BRASIL'S FOREIGN AID PROGRAM - A NEW KID ON THE BLOCK

In search of soft power, Brazil is turning itself into one of the world's biggest aid donors. But is it going too far, too fast?

One of the most successful post-earth­quake initiatives in Haiti is the expan­sion of LEI Agogo (Lots of Milk, in Creole), a dairy co-operative, into a project encourag­ing mothers to take their children to school in exchange for free meals. It is based on Bolsa Família, a Brazilian welfare scheme, and financed with Brazilian government money. In Mali cotton yields are soaring at an experimental farm run by Embrapa, a Brazilian research outfit. Odebrecht, a Bra­zilian construction firm, is building much of Angola's water supply and is one of the biggest contractors in Africa.

Without attracting much attention, Bra­zil is fast becoming one of the world's big­gest providers of help to poor countries. Official figures do not reflect this. The Bra­zilian Co-operation Agency (abc), which runs "technical assistance" (advisory and scientific projects), has a budget of just 52m reais ($3om) this year. But studies by Brit­ain's Overseas Development Institute and Canada's International Development Re­search Centre estimate that other Brazilian institutions spend 15 times more than abc's budget on their own technical-assis­tance programmes. The country's contri­bution to the United Nations Develop­ment Programme (undp) is $2om-25m a year, but the true value of the goods and services it provides, thinks the undp's head in Brazil, is $ioom. Add the $30001 Brazil gives in kind to the World Food Pro­gramme; a $35om commitment to Haiti; bits and bobs for Gaza; and the $3.3 billion in commercial loans that Brazilian firms have got in poor countries since 2008 from the state development bank (bndes, akin to China's state-backed loans), and the val­ue of all Brazilian development aid broad­ly defined could reach $4 billion a year (see table on next page). That is less than China, but similar to generous donors such as Sweden and Canada-and, unlike theirs, Brazil's contributions are soaring, abc's spending has trebled since 2008.

This aid effort-though it is not called that by the government-has wide implica­tions. Lavishing assistance on Africa helps Brazil compete with China and India for soft-power influence in the developing world. It also garners support for the coun­try's lonely quest for a permanent seat on the un Security Council. Since rising pow­ers like Brazil will one day run the world, argues Samuel Pinheiro Guimarães Neto, the foreign ministry's secretary-general, they can save trouble later by reducing poverty in developing countries now.

Moreover, aid makes commercial sense. For example, Brazil is the world's most efficient ethanol producer, and wants to create a global market in the green fuel. But it cannot do so if it is the world's only real provider. Spreading ethanol technol­ogy to poor countries creates new suppli­ers, boosts the chances of a global market and generates business for Brazilian firms.

The effort matters to the world's aid in­dustry, too-and not only because it helps offset the slowdown in aid from traditional donors. Like China, Brazil does not impose Western-style conditions on recipients. But, on the whole, western donors worry less about Brazilian aid than they do over China's, which they think fosters corrupt government and bad policy. Brazilian aid is focused more on social programmes and agriculture, whereas Chinese aid finances roads, railways and docks in exchange for access to raw materials (though Brazilian firms are busy snapping up commodities in third-world nations, too).

Marco Farani, the head of abc, argues there is a specifically Brazilian way of do­ing aid, based on the social programmes that have accompanied its recent eco­nomic success. Brazil has a comparative advantage, he says, in providing hiv/aids treatment to the poor and in conditional cash-transfer schemes like Bolsa Família. Its tropical-agriculture research is among the world's best. But Brazil also still re­ceives aid so, for good or ill, its aid pro­gramme is eroding the distinction be­tween donors and recipients, thus undermining the old system of donor-dic­tated, top-down aid.

And all this has consequences for the West. Some rich-country governments cautiously welcome what Brazilians call "the diplomacy of generosity", just as they do the soft-power ambitions of which aid is part. After all, if (as seems likely) emerg­ing markets are to become more influen­tial, Brazil-stable, democratic, at peace with its neighbours-looks more attractive and tractable than, say, China or Russia.

But if aid is any guide, a lot will have to change before Brazil occupies the place in the world that its president, Luiz Inácio Lula da Silva, aspires to. Brazil seems al­most ambivalent about its aid programme. The country still has large pockets of third-world poverty, and sending money abroad could be controversial. Brazilian law for­bids giving public money to other govern­ments, so legal contortions are inevitable. The abc aid agency is tucked away in the foreign ministry, where its officials are looked down on as "Elizabeth Arden" dip­lomats (London-New York-Paris), not the "Indiana Jones" adventurers required. At least some aid, for example to Venezuela, seems to have been inspired by Lula's soft spot for leftist strongmen. And the expo­nential increase in aid-the value of hu­manitarian contributions has risen by 20 times in just three years-means that both people and institutions are being over­whelmed. Stories abound of broken prom­ises, incompetence and corruption.

Slowly, though, things are changing. Dilma Rousseff, the presidential candidate from Lula's party, is thought to be mulling over the idea of a new development agen­cy to raise aid's profile, if elected. As Mr Farani says, Brazil needs more aid officials, with more operational independence and a greater emphasis on policy aims, not just piecemeal projects. Until it gets those, Bra­zil's aid programme is likely to remain a global model in waiting-a symbol, per­haps, of the country as a whole. 

New kid on the block
Brazil's foreign-aid commitments, 2010,      $m
Brazilian Co-operation Agency	30
Other technical co-operation	440
Humanitarian aid	30
To UNDP	25
To World Food Programme	300
To Gaza	10
To Haiti	350
Total direct aid	1,200
BNDES loans in developing countries	3,300
2008-Q12010
of which new loans, Ql 2010	1,500
Source: The Economist