On Sunday, January 25, 2004, India signed a preferential trade agreement (PTA) with Latin American trading block MERCOSUR at Delhi. Although the details of the arrangement are yet not made public, this PTA is said to pave the way for creation of a free trading block between MERCOSUR countries and India. This agreement was signed by Ministers from Brazil, Paraguay, Uruguay, Argentina with Commerce and Industry Minister of India (Arun Jaitley) in the presence of the Indian Prime Minister and President Lula of Brazil who is currently visiting India. Significantly, President Lula was also the Chief Guest at the 54th Republic Day Parade held o­n January 26, 2004 – a gesture which shows how important Brazil is becoming for the Indian government in its international and national diplomatic as well as political endeavours.

For the Indian government, the visit of the Brazilian President comes in it at a juncture when general elections for the lower house of the Indian Parliament are just round the corner.

Given the hype created by the Vajpayee government with respect to existence of the "feel good factor" and an "India Shining" at the domestic level (e.g. good gross domestic growth rate, a managed stock market, buoyant tax collections, number of sops to large industry – both domestic and foreign, irrespective of growing disparity between rich and the poor, growing unemployment within semi-skilled and unskilled labour, growing disparity within states, rising internal debt and inflation) the government is keen to impress o­n their voters about its skills to use a ‘so-called’ strong economic position as a lever to extract a strong geo-economic and geopolitical position at the regional and international level.

The visit of the Brazilian President assumes importance in the context of the deliberations at the Cancun Ministerial Conference of the WTO. Just a few months ago, Brazil and India led the G-20 countries towards articulation of an offensive negotiating position o­n agriculture. This spoilt the plans of the EU and the US to sway the outcomes of the Cancun Ministerial. The Indian Government would be keen to refresh memories of its voters with this achievement and more so o­nce again remind (rather fool) farmers and peasants that it was the BJP-led government that protected their interests at Cancun.

The visit of the Brazilian President is taking place just a few days after the World Social Forum that was held in India for the first time. In fact, the Indian government was very quick to invite President Lula to the Republic Day ceremonies as a State Guest as soon as it learnt that the President of Brazil had expressed his desire to attend the World Social Forum (2004) as a simple worker and not as a President. This averted a major protocol controversy for the Government of India. The Bharatiya Janata Party (BJP) would also use this visit of President Lula to showcase to its voters that it is ready to speak to a section within the Left that is interested in "reforming" globalization to address national concerns. Of course no o­ne knows what "national" means for the BJP.

The discussions between Brazil and India during this visit of the President have been "trade plus". In fact during discussions with the Brazilian delegation, the Indians seem to have shown keen interest to participate in major projects in Brazil, particularly the railway sector. Moreover, negotiations are also in an advanced stage for a Brazilian micro-satellite to be operationalised from an Indian launch pad. India has also offered the indigenously developed "Param" supercomputer to Brazil.

This shows that the latitudes and longitudes of cooperation between India and Brazilian are fast moving into areas of high-end technology that can be employed in the areas of defence and warfare.

This growing cooperation needs to be seen in the context of the existing capabilities that both countries enjoy in the area of strategic defence. Brazil already has the capabilities of producing a commercial aircraft and India has the necessary wherewithal to produce o­ne for combat. Both countries are also well placed in production of high-end equipment to be used o­n the ground such as tanks and other land-based combat vehicles. India has successfully used its technological and mechanical prowess to produce state-of-the art missiles and rocket propellants that can deliver a payload across continents. India has also invested heavily in developing its capabilities to strengthen its navy.

Moreover, the BJP-led government has not been shy to say that it would be interested to share its defence technology with countries that may be interested to purchase it or could be in a position to make a part payment for the same by granting market access to Indian exports. The results of recent visits of Prime Minister Vajpayee to Syria and Kazakhstan and the FTAs that India has inked with Thailand and Singapore show this.

Does this visit of President Lula mark a beginning of an era wherein Brazil and India could become new-generation suppliers of defence equipment to countries?

Nuclear Suppliers Group (NSG) is a group of nuclear supplier countries which seeks to contribute to the non-proliferation of nuclear weapons through the implementation of Guidelines for nuclear exports and nuclear related exports. The NSG Guidelines are implemented by each participating Government in accordance with its national laws and practices. Decisions o­n export applications are taken at the national level in accordance with national export licensing requirements. Incidentally, the NSG was formed specifically as a response to the 1974 Indian nuclear tests and was initially directed solely against India. Under the NSG guidelines no nuclear cooperation is possible between NSG members and India unless India accepts IAEA fullscope safeguards o­n all nuclear activities in India. India has quite rightly refused to accept such a condition.

However, recognizing the need to engage India in talks the NSG Plenary in 2001 "agreed there should be consideration of options for intensified dialogue with non-NSG, including those not parties to the Non Proliferation Treaty (NPT) and that possess developed nuclear capability and are potential nuclear suppliers." In the subsequent meetings of the NSG consultative group, while some of the western countries such as USA, France, Russia, and Germany were in favour of a dialogue with India, the opposition to any talk with India was led by some of India’s friends, especially Brazil and South Africa, their objection being that "there should be no forms of reward in terms of recognition or easing of controls of transfers of nuclear related material."

The NSG prohibition o­n assistance to India of civilian nuclear technology is perceived as o­ne of the most serious impediments to enhanced Indo-US cooperation in civil nuclear technology. Brazil has been active at the NSG meetings in leading the charge against such cooperation with India.

Interestingly, Brazil has been against the Indian military nuclear programme even in its bilateral relations. India and Brazil had signed a bilateral agreement o­n civil nuclear cooperation in the late 1950s and early ’60s. When India conducted its peaceful nuclear test in 1974, Brazil unilaterally repudiated this agreement. Later, o­nce again in the early ’90s, India and Brazil signed another nuclear cooperation agreement, this time in the area of thorium, since both countries have abundant reserves of the same. o­nce again, in response to the Indian 1998 nuclear tests, Brazil unilaterally repudiated this agreement.

The Bharatiya Janata Party that is leading the National Democratic Alliance Government at the Centre has been aggressively pursuing its ambition of making India a permanent member of the UN Security Council. The Indian government has been able to extract support for the candidature of India from important countries in major continents. But till date it had not received a clear backing o­n its position from a big country in Latin American region.

In this context it is important to note that India and Brazil have also agreed to support each other’s bid to enter the United Nations Security Council as permanent members. Addressing a Press Conference before leaving for Agra in Delhi, President Lula said, "We are demanding that India, Brazil and South Africa be represented o­n the U.N. Security Council as permanent members". He further remarked, "Important countries have to have seats."

Since the last o­ne year the Indian Government has been very upbeat in thawing political relationships with its neighbours and with its existing and prospective trading partners within the developing world by using instruments in the realm of trade and defence.

Big business involved in goods, services as well as defence establishments in India are keen that these thawing relationships become a process of extracting market access for their products and services with a cutting edge over similar products and services being imported by thee countries from the rest of the world. In return the Indian government is also opening its own market by lowering import tariff rates, by reducing regulation of entry to foreign investors and by loosening its control over outflow of monetary and property resources. Besides big business, the right wing hawks within the BJP have always been keen to extract their agenda in the realm of nuclear and defence issues by meshing them well with trade and economic diplomacy.

Given the so-called strong macroeconomic parameters of India, a number of developing countries that believe in export-led growth model of development are approaching India for signing trade deals that would give their products and services a preferential access to the Indian markets (e.g. Thailand, Bangladesh). It is therefore not surprising to see that Brazil and its MERCOSUR partners did not want to be left out. The Indian government is also taking strategic advantage of this situation.

Theoretically such kind of arrangements would increase "South-South" trade. But with the growing transnationalization of production and with the spate of mergers and acquisitions between entities producing goods sectors o­ne needs to see if these arrangements become channels for routing highly subsidized goods of developed countries into markets of developing countries, especially in the area of agriculture. What could be a better form of "creative destruction"?

At a broader level, Brazil, India and South Africa – countries that would be in the thick of such processes, should not forget that the developing and poor nations are watching their growing association with great interest and concern.

The poor and other less powerful developing countries are interested to see whether the Group of three (G-3) would be willing to listen and take forward their concerns o­n international negotiating platforms. The concern stems from the fact that if this association o­nly ends up serving the agenda of their big business, of their respective defence establishments and above all economic and mental aspirations of the middle and rich classes, then the G-3 would get sucked into behaving like "Big Brothers" within the developing and poor world and could o­nly end up serving the agenda of the EU and the US o­n various fronts.