Commercial Pragmatism to prevail over Brazil-Israel Diplomatic Deadlock

President Luiz Inácio Lula da Silva’s controversial statements, likening Israeli attacks on the Gaza Strip to the Holocaust, have stirred turbulence in Brazilian foreign policy and sparked diplomatic tension between Brazil and Israel, according to experts interviewed by the Valor press agency. Brazilian exporters have also raised concerns following Lula’s remarks, though the consensus is that pragmatism in trade between the two countries will prevail.

On Monday (19), the Brazilian Ambassador to Israel, Frederico Meyer, was summoned by Israeli authorities to provide explanations regarding Lula’s comments. Hours later, the Brazilian government decided to recall Meyer for consultations. In Rio, where he is attending the G20 meeting, Foreign Minister Mauro Vieira, in turn, summoned Israeli Ambassador Daniel Zonshine. The meeting lasted about an hour and a half, and Zonshine left without speaking to the press.

The diplomatic crisis also unfolds amidst preparations for the first ministerial-level meeting of the G20 under the Brazilian presidency. The summit of the group’s foreign ministers, which brings together 20 major world economies, is scheduled for Wednesday (21) and Thursday (22) in Rio. While Israel is not part of the G20, the quarrel could overshadow summit discussions, according to experts.

In Brazil, the incident raises concerns among exporters. Data from the government platform ComexStat shows that Brazil exported US$ 662 million worth of goods to Israel in 2023. The top five items include crude oil or bituminous mineral oils (US$ 139 million), beef (US$ 127 million), soybeans (US$ 121 million), soybean meal (US$ 63 million), and corn (US$ 38 million). “We’re talking about three ships of corn and three of soybeans per year. That may not seem much in terms of volume, but any conflict in the commercial area is cause for concern,” says a source linked to grain exporters.

In a written statement, the President of the Brazil-Israel Chamber (BRIL Chamber), Renato Ochman, asserts that the organization is working to maintain bilateral relations and steer clear of political issues. However, “the President’s statement’s repercussions may impact tech imports from Israel, especially in priority sectors such as medicine, security, and intelligence protection,” he said. Brazil imported US$ 1.35 billion worth of Israeli products, with the two main items being inputs for agribusiness: fertilizers (US$ 608 million) and agricultural pesticides (US$ 144 million).

The following chart compares container exports and imports between Brazil and Israel from January 2022 to Dec 2023. The data is from DataLiner.

Brazil – Israel | Container Trade | Jan 2022 – Dec 2023 | TEU

Source: DataLiner (click here to request a demo)

Welber Barral, former Secretary of Foreign Trade, believes the incident will have little impact on bilateral relations. The main point of attention is on the medium term, as exports are kept through licenses and certificates granted by the Israeli government. “Although this may cool down diplomatic relations, Brazil and Israel have a certain stability due to the Mercosur agreement,” he said.

Source: Valor Econômico

Click here to read the original material: https://valor.globo.com/brasil/noticia/2024/02/20/crise-diplomatica-nao-deve-afetar-comercio-entre-brasil-e-israel.ghtml

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