U.A.E. Dangles Billions of Dollars Before Brazil, With One Catch

(Bloomberg) -- The United Arab Emirates is willing to expand its multi-billion dollar investments in Brazil as long as it’s no longer labeled a tax haven by Latin America’s largest economy.

The U.A.E. Ambassador to Brazil, Hafsa Abdulla Al Ulama, said her country’s sovereign wealth funds are ready to boost investments in infrastructure, energy and agriculture should the nation be removed from the list.

"Our sovereign funds would like to see that there are incentives for people to come and invest", she said in an interview in Brazil’s capital city, Brasilia. "Singapore and Switzerland have been removed from the tax haven list. Why not U.A.E.?"

In addition to having to deal with Brazil’s notorious red tape, countries considered as tax havens are also subject to higher levies and stricter compliance rules. The U.A.E. fund Mubadala, while not the country’s largest, already manages $2 billion in Brazil, including investments in ports and telecommunications. Brazil’s outgoing Foreign Minister Aloysio Nunes Ferreira told Bloomberg the tax haven list discussion with the U.A.E. is "very close" to being resolved.

Mubadala employs over 40 people in its Rio de Janeiro office. "Concessions, privatizations, we are ready to look at all of these," Al Ulama said, adding she expects to meet soon with Brazil’s future Economy Minister Paulo Guedes. She met with President-elect Jair Bolsonaro days after his election victory on Oct. 28.

Following decades of consumer-driven growth, Brazilian policy makers are now looking to investments to help kick-start the economy after its worst recession on record. Both Bolsonaro and Guedes have also indicated willingness to sell off state-owned assets under the new administration.

Al Ulama’s comments come as Bolsonaro mulls a shift in Brazil’s foreign policy, including much closer ties with the U.S. and a possible transfer of the Brazilian Embassy in Israel from Tel Aviv to Jerusalem.

Bilateral trade between Brazil and the U.A.E. jumped to $2.7 billion in 2017 from $1.8 billion in 2009.

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