After the confrontational expropriation of oil dinosaur Repsol YPF president Cristina Kirchner of Argentina has published a glowing profile of Dilma Rousseff in Time magazine, praising the Brazilian leader for sharing her commitment to "social equality."
But as politicians and business leaders struggle with the role capitalism is to play in driving Globalism 2.0 and its monetary system, Brazil's efforts to bring more "social equality" to Argentina, Iran, Syria, Venezuela and Cuba have made president Dilma and Brazil's world view an issue in the media circus that is the U.S. presidential campaign.
With president Barack Obama in a dead heat with the GOP hopeful, the influential Israeli daily Ha'aretz has buzzed up Romney's claim that Iran will get nuclear weapons if Obama is re-elected. Dilma continues to support Iran's development of what Brasilia characterizes as a peaceful nuclear program.
Former senior U.S. diplomats Roger Noriega and Bernard Aronson, who held the top Latin American portfolio, have published controversial opinion pieces in Foreign Policy and the New York Times calling for Washington to get tough with nations who are friends of the Iran-Venezuela axis, and boycott slackers. Noriega, who is still plugged in to the old Iran-Contra crowd, has been a Romney adviser.
To help stabilize regional energy security Brazil will maintain its large investment in YPF oil infrastructure, continuing the collateral effect of subsidizing an obsolete Peronist social justice model Cristina has repackaged as "social equality" and continues to resonate throughout Latin America. The populist fervor indicative of that model was exploited by Iran's president Ahmadinejad during his Latin American tour in January which he used to build support for his nation's nuclear program.
Currently "social equality" practitioners, Brazil among them, are open to fuel for food swaps that avoid hard currency trails and enable nations to work around embargoes and sanctions like those imposed on Iran and Syria and put nations like Washington at risk for being accused of using food as a political weapon. They also support France, Brazil and other BRICS nations in the discussion over a non-dollar-dominated world reserve currency.
As part of Washington's tough love friendship with Brazil, the Tim Geithner Treasury Department in January reacted to this hybrid version of dollar diplomacy by fudging the benchmark report, listing top foreign purchasers of Treasury securities, minimizing the important role Brazil plays in supporting the U.S. economy. Dilma and Lula made Brazil the No. 3 nation buyer and holder of U.S. Treasury securities right after China and Japan, but by using the same lack of transparency Washington calls out other nations for Brazil got knocked down from the third spot on the list.
Wittingly or unwittingly, the Department of the Treasury created a phantom category known as "oil nations" that bumped Brazil down the list of top buyers while breaking out the list of the "oil nations" by name in a footnote. As the link above indicates, the names of most other nations are listed in the baseball league-style standings, save for offshore Caribbean narcodollar and capital flight havens, which are relegated to footnote status.
Winners and losers in the "social equality" game depend on how public diplomacy is used to shape world opinion. Turning up the volume, Brasilia successfuly played the sanctions card against the United States to win a quarter-billion-dollar World Trade Organization (WTO) settlement over illegal Washington cotton subsidies. President Obama's friend Lula, before leaving office last year, threatened more WTO action that influenced Congress to not renew the annual $6 billion corn ethanol subsidy or the 54 cents per gallon tariff slapped on sugar ethanol that is produced by Brazil.
The stakes in the "social equality" game become higher due to Ahmadinejad's plans to bring the Iranathon to Brazil. If he shows up, you can bet he won't be asking Dilma why it costs around two dollars to ride a subway in Sao Paulo when it costs just thirty cents in Tehran and Buenos Aires.
The Iranian FARS news agency reports Ahamadinejad will visit Brazil to make up for the January meeting with Dilma that was postponed by her handlers in an effort to assuage Washington. So far, Dilma's press team and foreign ministry have been tight-lipped about the visit.
Taking the Iranathon into Dilma's hood would be a public diplomacy coup for the clerics in Tehran and jeopardize White House efforts to promote business ties with Brazil, the world's sixth-largest economy, and other Latin nations and could push Latino and Jewish voters into the Romney camp. With Newt Gingrich throwing in the towel, Romney is picking up up major support from Iranophobe and Las Vegas casino billionaire Sheldon Adelson.
Relations between the White House and the Planalto Palace could become more complicated if Romney decides to visit Brazil to reach out to Dilma and gain support from the influential one million-strong Brazilian LDS community that includes David Neeleman, Brazilian-American owner of Voe Azul and Jet Blue, and a major buyer of Embraer airplanes, Dilma's aircraft of choice.
Already engaged in damage control to ward off Iranophobia, the clerics may want to consider yet another postponement of Ahmadinejad's Brazil trip now that the policia civil in Brasilia arrested Iranian diplomat Hekmatollah Ghorbani for sexually abusing at least four girls between the ages of 9 and 15 in a swimming pool at a local club.
The embassy of Iran in Brasilia says the arrest of the diplomat, who was subsequently released under diplomatic immunity, is the result of a misunderstanding in cultural behavior. In Tehran, the foreign ministry calls the charges "false and baseless."
Argentina's Iran-friendly former president Carlos Menem, who took YPF private during the 1990s, has announced his support for the takeover. In Havana, meanwhile, the communist Castro dictatorship, who support Iran's nuclear program, also backed the Argentine expropriation.
Argentine faiblesse in dealing with Hezbollah continues. Cristina's security services needed international help to roll up a Hezbollah network in the Patagonian city of Bariloche, where Argentina maintains a strategic nuclear center. Iran is also the major buyer of Argentina's corn crop.
With inflation continuing to slow Brazil's growth, Dilma's coalition government would do best to proceed with caution and limit its exposure in Argentina's troubled economy. Morgan Stanley analysts have questioned the veracity of how the Peronist government presents financial information and EuroMoney calls the Argentine economy a "comedy of errors." Journalists and editors who question police brutality and human rights issues have been threatened. If that is not enough to move Dilma off the bubble the Argentine central bank reports third-quarter capital flight at $8.4 billion, much of it to U.S. institutions.
None of this bodes well for Brazil as it moves toward hosting the World Cup and the Rio Olympics. Brazil siding with Argentina in the dispute over the oil rich Falkland islands and refusing port calls from ships flying the British Falkland Islands flag is a factor in Britain's National Security Council reviewing and updating war contingency plans. If tensions escalate shipping exclusion zones and no-fly zones could pose logistical nightmares for southern hemisphere commerce, including the big sports events.
World Cup champion Spain could threaten to boycott the 2014 World Cup over the YPF Repsol affair much as Democratic president Jimmy Carter boycotted the 1980 Moscow Olympics to protest the Soviet Union occuptation of Afghanistan. Britain, threatened by possible war over the Falklands, could do likewise. The influential Globo media empire on Sunday reported that Brazil was part of an arms procurement network to assist Argentina in its invasion of the Falkland Islands in 1982 along with the Soviet Union, Angola, Cuba, Peru and Libya.
Brazil's financial markets and domestic policies may feel some unexpected turbulence being dragged into the slipstream of President Obama's presidential election campaign. With Cuba and Syria, and Chavez providing Iran with a television propaganda base in Latin America being hot campaign issues, U.S. Secretary of State Hillary Clinton, who still says it's not possible she will be upped to the vice presidency, could be spending a lot of time on the phone with Dilma, whose efforts to clean up Brazil's political system have earned her a 77 percent approval rating in the latest polls whether she cries for Argentina or not.