Brazil complains to Obama about monetary policy

Brazilian President Dilma Rousseff complained about U.S. monetary policy and expressed concern that sanctions against Iran could backfire in a meeting with President Barack Obama on Monday, highlighting strains between the Western Hemisphere's two biggest democracies.

Rousseff said low interest rates and other expansionist policies in wealthy nations have created a glut of global liquidity, which in turn has the unintended effect of damaging growth in poorer countries such as Brazil.

She also raised concerns with Obama that sanctions against Iran could fuel tensions in the Middle East and cause a spike in oil prices, threatening the global economic recovery, sources told Reuters on condition of anonymity.

Her comments punctuated a generally cordial White House visit that yielded some modest advances in cooperation on aviation and technology sharing, but also exposed clear differences on trade, economic policy and foreign affairs.

"Expansionist monetary policies ... ultimately lead to a depreciation in the value of the currencies of developed countries, thus impairing growth outlooks in emerging countries," Rousseff told reporters in the Oval Office, as Obama looked on.

Obama, who spoke first, struck a more conciliatory tone, calling Rousseff a "good friend." He congratulated Brazil for making "extraordinary progress" in reducing poverty.

"Our trade and investment is reaching record levels, which creates jobs and business opportunities in both countries," Obama said.

Brazil came into the meeting seeking greater U.S. recognition for its recent economic rise and increased investment in its economy, which has stalled in recent months.

The White House wants greater access for U.S. companies to Brazil's growing consumer market of about 190 million people, which could help drive job growth in the United States.

There were no major breakthroughs. But the leaders' meeting ran for more than 75 minutes, half an hour longer than scheduled, in what officials from both countries described as a hopeful sign that they can establish better communication on key issues going forward.

A senior Brazilian official told Reuters the conversation included disagreements about Cuba and the Middle East but that the overall tenor and attention devoted to Brazil's concerns was "much better than anyone expected."

"I think there was a click today" between Obama and Rousseff, the official said.

Brazil's Growing Economy

Speaking at a media briefing shortly after the Oval Office meeting, White House spokesman Jay Carney declined to comment on how Obama responded to Rousseff's concerns over monetary policy.

Rousseff voiced her concerns about Iran sanctions at a working lunch between the leaders, the officials said. Brazil has generally opposed sanctions against Iran and Syria, arguing that they increase the risk of armed conflict.

Still, most of the day's business focused on how to boost bilateral trade, which totaled about $74 billion in 2011. Brazil is the world's sixth largest economy but only the eighth biggest foreign market for U.S. goods.

A forum of business leaders from both countries, held across the street from the White House at the U.S. Chamber of Commerce, played to an overflow crowd of several hundred people. When Rousseff addressed the forum in the evening, some people in suits were seated on the floor.

"It's a sign of the interest in Brazil, which is only going to become more attractive as a market in coming years," said Paulo Sotero, director of the Brazil Institute for the Wilson Center in Washington.

In her meeting with Obama and again before business leaders, Rousseff said Brazil would welcome greater U.S. investment in infrastructure, especially as the country prepares to host the 2014 World Cup and 2016 Olympics.

The leaders signed a memorandum of understanding to expand ties in the aviation sector, which they said in a statement should allow for greater travel and tourism.

Talks over greater trade integration yielded little progress. A joint statement released by Rousseff and Obama after their meeting said they had "further emphasized the importance of the mutual benefits of stimulating increased trade and investment," but mentioned no major advances.

Obama and Rousseff did not explicitly discuss Boeing's proposal to sell F-18 jets to Brazil during their meeting, sources said.

The omission of the deal from the conversation could indicate reduced chances of the deal taking place. Reuters reported in February that Brazil was "very likely" to choose a jet made by France's Dassault instead for a contract worth at least $4 billion to renew its Air Force fleet.

Sotero said that while the visit did not herald any major progress on trade or investment, he was encouraged by Rousseff's speech at the business forum, in which she emphasized the United States' importance as an engine for global economic growth.

"I think she's clearly portraying the United States as part of the solution to Brazil's problems," Sotero said. "That's a positive change compared to recent years. We'll have to see what it means in practice in the next few months."

[Source: By Brian Winter and Caren Bohan, Reuters, Washington, 09Apr12]

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