhor presidente Obama, sucedo a um homem do povo, meu querido companheiro Luiz Inácio Lula da Silva, com quem tive a honra de trabalhar. Seu legado mais nobre, Presidente, foi trazer à cena política e social milhões de homens e mulheres que viviam à margem dos mais elementares direitos de cidadania.

Dos nove chefes de Estado norte-americanos que visitaram oficialmente o Brasil, o senhor é aquele que encontra o nosso país em um momento mais vibrante.

A combinação de uma política econômica séria com fundamentos sólidos e uma estratégia consistente de inclusão fez do nosso país um dos mais dinâmicos mercados do mundo. Fortalecemos o conteúdo renovável da nossa matriz energética e avançamos em políticas ambientais protetoras de nossas importantes reservas florestais e de nossa rica biodiversidade.

Todo esse esforço, presidente Obama, criou milhões de empregos e dinamizou regiões inteiras antes marginalizadas do processo econômico. Permitiu ao Brasil superar, com êxito, a mais profunda crise econômica da história recente, mantendo, até os dias atuais, níveis recordes de geração de postos de trabalho.

Mas são ainda enormes os nossos desafios. Meu governo, neste momento, se concentra nas tarefas necessárias para aperfeiçoar nosso processo de crescimento e garantir um longo período de prosperidade para o nosso povo.

Meu compromisso essencial é com a construção de uma sociedade de renda média, assegurando oportunidades educacionais e profissionais para os trabalhadores e para a nossa imensa juventude, garantindo também um ambiente institucional que impulsione o empreendedorismo e favoreça o investimento produtivo.

O meu governo trabalhará com dedicação para superar as deficiências de infraestrutura, e não pouparemos esforços para consolidar nossa energia limpa, ativo fundamental do Brasil.

Enfim, daremos os passos necessários para alcançar nosso lugar entre as nações com desenvolvimento pleno, forte democracia e ampla justiça social.

É aqui, senhor presidente Obama, que enxergo as melhores oportunidades para o avanço das relações entre nossos países. Acompanho com atenção e a melhor expectativa seus enormes esforços para recuperar a vitalidade da economia americana.

Temos assim, como o mundo todo, uma única certeza: a de que o povo americano, sob a sua liderança, saberá encontrar os melhores caminhos para o futuro dessa grande nação.

A gentileza da sua visita, logo no início do meu governo, e o longo histórico de amizade entre nossos povos me permitem avançar sobre dois temas que considero centrais nas futuras parcerias que fizermos: a educação e a inovação.

Aproximar e avançar em nossas experiências educacionais, ampliando nosso intercâmbio e construindo progresso em todas as áreas do conhecimento é uma questão chave para o futuro dos nossos países.

Na pesquisa e inovação, os Estados Unidos alcançaram as mais extraordinárias conquistas nas últimas décadas, favorecendo a produtividade em diferentes setores econômicos. O Brasil, senhor presidente Obama, está na fronteira tecnológica em algumas importantes áreas, como a genética, a biotecnologia, as fontes renováveis de energia e a exploração do petróleo em águas profundas.

Combinar as nossas mais avançadas capacidades no campo da pesquisa e da inovação certamente trará os melhores frutos para as nossas sociedades. Tomo como exemplo o pré-sal, a mais recente fronteira alcançada pela tecnologia brasileira. Acreditamos que os enormes desafios de cada etapa da exploração dessas riquezas poderão reunir uma inédita conjunção do conhecimento acumulado pelos nossos melhores centros de pesquisa.

Mas, senhor Presidente, se queremos construir uma relação de maior profundidade é preciso também, com a mesma franqueza, tratar de nossas contradições.

Preocupam-me em especial os efeitos agudos decorrentes dos desequilíbrios econômicos gerados pela crise recente. Compreendemos o contexto do esforço empreendido por seu governo para a retomada da economia americana, algo tão importante para o mundo. Porém, todos sabem que medidas de grande vulto provocam mudanças importantes nas relações entre as moedas de todo o mundo. Este processo desgasta as boas práticas econômicas e empurra países para ações protecionistas e defensivas de toda natureza.

Somos um país que se esforça por sair de anos de baixo desenvolvimento, por isso buscamos relações comerciais mais justas e equilibradas. Para nós é fundamental que sejam rompidas as barreiras que se erguem contra nossos produtos – etanol, carne bovina, algodão, suco de laranja, aço, por exemplo. Para nós é fundamental que se alarguem as parcerias tecnológicas e educacionais, portadoras de futuro.

Preocupa-me igualmente a lentidão das reformas nas instituições multilaterais que ainda refletem um mundo antigo. Trabalhamos incansavelmente pela reforma na governança do Banco Mundial e do FMI. Isso foi feito pelos Estados Unidos e pelo Brasil, em conjunto com outros países. E saudamos o início das mudanças empreendidas nestas instituições, embora ainda que limitadas e tardias, quando olhada a crise econômica. Temos propugnado por uma reforma fundamental no desenho da governança global: a ampliação do Conselho de Segurança da ONU.

Aqui, senhor Presidente, não nos move o interesse menor da ocupação burocrática de espaços de representação. O que nos mobiliza é a certeza que um mundo mais multilateral produzirá benefícios para a paz e a harmonia entre os povos.

Mais ainda, senhor Presidente, nos interessa aprender com os nossos próprios erros. Foi preciso uma gravíssima crise econômica para mover o conservadorismo que bloqueava a reforma das instituições financeiras. No caso da reforma da ONU, temos a oportunidade de nos antecipar.

Este país, o Brasil, tem compromisso com a paz, com a democracia, com o consenso. Esse compromisso não é algo conjuntural, mas é integrante dos nossos valores: tolerância, diálogo, flexibilidade. É princípio inscrito na nossa Constituição, na nossa história, na própria natureza do povo brasileiro. Temos orgulho de viver em paz com os nossos dez vizinhos há mais de um século, agora.

Há uma semana, senhor Presidente, entrou em vigor o Tratado Constitutivo da Unasul, que deverá reforçar ainda mais a unidade no nosso continente. O Brasil está empenhado na consolidação de um entorno de paz, segurança, democracia, cooperação e crescimento com justiça social. Neste ambiente é que devem frutificar as relações entre o Brasil e os Estados Unidos.

Senhor Presidente, quero dizer-lhe que vejo com muito otimismo nosso futuro comum.

No passado, esse relacionamento esteve muitas vezes encoberto por uma retórica vazia, que eludia o que estava verdadeiramente em jogo entre nós, entre Estados Unidos e Brasil.

Uma aliança entre os nossos dois países – sobretudo se ela se pretende estratégica – é uma construção. Uma construção comum, aliás, como o senhor mesmo disse no seu pronunciamento sobre o Estado da Nação.

Mas ela tem de ser uma construção entre iguais, por mais distintos que sejam esses países em território, população, capacidade produtiva ou poderio militar.

Somos países de dimensões continentais, que trilham o caminho da democracia. Somos multiétnicos e em nossos territórios convivem distintas e ricas culturas.

Cada um, a sua maneira, temos o que um poeta brasileiro chamou de “sentimento do mundo”.

Sua presença no Brasil, senhor Presidente, será de enorme valia nessa construção que queremos juntos realizar.

Uma vez mais, presidente Obama, bem-vindo ao Brasil.

Remarks of President Barack Obama in Rio

Read the remarks in full given by The United States Embassy in Brazil.

 

Teatro Municipal
Rio de Janeiro, Brazil
Sunday, March 20, 2011

2:56 P.M. BRT

THE PRESIDENT:  Hello, Rio de Janeiro!

AUDIENCE:  Hello!

AUDIENCE MEMBER:  Many welcomes!

THE PRESIDENT:  Alô, Cidade  Maravilhosa!  (Applause.)  Boa tarde, todo o povo brasileiro.  (Applause.)

Since the moment we arrived, the people of this nation have graciously shown my family the warmth and generosity of the Brazilian spirit.  Obrigado.  Thank you.  (Applause.)  And I want to give a special thanks to all of you for being here, because I’ve been told that there’s a Vasco football game coming.  (Cheers and boos.)  Botafogo — (laughter.)  So I know that — I realize Brazilians don’t give up their soccer very easily.  (Laughter.)

Now, one of my earliest impressions of Brazil was a movie I saw with my mother as a very young child, a movie called Black Orpheus, that is set in the favelas of Rio during Carnival.  And my mother loved that movie, with its singing and dancing against the backdrop of the beautiful green hills.  And it first premiered as a play right here in Teatro Municipal.  That’s my understanding.

And my mother is gone now, but she would have never imagined that her son’s first trip to Brazil would be as President of the United States.  She would have never imagined that.  (Applause.) And I never imagined that this country would be even more beautiful than it was in the movie.  You are, as Jorge Ben-Jor sang, “A tropical country, blessed by God, and beautiful by nature.”  (Applause.)

I’ve seen that beauty in the cascading hillsides, in your endless miles of sand and ocean, and in the vibrant, diverse gatherings of brasileiros who have come here today.

And we have a wonderfully mixed group.  We have Cariocas and Paulistas, Baianas, Mineiros.  (Applause.)  We’ve got men and women from the cities to the interior, and so many young people here who are the great future of this great nation.

Now, yesterday, I met with your wonderful new President, Dilma Rousseff, and talked about how we can strengthen the partnership between our governments.  But today, I want to speak directly to the Brazilian people about how we can strengthen the friendship between our nations.  I’ve come here to share some ideas because I want to speak of the values that we share, the hopes that we have in common, and the difference that we can make together.

When you think about it, the journeys of the United States of America and Brazil began in similar ways.  Our lands are rich with God’s creation, home to ancient and indigenous peoples.  From overseas, the Americas were discovered by men who sought a New World, and settled by pioneers who pushed westward, across vast frontiers.  We became colonies claimed by distant crowns, but soon declared our independence.  We then welcomed waves of immigrants to our shores, and eventually after a long struggle, we cleansed the stain of slavery from our land.

The United States was the first nation to recognize Brazil’s independence, and set up a diplomatic outpost in this country.  The first head of state to visit the United States was the leader of Brazil, Dom Pedro II.  In the Second World War, our brave men and women fought side-by-side for freedom.  And after the war, both of our nations struggled to achieve the full blessings of liberty.

On the streets of the United States, men and women marched and bled and some died so that every citizen could enjoy the same freedoms and opportunities — no matter what you looked like, no matter where you came from.

In Brazil, you fought against two decades of dictatorships for the same right to be heard — the right to be free from fear, free from want.  And yet, for years, democracy and development were slow to take hold, and millions suffered as a result.

But I come here today because those days have passed.  Brazil today is a flourishing democracy — a place where people are free to speak their mind and choose their leaders; where a poor kid from Pernambuco can rise from the floors of a copper factory to the highest office in Brazil.

Over the last decade, the progress made by the Brazilian people has inspired the world.  More than half of this nation is now considered middle class.  Millions have been lifted from poverty.  For the first time, hope is returning to places where fear had long prevailed.  I saw this today when I visited Cidade de Deus — the City of God.  (Applause.)

It isn’t just the new security efforts and social programs  — and I want to congratulate the mayor and the governor for the excellent work that they’re doing.  (Applause.)  But it’s also a change in attitudes.  As one young resident said, “People have to look at favelas not with pity, but as a source of presidents and lawyers and doctors, artists, [and] people with solutions.”  (Applause.)

With each passing day, Brazil is a country with more solutions.  In the global community, you’ve gone from relying on the help of other nations, to now helping fight poverty and disease wherever they exist.  You play an important role in the global institutions that protect our common security and promote our common prosperity.  And you will welcome the world to your shores when the World Cup and the Olympic games come to Rio de Janeiro.  (Applause.)

Now, you may be aware that this city was not my first choice for the Summer Olympics.  (Laughter.)  But if the games could not be held in Chicago, then there’s no place I’d rather see them than right here in Rio.  And I intend to come back in 2016 to watch what happens.  (Applause.)

For so long, Brazil was a nation brimming with potential but held back by politics, both at home and abroad.  For so long, you were called a country of the future, told to wait for a better day that was always just around the corner.

Meus amigos, that day has finally come.  And this is a country of the future no more.  The people of Brazil should know that the future has arrived.  It is here now.  And it’s time to seize it.  (Applause.)

Now, our countries have not always agreed on everything.  And just like many nations, we’re going to have our differences of opinion going forward.  But I’m here to tell you that the American people don’t just recognize Brazil’s success — we root for Brazil’s success.  As you confront the many challenges you still face at home as well as abroad, let us stand together — not as senior and junior partners, but as equal partners, joined in a spirit of mutual interest and mutual respect, committed to the progress that I know that we can make together.  (Applause.) I’m confident we can do it.  (Applause.)

Together we can advance our common prosperity.  As two of the world’s largest economies, we worked side by side during the financial crisis to restore growth and confidence.  And to keep our economies growing, we know what’s necessary in both of our nations.  We need a skilled, educated workforce — which is why American and Brazilian companies have pledged to help increase student exchanges between our two nations.

We need a commitment to innovation and technology — which is why we’ve agreed to expand cooperation between our scientists, researchers, and engineers.

We need world-class infrastructure — which is why American companies want to help you build and prepare this city for Olympic success.

In a global economy, the United States and Brazil should expand trade, expand investment, so that we create new jobs and new opportunities in both of our nations.  And that’s why we’re working to break down barriers to doing business.  That’s why we’re building closer relationships between our workers and our entrepreneurs.

Together we can also promote energy security and protect our beautiful planet.  As two nations that are committed to greener economies, we know that the ultimate solution to our energy challenges lies in clean and renewable power.  And that’s why half the vehicles in this country can run on biofuels, and most of your electricity comes from hydropower.  That’s also why, in the United States, we’ve jumpstarted a new clean energy industry. And that’s why the United States and Brazil are creating new energy partnerships — to share technologies, create new jobs, and leave our children a world that is cleaner and safer than we found it.  (Applause.)

Together, our two nations can also help defend our citizens’ security.  We’re working together to stop narco-trafficking that has destroyed too many lives in this hemisphere.  We seek the goal of a world without nuclear weapons.  We’re working together to enhance nuclear security across our hemisphere.  From Africa to Haiti, we are working side by side to combat the hunger, disease, and corruption that can rot a society and rob human beings of dignity and opportunity.  (Applause.)  And as two countries that have been greatly enriched by our African heritage, it’s absolutely vital that we are working with the continent of Africa to help lift it up.  That is something that we should be committed to doing together.  (Applause.)

Today, we’re both also delivering assistance and support to the Japanese people at their greatest hour of need.  The ties that bind our nations to Japan are strong.  In Brazil, you are home to the largest Japanese population outside of Japan.  In the United States, we forged an alliance of more than 60 years.  The people of Japan are some of our closest friends, and we will pray with them, and stand with them, and rebuild with them until this crisis has passed.  (Applause.)

In these and other efforts to promote peace and prosperity throughout the world, the United States and Brazil are partners not just because we share history, not just because we’re in the same hemisphere; not just because we share ties of commerce and culture, but also because we share certain enduring values and ideals.

We both believe in the power and promise of democracy.  We believe that no other form of government is more effective at promoting growth and prosperity that reaches every human being

— not just some but all.  And those who argue otherwise, those who argue that democracy stands in the way of economic progress,

they must contend with the example of Brazil.

The millions in this country who have climbed from poverty into the middle class, they could not do so in a closed economy controlled by the state.  You’re prospering as a free people with open markets and a government that answers to its citizens.  You’re proving that the goal of social justice and social inclusion can be best achieved through freedom — that democracy is the greatest partner of human progress.  (Applause.)

We also believe that in nations as big and diverse as ours, shaped by generations of immigrants from every race and faith and background, democracy offers the best hope that every citizen is treated with dignity and respect, and that we can resolve our differences peacefully, that we find strength in our diversity.

We know that experience in the United States.  We know how important it is to be able to work together — even when we often disagree.  I understand that our chosen form of government can be slow and messy.  We understand that democracy must be constantly strengthened and perfected over time.  We know that different nations take different paths to realize the promise of democracy. And we understand that no one nation should impose its will on another.

But we also know that there’s certain aspirations shared by every human being:  We all seek to be free.  We all seek to be heard.  We all yearn to live without fear or discrimination.  We all yearn to choose how we are governed.  And we all want to shape our own destiny.  These are not American ideals or Brazilian ideals.  These are not Western ideals.  These are universal rights, and we must support them everywhere.  (Applause.)

Today, we are seeing the struggle for these rights unfold across the Middle East and North Africa.  We’ve seen a revolution born out of a yearning for basic human dignity in Tunisia.  We’ve seen peaceful protestors pour into Tahrir Square — men and women, young and old, Christian and Muslim.  We’ve seen the people of Libya take a courageous stand against a regime determined to brutalize its own citizens.  Across the region, we’ve seen young people rise up — a new generation demanding the right to determine their own future.

From the beginning, we have made clear that the change they seek must be driven by their own people.  But for our two nations, for the United States and Brazil, two nations who have struggled over many generations to perfect our own democracies, the United States and Brazil know that the future of the Arab World will be determined by its people.

No one can say for certain how this change will end, but I do know that change is not something that we should fear.  When young people insist that the currents of history are on the move, the burdens of the past can be washed away.  When men and women peacefully claim their human rights, our own common humanity is enhanced.  Wherever the light of freedom is lit, the world becomes a brighter place.

That is the example of Brazil.  That is the example of Brazil.  (Applause.)  Brazil — a country that shows that a dictatorship can become a thriving democracy.  Brazil — a country that shows democracy delivers both freedom and opportunity to its people.  Brazil — a country that shows how a call for change that starts in the streets can transform a city, transform a country, transform a world.

Decades ago, it was directly outside of this theater, in Cinelandia Square, where the call for change was heard in Brazil. Students and artists and political leaders of all stripes would gather with banners that said, “Down with the dictatorship.  The people in power.”  Their democratic aspirations would not be fulfilled until years later, but one of the young Brazilians in that generation’s movement would go on to forever change the history of this country.

A child of an immigrant, her participation in the movement led to her arrest and her imprisonment, her torture at the hands of her own government.  And so she knows what it’s like to live without the most basic human rights that so many are fighting for today.  But she also knows what it is to persevere.  She knows what it is to overcome — because today that woman is your nation’s president, Dilma Rousseff.  (Applause.)

Our two nations face many challenges.  On the road ahead, we will certainly encounter many obstacles.  But in the end, it is our history that gives us hope for a better tomorrow.  It is the knowledge that the men and women who came before us have triumphed over greater trials than these — that we live in places where ordinary people have done extraordinary things.

It’s that sense of possibility, that sense of optimism that first drew pioneers to this New World.  It’s what binds our nations together as partners in this new century.  It’s why we believe, in the words of Paul Coelho, one of your most famous writers, “With the strength of our love and our will, we can change our destiny, as well as the destiny of many others.”

Muito obrigado.  Thank you.  And may God bless our two nations.  Thank you very much.  (Applause.)

END 3:17 P.M. BRT