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Portugal/Brazil - a special relationship?

According to Brazil's Sun, Portugal and Brazil are now in a very favourable stage of their increasing global partnership.

Both countries have now two non-permanent seats in the UN security Council. According to Portugal's Foreign Minister, Luis Amado, this could be a good time to promote Portugal and Brazil's common vision of global politics, specifically mentioning the Middle East.

Brazil has long lobbied for a permanent seat in the UN security council. Portugal can be seen as a strategic ally right now in helping Brazil achieve that status. Brazil has long emerged as one of the leading emerging markets, and the leading regional power in Latin America.

Luis Amado, talking in a press conference after a meeting with Brazil's president DIlma Rousseff, avoided talking about the current sovereign debt crisis, but reiterated Portuguese companies' interest in investing in Brazil. Portuguese investments in Brazil surmounted to 25 billion euros last year, in sectors such as energy, telecommunications, tourism, construction, and transportation. To reinforce this view, last month, Portugal's Telecom acquired 25% of Brazil's largest landline phone operator, Oi.

There were talks that Petrobras was interested in acquiring 33% of Galp, Portugal's leading petrol company, although nothing has been released as certain yet.

Brazilian companies have recently made the jump across the Atlantic as well. Embraer, Brazilian's aircraft producer, acquired Portugal's OGMAs and is set to build a new plant in the Alentejo region, in Southern Portugal, by the end of 2013.

Camargo Correa, Brazil's conglomerate giant, also recently acquired a huge stake in Portugal's Cimpor, which has plants in Europe, the Middle East, and Africa.


All these mergers and movements seem to indicate that Portugal and Brazil, which share common cultural roots and a common language, are making bilateral efforts to boost their cooperation, both politically, as economically.

A possible way out of the sovereig debt crisis for Portugal would be a stronger bet in emerging markets with which it holds cultural and historical ties. Portuguese exports, which grew by 15% in 2010, and led the economy to grow by 1.4%, the biggest growth in the Club Med countries, performed surprisingly well, in part due to Portugal's increase of exports to emerging markets. Angola and China are also key players.




Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.