Shannon K. O'Neil

Latin America's Moment

O'Neil analyzes developments in Latin America and U.S. relations in the region.

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Brazil as an Emerging Power: The View from the United States

by Shannon K. O'Neil
March 1, 2010

cristo redentorExecutive Summary
The United States has always seen Brazil as a significant regional powerhouse, but its perceived importance has risen in the last decade. Due to Brazil’s economic strength, its hemispheric leadership, and its growing geostrategic role through multilateral international forums, it has become a vital player in both regional and global politics across numerous dimensions. While US recognition of Brazil’s political and economic emergence brought the question of how Washington should manage relations with Brasilia to the fore, the ability to translate this new awareness into concrete bilateral policies and partnerships remains difficult. Whether the US and Brazil will be willing and able to form a ‘special relationship’ remains unclear.

Introduction
In the last century, the US has viewed Brazil as an important nation on the world stage – based on the sheer size of its territory, economy, and population, as well as its shared Western values. At times, the US has pushed for a ‘special relationship’ with Brazil, recognizing its importance for hemispheric and global stability. During World War II, the US promised support for Brazil’s development agenda and, in exchange, Brazil became the only Latin American nation to send troops to Europe’s battlefields. Although the pledged alliance faded after the war, throughout the 1950s Brazil largely supported US Cold War policies, if at somewhat of a distance. This support continued under Brazil’s military government in the 1960s. During the 1970s the US – especially Henry Kissinger – tried to reaffirm the ‘special relationship’ between the two nations, envisioning greater consultation and cooperation on an array of issues. These efforts were scuttled by a Carter administration more concerned with Brazil’s equivocal position on human rights and nuclear nonproliferation. These differences led not to conflict, but to detachment between the two governments.

By the 1980s, relations tilted further toward tensions and away from commonalities. The US disapproved of Brazilian trade policies and of its hardline stance when negotiating with the International Monetary Fund (IMF) and other creditors in the wake of the debt crisis. As the largest of all Third World debtors, Brazil repeatedly refused to pay interest on its arrears, threatening the deals US banks were negotiating with other nations. Newly democratic Brazil and the United States were also at odds over US military involvement in Central America.

By the 1990s, the debt crisis was resolved, and Brazil again became a welcome partner for the United States in the evolving post-Cold War world. Even if few concrete actions were taken, Presidents Cardoso and Clinton agreed on many matters. Some progress was made in the realm of democracy. Both the US and Brazil supported the consolidation of democracy in the region and leaned on Paraguay to reverse the attempted coup by an army commander against the elected government in 1996. Later, Brazil would prove important in pushing through the Inter-American Democratic Charter of the Organization of American States (OAS), which binds all 34 active member states to strengthen and uphold democratic institutions in the hemisphere.

Yet, as globalization became the driver behind much of US foreign policy, trade again became a sticking point between the two nations. In particular, Brazil’s reluctance to fully support the Free Trade Area of the Americas (FTAA) frustrated the Clinton administration and thwarted a closer relationship.

Generalizing five decades of foreign policy, the US rhetorically recognized Brazil’s importance, but concrete, practical initiatives or partnerships were few. This left little in the way of tangible policy outcomes between the US and Brazil. Instead, the two countries maintained a fairly warm, if distant, status quo, befitting Washington’s viewpoint that Brazil occupied an influential — but not central — role in the world pecking order.

A Turning Point in US-Brazil Relations
The urgency for bilateral relations began to change in the last decade. While blessed with natural resources, an almost 200 million-strong domestic market, and a well diversified economy (with robust agricultural, mining, manufacturing and service sectors), for decades Brazil suffered from high inflation, exchange rate instability, and low growth. This chronic economic instability meant that while viewed as geographically and geostrategically important, Brazil was seen by many in Washington, to quote General Charles de Gaulle, as ‘not a serious country’.

These reservations began to fade with the rise of Brazil’s economy. Anchored by the 1994 Plan Real, Brazil finally tamed its historically high inflation through solid macroeconomic and monetary policies and embarked on a process of privatization and other economic reforms. Put in place by President Fernando Henrique Cardoso, these initiatives were adopted and deepened by his leftist successor and current president Luiz Inácio ‘Lula’ da Silva.

By 2001, Brazil’s ascent was recognized by the financial markets. Banking giant Goldman Sachs named it one of the countries — alongside Russia, India and China (BRICs) – that could potentially eclipse the G8 in the coming decades. By the mid 2000s, Brazil’s macroeconomic instability seemed fully relegated to the past, and its economy boomed with higher commodity prices and the long awaited expansion of its own middle class.

At the same time, climbing worldwide energy prices and rising concerns over climate change brought Brazil’s biofuel successes and technology to Washington’s attention. Brazil’s biofuel industry dates back to the 1970s when the military government launched an ethanol program mandating a blend of sugar cane ethanol into transportation fuel with the hope of weaning the country off its dependence on imported fossil fuels. The program gained competitive traction by the late 1980s when more than a third of the country’s motor vehicle fleet was running on pure ethanol. In the 1990s the program experienced some growing pains as a 1993 federal law increased the mandate to a 25% ethanol blend, and demand outstripped local supply. The later technological breakthrough of flex-fuel vehicles restored widespread confidence (and investment) in ethanol, allowing motorists to switch to any blend of gasoline and ethanol at anytime.

By the turn of the 21st century, Brazil boasted the most efficient biofuel production in the world, with volumes rivaling those of the United States, and vast expanses of pasture land ready for planting more sugar cane. In February 2008, the market share of ethanol surpassed that of traditional gasoline at Brazilian pumps, proving the market viability of alternative fuels in one of the world’s largest economies. Add to this the recent discovery of significant oil fields off its coast and Brazil’s image as a global energy leader was secured.

Politically, the United States came to see Brazil’s well-grounded democracy and President Lula’s centrist even-handedness – particularly in comparison to some of its neighbors such as Venezuela – as important for US interests in the hemisphere. In addition, Presidents George W. Bush and Lula seemed to genuinely like each other, encouraging greater efforts to work together.

For Washington, Brazil’s rise came at a propitious time, one of changing policies and priorities. As the Bush administration took on two wars abroad, little bandwidth remained for policing its own hemisphere, despite what many saw as worrisome political shifts in the Andean region. The White House hoped that Brazil, as an important stakeholder and leader, would also take on the responsibility to push for stability and democracy in South America. During his visit in 2005, George W. Bush recognized Brazil as a ‘leader — …exercising its leadership across the globe’ and reassured Lula that as he ‘works for a better tomorrow, Brazil must know (it has) a strong partner in the United States’.

The US View Today
The events of the last few years and a change in the US administration make Brazil perhaps even more important than ever for US foreign policy. After the worldwide financial meltdown, the relative success of Brazil, China, and other developing economies has definitively shifted the multilateral center of global financial agreements from the G8 to the G20. This gives Brazil a permanent seat going forward in all major global macroeconomic discussions, where it has already become a vital voice in the North-South dialogue.

With climate change a priority for the Obama administration, Brazil’s perceived importance has grown, both on account of its leadership in alternative energy and its fight against deforestation. Brazil already boasts one of the most eco-friendly energy matrices in the world, with 46% of primary energy coming from renewable energies, far above the world average of 8%. In addition, as the majority owner of the planet’s largest rainforest, the Amazon, Brazil will play perhaps the central role in slowing worldwide deforestation, the leading cause of carbon emissions, ahead of the global transportation network.

While still not given as much airtime in Washington as many of its BRIC partners – China in particular – Brazil is seen as an emerging power that the United States can work with, be it on issues of global financial stability, climate change, reform of multilateral institutions (e.g.: the UN, G20, WTO, IMF) or regional security, stability and development.

Stumbling to Translate Interest into Policy
For all these reasons, many in Washington are calling yet again for a new special relationship with Brazil. While this is progress, significant limitations exist to translating growing US interest in Brazil as an emerging power into concrete policies.

On a practical level, the US-Latin America policy community has historically been biased toward Spanish-speaking Latin America. Few in Washington know Brazil well or speak Portuguese. The lack of a dedicated group of experts – both inside and outside of government – limits the constant pressure needed to keep Brazil firmly on the US foreign policy agenda. Adding to this, due to US domestic political battles it took nearly a year for President Obama to confirm his new Ambassador to Brazil. To date, this gap has severely hampered the administration’s ability to create a more dynamic engagement with Brazil.
Beyond these logistical challenges, it is still unclear how best to promote the two countries’ common interests. While they share many concerns in principle, priorities and policies are often not aligned, and at times even in conflict. In the realm of security, the United States prioritizes counterterrorism, which sits low on the list of Brazilian concerns. Regarding drug trafficking, US counter-narcotics assistance to the region often focuses on military responses, while Brazil has tended toward policing and law enforcement solutions. Add to this long-standing suspicion over US military involvement in the region, which recently resurfaced with the Colombian base agreement that granted the US military access to seven Colombian bases to combat drug trafficking and the guerrillas, or US concerns about Iranian President Mahmoud Ahmadinejad’s official visit to Brasilia in November 2009, and these differences may make it difficult to find a middle ground for deeper partnership around security issues in the hemisphere – while highlighting the need for Washington to more openly communicate with its regional partners.
The debate over free trade poses similar dilemmas. While both the US and Brazil rhetorically support the expansion of global free trade through the World Trade Organization’s Doha round and other mechanisms, their fundamental interests often diverge. Brazil wants the reduction and/or elimination of extensive US agricultural subsidies and protections, as well as tariffs on products such as ethanol. The vagaries of US domestic politics will make it difficult to deliver on these demands. The US, in turn, is suspicious of Brazilian protection of its industrial sector, and of what it sees as a weak intellectual property rights regime, and hopes Brazil is willing to change its position on services and market access.

Finally, assuming that Washington stays focused on developing and deepening its relationship with Brazil (a big assumption), it is unclear whether Brazil actually aspires to closer relations with the United States. It might benefit Brazil to keep the northern behemoth at arm’s length, particularly given the role the United States likely envisions for Brazil as an active regional ‘stakeholder’, shouldering greater responsibilities in the hemisphere and acting in US interests.

Conclusion
In recent years, the US view of Brazil has likely changed permanently, recognizing the nation’s importance for regional and world order. Brazil is finally seen by the United States as a genuine emerging power. The enhanced strategic dialogue and cooperative steps taken in recent years in light of this recognition has benefited both countries. Nevertheless, many areas of disengagement and even conflict remain. Whether the newly invoked ‘special relationship’ will be more multifaceted and long-lasting this time than on previous attempts remains to be seen.

Recommendations
• Brazil’s rise as an economic and global emerging power has finally been recognized by the US. To effectively leverage this interest, Washington needs to strengthen the policy community dedicated to Brazil – perhaps separately from Spanish-speaking Latin America, thus reflecting its emerging power status – in order to ensure more thorough and consistent attention to US-Brazil relations.
• Despite the potential, an ambitious ‘special relationship’ may be difficult to achieve. Too many differences in policies and priorities remain, particularly in the areas of security and trade. This is most evident in the context of regional leadership and a broader vision for the Americas.
• Bilateral relations should focus on a more permanent dialogue across multiple issue areas, thus converting growing areas of interest into concrete action and policy on a bilateral and multilateral level.
• The United States and Brazil should identify clear issues and strategies of mutual interest to start deepening the bilateral partnership and multilateral engagement. Energy and climate change, as well as global financial stability, are good starting points.
• The biofuel industry and associated technology development is an area of mutual interest that satisfies national and multilateral ambitions related to climate change. This is an obvious point of intersection between the US and Brazil where bilateral cooperation would have a global impact.

This piece was first published by the South African Institute of International Affairs and is available to download here

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