What a difference two decades makes.

Following the peaceful implosion of the USSR in December 1991, numerous opportunities opened worldwide.

The Bush administration chose to devote its energies to achieving global military “full spectrum” dominance, to construct a worldwide martial presence that would cause any and all post-Soviet rising powers to think twice about even considering attempting to compete.

In that they were successful, but it can be argued that in winning the military peace, the Pentagon lost the economic war, as nations around the world poured monies into social programs while Washington focused on its military forces.

In 1991, Jim O’Neill, then Goldman Sachs head of global economic research and commodities and strategy research, coined an acronym that has increasingly come to dominate economic discussions since in his study, “Building Better Global Economic BRICs.” The study predicted the imminent rise of the four BRIC economies – Brazil, Russia, India and China.

Three of the four BRIC nations are in Asia – India, China and Russia who defines itself as an Asiatic power when circumstances are convenient, a technically correct assertion as the bulk of the vast Eurasian mass of the Russian Federation does in fact lie in Asia.

Which leaves Brazil as the Western Hemisphere’s sole rising potential economic powerhouse.

And rising they are – according to predictions by London’s authoritative Economist publication’s Intelligence Unit, its latest monthly forecasts postulate that Brazil’s GDP for 2011 is predicted to reach hit $2.44 trillion, compared with $2.43 trillion for Britain.

Can you say shell shocked?

For the first time since Columbus set sail in 1492, a Latin American country is set to surpass a nation whose empire in its prime covered one-sixth of the globe. Not that Britain ruled Brazil – that was sleepy Portugal, but Britain faces another milestone in its former colony India, with a similarly booming economy.

The Economist prediction notes dryly that Brazil, which in 2010 overtook Italy to become the world’s seventh biggest economy, will shortly dethrone Britain from sixth place, knocking the UK back to seventh place in global fiscal rankings. In 2010 the Brazilian economy grew by 7.5 percent after surmounting the 2008-2009 global financial recession.

Economist Intelligence Unit chief economist on Brazil Robert Wood attributed Brazil’s dynamism to a growing consumer class and rising trade with China, as Brazil satiates China’s raw material needs with commodities such as soy and iron ore. Wood then snarkily comments that while the combined indigenous rising consumer demand coupled with China exports have fuelled Brazil’s rise. We are in the middle of a commodity super-cycle that will last for some time but at some point the really good times Brazil is enjoying will cool off a bit.”

Much of Brazil’s current prosperity can be attributed to the progressive policies of former President Luiz Inacio Lula da Silva, in power from 2003 to 2010, known more popularly as Lula, who made it a keystone of his administration’s policies both to reject the economic prescripts of both the international Monetary Fund and the World Bank and boost progressive programs for the country’s less fortunate.

Top of the list, Lula’s administration tamed a fierce rage of hyperinflation during 1986-94 that averaged around 1,000 percent a year.

A charming diplomatic if occasionally blunt speaker, at the March 2009 G-20 summit in London, President Lula caused an uproar when he declared that the economic crisis was caused by “the irrational behavior of white people with blue eyes, who before seemed to know everything, and now have shown they don’t know anything.”

In July 2010 while visiting Zambia Lula noted, “We had a debt of $30 billion to the International Monetary Fund but when I took office, we repaid the IMF and we don’t owe anymore to the IMF. On the contrary, the IMF owes us $14 billion. We have $250 billion in our currency reserves.”

Lula left office last December with 80 percent approval ratings, an unprecedented accomplishment for a chief executive after seven years in office.

The Brazilian economy’s not so secret ace in the hole?

Oil – lots of it.

The government-managed Petrobras energy company is to build on Lula’s sound fiscal foundation and has announced that it intends to double its output by 2015. Echoing Lula’s reluctance to rely on foreign financial funding, Petrobras said that its plan to more than double oil output will boost the company’s cash flow and eliminate the need to tap debt markets in less than a decade, as profits from oil sales will be enough to cover both operating and debt costs, according to Petrobras Chief Financial Officer Almir Barbassa.

Petrobras has announced plans to invest $224.7 billion in increasing production through 2015, more than any other major oil producer in the world. Just one offshore Brazilian field, Lula/Cernambi, is estimated to contain an eye-watering 7 -11 billion barrels of recoverable crude, leading the deposit to be labeled the one of the Western Hemisphere’s biggest oil discovery in the last three decades.

And down the road? The Economist Intelligence Unit predict that Brazil’s economy will be larger than any in Europe within a scant nine years, when by 2020 it overtakes Germany to become the world’s fifth biggest global economy after China, predicted to be by then the world’s leading economy, followed by the U.S., India and Japan.

And Russia, the most sluggish of the BRICs?

That’s a story for another time.

By John C.K. Daly of http://oilprice.com

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