Postcard from Brazil, the Once and Future Country

brazil062209.jpgHaving recently completed a week-long trip to the cities of São Paulo, Brasilia, and Rio de Janeiro, Brazil, I am struck with several observations that relate to relations with Venezuela, Russia, and the international business community.  The title of this post I borrow from Professor Marshall Eakin of Vanderbilt University, whose 1998 book does much to capture the country’s long-standing hope of ascendency in global relations – this nearly permanent sensation that the country is on the cusp of major change, only to see the opportunity escape due to unfortunate coincidences and mistakes.  There are many who believe that this time Brazil’s rise might be for real.

I had the opportunity to meet Professor Eakin last week at lunch, where over the course of a wide-ranging discussion, he expounded on several social and cultural underpinnings that have provided the Brazilian people with such generous amounts of pride and optimism.  Indeed, “pride” is the one word that I would take away from the country, as I found an inwardly focused nationalism nearly everywhere I turned, driven in part by grand ambitions:  the building of the capital Brasilia from scratch in just three years, the transformation of São Paulo into one of the leading automotive manufacturers of the Western Hemisphere, or any one of the hundreds of rich stories of Brazil exceeding expectations and nearing greatness.

This nationalism, though different from the dangerous American and Russian versions, also conceals some distortions and serious challenges for the country to confront and move forward.  Brazil, I discovered, really likes to talk about Brazil – and remains unaware of many things happening nearby.  One will find that after spending some time here and speaking with Brazilian observers, that the stereotypes of samba, beaches, and boisterous parties barely scratch the surface of what the country has to offer.

Firstly there is the considerable soft power of Brazil, which continues to grow rapidly and for the most part remains un-applied to leverage its interests.  Celebrity footballers, supermodels, and musicians have conquered the world’s attention many times over, and there are few other nations whose flag you will see proudly brandished on so many consumer products.  In a few short years, Brazil has consolidated its role as the de facto regional leader – leaving those stories of Hugo Chávez’s bid to dominate the region through bought elections and briefcases full of cash a distant memory.  It did not escape us that the very purpose of our visit to Brazil, to raise awareness among policymakers of the Eligio Cedeño case and political prisoners in Venezuela, was in and of itself a sign of the growing foreign policy muscle of this BRIC economy.

People have been predicting “Brazil’s big moment” for quite some time now.  In a 2008 article published in Foreign Affairs, Juan de Onis gives generous praise to the gradual maturation of the Brazilian economy, especially noting how the economy can absorb its huge new offshore oil discoveries (which pushed reserves to some 40 billion barrels – the size of Venezuela).  Unlike Caracas and Moscow, these new discoveries of the devil’s excrement are unlikely to destroy political plurality as they have in Moscow: 

Thanks to a diversified economy, such developments hardly risk turning Brazil into a petrostate, dependant on the export of oil and a few other commodities for all its revenue.  Brazil’s consumer market is supplied by the country’s world-class industries and market services, and Brazil also boasts a dynamic agriculatral sector.  Indeed Brazil is a land of agricuiltural plenty.  Equivalent in size to the continental United States, it is the largest tropical landmass in the world; more than 80 percent of its territory falls with in the interroptical zone that straddles the equator.  Thanks to a habitat that combines abundat solar power, fresh water, tillable soils, and a warm climate, it can produce agricultural crops year-round and has enough pastureland to maintain the largest cattle population on earth.  This production feeds a national population of nearly 190 million, and a growing surplus generates a substantial flow of exports.

In addition to becoming the global breadbasket in an era of sharply rising food prices, Brazil also has a booming industrial sector (25% of GDP) as well as the relative untapped potential of energy exports of sugarcane ethanol (one could imagine the transformative impact on Latin American geopolitics if the United States were to lift its punitive 54% ethanol tariffs to start a green biofuels revolution in the Americas).  The economic optimism of 2008 has increased despite the challenges of the global economic crisis.

markets062309.gifA report last week in the Wall Street Journal cites a survey published by Frontier Strategy Group, which interviewed some 72 of the world’s largest corporations about which emerging economies they believe are going to be the most important over the short-term.  Although the focus of the report was the extent of the beating Russia had taken in their ranking, falling below both Mexico and Indonesia.  More than just the negative impact of confrontational foreign policy, Brazil leaped ahead of Russia to become one of the best of the BRICs through sound and consistent economic policies for four straight presidential administrations in a row.  To imagine that just 15 years ago, Brazil was experiencing a hyperinflation pandemic that was so bad that the price of one’s groceries would radically change inbetween the time of selecting them in the aisle and reaching the cash register, this is a remarkable economic miracle.  But something happened in Brazil that didn’t happen in Russia – in between the commodity booms the economy managed to diversify, and a modest fledgling middle class has begun to emerge.  Russia, on the other, hand, has not grown in between the resource booms.

There is a typical laundry lists of achievements that one cites to underscore the economic revolution here, including the country’s activism for more free trade, becoming a net debtor to a net lender, or even the remarkable energy independence they have achieved through both new LNG terminals (which put an end to Chávez’s attempt to attack the country through gas leverage from Bolivia, which could have crippled São Paulo’s industrial production – much like Russia’s gas cut-offs to Europe) and some 25% of energy needs being covered by biofuels.

In terms of foreign policy, Brazil has been as bold and activist as the national attitude would suggest.  In my long-standing tradition of being in the wrong place at the wrong time,  I arrived to Brazil on the same day that President Luiz Inacio Lula da Silva arrived to the BRIC summit in Yekatrinberg – just one of many non-U.S. global alliances the country has been seeking.  Thanks to Brasilia’s efforts, the G20 is beginning to have a voice.  President Lula has also pioneered some peculiar South-South trade relationships and alliances, including IBSA, the India, Brazil and South Africa trilateral trade alliance. Although the trade and investment transfers between these countries have not yet materialized, it is indeed very meaningful that these governments are meeting and talking.

Brazil very much wants to assume its place as a world leader – however this desire does become challenged by the country’s traditional doctrine of non-intervention, and its reluctance to criticize illegal or controversial conduct of other states.  A chapter written by the talented foreign policy academic Paulo Roberto de Almeida (from a book edited by Michael Shiffer and David Shorr) remarks on the unsure rise of this tropical powerhouse:  “Brazil may finally be ready to overcome the old adage of forever being the land of the future and able to say that Brazil’s moment is at hand, though this depends in great part on Brazil fulfilling its promise as a global stakeholder.

Others have directly confronted what is seen as the uglier side of Brazilian foreign policy.  A recent column by the Miami Herald’s Andres Oppenheimer entitled “Brazil deserves criticism for awful foreign policy” excoriates President Lula for having never found a dictator he didn’t like.  Oppenheimer writes:  “Last year, after Venezuelan President Hugo Chávez had closed downhis country’s biggest independent television station, RCTV, Lula toldthe German magazine Spiegel that “Chávez is without a doubtVenezuela’s best president in the last 100 years.”  Similarly,after meeting with semi-retired dictator Fidel Castro during a visit toCuba in January 2008, Lula said he hoped Castro would soon return toassume his ”historic role,” and praised his “incredible lucidity.

Probably the most powerfully insulting line I heard from the President during my visit was a comment made about the post-election protests taking place in Iran, which Lula described as “the tears of losers.”

There are however several reasons why I do not see a great problem with such isolated quotes.  For one, these are the typical kind of faux pax made by any politician enjoying enormous approval ratings year after year – it’s been a long time time Lula has had to be careful with his tongue (he is by far the most popular president of Latin America with almost 80%).  Secondly, Brazil remains, despite its improvements, a country of more than 100 million poor people, with a rate of inequality that one of the sharpest and cruel in the world – this is fertile ground for bad policy making).  Within the ruling PT party and coalition, there are radical elements calling for a harsh redistribution of income, and other policies that would lead to polarization.  Sometimes Lula speaks to these followers and keeps them at bay … a political decision different from, say, Venezuela, where the potential for damaging political polarization has been explored to its full extent.  Lastly, I am encouraged by the fact that Lula and many others in Brazil are entirely political pragmatic and opportunistic, adjusting to the prevailing winds of opinion among the people (just look at Ahmadinejad’s suddenly cancelled tour of Brazil following protests).  One should look to actually policy substance, and not get provoked by every inch of rhetoric.

I do think eventually that Brazil will find itself forced to drop its traditional hesitance to make its preferences known to other states if it wants to continue its great rise.  Values still matter, and values are strategic for long-term relations with other states.  I also believe that no one in Brasilia actually trusts Venezuela’s promise that Brazilian companies will not have their assets nationalized – especially after the junta stole from the politically obedient Argentina.

This is, without doubt, one of the most interesting countries of the future, offering many lessons to other governments seeking to imitate its success.  I am grateful I had the opportunity to meet these wonderful and deserving people in such a dramatic moment, and am already looking forward to my next visit.