This week's meeting of Brazilian President Dilma Russef and U.S.President Barak Obama in Washington is expected to be short on splashy announcements, but it could go long way to healing a breach between the leaders of the hemisphere's two largest economies.
U.S.-Brazilian relations have been frosty since 2013, when leaked National Security Agency files revealed that the U.S. had spied on Brazil. Ms. Rousseff’s decision to accept a rain-check for a U.S. visit that she canceled following the scandal marks a turning point.
It may also be a chance, analysts say, for the leftist Brazilian leader to show businesses at home that she is working to secure export opportunities at a time when Brazil’s economy is struggling.
“We need to reduce the risks of doing business in Brazil,” she said in a Monday interview in New York with The Wall Street Journal as she began a visit to the U.S. aimed at attracting investors and to meet with Mr. Obama in Washington.
Her task is complicated by poor economic conditions at home. Annual inflation is running at 8.8% despite high interest rates, with the benchmark rate at 13.75%. Economists forecast an economic contraction this year. But Ms. Rousseff said Brazil still has strong fundamentals that should attract long-term investors.
Her visit comes amid a widening investigation into alleged price-fixing and corruption surrounding government-controlled oil giant Petróleo Brasileiro SA, or Petrobras. Several Brazilian companies are being investigated in connection with the scandal. Some are cooperating with investigators; some have denied wrongdoing. Some of those executives who have made plea deals whave alleged that Ms. Rousseff’s campaign received some of the illegal funds.
The president said Monday that all of her campaign funds were legal. “I don’t accept that anyone could insinuate any irregularities” in her campaign donations, she said.
Petrobras also said Monday that it plans to slash investments by 37% over the next five years in an effort to reduce its soaring debt load.
The president and some of her ministers were in New York to pitch to investors a package of infrastructure works they hope will draw U.S. investors.
In turn, a rapprochement with Brazil would mark the latest effort by Mr. Obama to ease long-standing friction with some key Latin American nations. Mr. Obama in December ordered the restoration of full diplomatic ties with Cuba after a five-decade standoff, a move applauded by the Brazilian government.
“It was very important for Latin America that the last trait of the Cold War was done away with,” she told the Journal.
Still, experts say Ms. Rousseff’s trip is expected to produce little beyond the message that the nations are warming up to each other after two years of chill.
“Expectations for the visit are quite modest,” said Michael Shifter, of The Inter-American Dialogue, a Washington, D.C. think tank. “There is mutual interest in rebuilding the bilateral relationship but [it isn’t] clear which projects are politically viable that would signal real progress.”
Later on Monday, Ms. Rousseff will head to Washington for dinner with Mr. Obama. Working meetings at the White House are scheduled the following day, as well as lunch with Vice President Joe Biden, according to Brazilian officials. Brazilian and U.S. officials couldn’t confirm the exact topics to be discussed.
Ms. Rousseff is scheduled to travel to San Francisco on July 1 to visit some as-yet unnamed business leaders before returning to Brazil, according to people close to the situation. Brazil is a major market for U.S. technology and social-media firms.
Relations between Brazil and the U.S. soured after former NSA contractor Edward Snowden unveiled in 2013 that the agency was spying on Brazilian leaders, including Ms. Rousseff, and on Petrobras. Ms. Rousseff canceled a high-profile state visit to Washington scheduled that year and demanded an apology from the U.S. that never came.
To mend fences, the White House offered Ms. Rousseff another state visit in 2016, the soonest Mr. Obama’s schedule could accommodate it, people close to the situation said. Ms. Rousseff opted for a shorter event this year before Washington becomes consumed with 2016 presidential politics, these people said.
With her popularity waning at home and Brazil’s economy likely in recession, Ms. Rousseff’s U.S. visit has taken on new urgency. The U.S. is Brazil’s second-largest export market, behind China. But while the Chinese buy mainly commodities whose prices have slumped, the U.S. is Brazil’s biggest customer for higher-value manufactured goods, including airplanes and engines.
In addition, large Brazilian companies have major operations in the U.S. They include airplane maker Embraer SA, meatpacker JBS SA and private-equity firm 3G Capital, owner of Burger King restaurants and ketchup maker H.J. Heinz Co. Well-off Brazilians are major buyers of Florida real estate.
“The U.S. is on [Ms. Rousseff’s] priority list,” said Roberto Goulart Menezes, a foreign-affairs professor at University of Brasília.
Still, he said major breakthroughs are unlikely during Ms. Rousseff’s visit given the countries’ vastly different outlooks on trade. The U.S. has signed free-trade agreements with 20 nations and forged smaller pacts with dozens more. Brazil’s economy, in contrast, is heavily protected. “There is no way Brazil can negotiate toe to toe with the U.S.,” he said. “We shouldn’t overestimate Brazil’s heft.”
The countries have sparred on several occasions. In 2002, for example, Brazil complained to the World Trade Organization that the U.S. was unfairly subsidizing American cotton exporters. The WTO ruled against the U.S., and last year Washington agreed to pay $300 million to settle the issue.
Ms. Rousseff’s visit is more likely to yield advances in areas such climate change and education, said Peter Schechter, a director at the Adrienne Arsht Latin America Center, in Washington. “These are small things, but if you add them up it begins to show an opening of relations,” he said.
The Brazilian-American Chamber of Commerce of the Southeast provides information, connection, and support for businesses interested in trade and investments between Brazil and the Southeastern United States. Click here to learn about the benefits and services we provide. For more information, contact us at firstname.lastname@example.org and ask us about our membership and advertising opportunities.