The Rise and Decline of Brazil as a Regional Power (2003–2016)

Brazil’s Rise to Global Power

Lula’s three foreign policy priorities, set out in the inaugural address of his first presidency, were to secure a permanent seat on the United Nations Security Council, to strengthen Mercosur as a foundation for the construction of a South American economic space, and to complete the multilateral negotiations begun in 2001 and invest in the hemispheric negotiations for the Free Trade Area of the Americas accepted by Itamar Franco and his chancellor, Celso Amorim (Almeida, 2014: 193). In an effort to turn Brazil into a regional power, he started building a logistical state, an ideal model that drew elements from developmentalist and neoliberal state models while transferring the responsibility for wealth generation and economic growth to the private sector (Cervo, 2008), pursued the internationalization of the national economy through large enterprises (public and private) with financial support from the Brazilian Development Bank, and sought to incorporate new sectors into the middle classes and consumption (Bernal-Meza 2015; Bernal-Meza and Bizzozero, 2014; Mercadante, 2013). Brazil’s position improved significantly in economics, trade, scientific and technological development, energy, and food, and it became a global power in biofuels and food, high-technology aeronautics, and exploration for and exploitation of oil on the high seas (Brainard and Martínez-Díaz, 2009). It promoted South-South cooperation in pursuit of a balance with the countries of the North, consolidating the necessary changes in the foreign policy agenda with adherence to international principles and standards through South-South alliances. South America became key in this strategy (Couto, 2013; Saraiva, 2010).

Lula’s diplomacy favored the adoption of multipolar and antihegemonic positions (Saraiva, 2016; Gratius and Saraiva, 2013; Garcia, 2013). Given Brazil’s self-assigned position, its global strategies included building new alliances with emerging powers or regional middle powers (Guimarães, 1999). The first of these was IBAS (India, Brazil, South Africa), and BRICS (Brazil, Russia, India, China, South Africa) followed. At the regional level, after differentiating between an area dependent on the United States (Mexico and Central America) and an independent one (South America) revolving around Mercosur, it promoted the strengthening of the subregional bloc and the creation of new institutions: the Comunidad Sudamericana de Naciones (South American Community of Nations—CSN) and then the Unión de Naciones Suramericanas (Union of South American Nations—UNASUR).

Brazil’s rapprochement with China and India began in the mid-1980s, and its choice of partners for parcerias estratégicas (strategic partnerships) began to take shape toward the end of that decade. The adjective “strategic” was used to characterize a particular bilateral relationship as the most important of several close bilateral bonds in that it propelled the country toward the international spotlight in the post–Cold War world (Lessa and Oliveira, 2013a: 10–11). South America aside, China was to be Brazil’s most important strategic relationship, and its inclusion in BRICS became the most important foreign policy goal of Lula’s governments. Brazil set out to encompass first the region (with Mercosur and UNASUR) and then the world. The goal was to participate in the construction of a new international stage in which regional powers had greater influence. This involved acting on multiple levels (García, 2013): the South American (UNASUR and the Council of South American Defense), the Latin American (the Comunidad de Estados Latinoamericanos y Caribeños [Community of Latin American and Caribbean States—CELAC]), and the global (IBAS and BRICS).

Latin America in the PT’s Foreign Policy

The idea of “Latin America” never gained consensus in Brazilian political thought. Since Franco there had been an effort to redefine regional cooperation in terms of “South America” (Hurrell, 1998). With the background of Cardoso’s 2000 Initiative for the Integration of South American Regional Infrastructure, the Lula administration pursued the establishment of South America as a political unit via the CSN and UNASUR, which were intended to institutionalize regional multilateral dialogue (Couto, 2013). During the 2003–2017 period, Brazil and the founding members of Mercosur were placed in an intermediate position with regard to South American integration and cooperation, one that emphasized economic and trade issues and the institutionalization of political dialogue that did not exclude a policy of good relations with the United States. This was a halfway point between the cooperation under anticapitalist and anti–United States ideologies espoused by members of the Alianza Bolivariana para los Pueblos de Nuestra América (Bolivarian Alliance for the Peoples of Our America—ALBA) (particularly Venezuela) and Chile and Colombia’s liberal, free-market stance and strong bonds with the United States.

Building a strategic bond with South America was always one of Lula’s goals, but, although the concept was heavily employed in political and diplomatic discourse, its meaning was undermined because the South American nations’ political, economic, and integration aims never quite agreed. Brazil did establish strategic bonds with Argentina and Venezuela (Lessa and Oliveira, 2013b; Couto, 2013; Saraiva, 2012), and Lula used presidential diplomacy to build consensus in the region by coordinating collective political action, strengthening trade, and internationalizing Brazilian companies. The Brazilian Development Bank played a key role in the internationalization and expansion strategies of these companies. As a result, Argentina, Bolivia, Paraguay, and Uruguay became major trading partners (Mejía, 2012). However, despite Brazil’s being the leader in South American integration via Mercosur and UNASUR, its economic leadership was strongly conditioned by China’s growing economic presence (Bernal-Meza, 2019; Hiratuka, 2016; Beckerman and Moncaut, 2016; Mourón and Onuki, 2015), and its exports to China began to be dominated by commodities (iron ore and soybeans). According to Couto (2013: 197),

We can see, then, a reprimarization of the Brazilian export agenda. In 2000, 74.5 percent of Brazilian exports were industrialized goods, while in 2010 that number dropped by more than 30 percentage points to 43.4 percent. Considering only manufactured products, the drop was from 59.1 percent in 2000 to 39.4 percent in 2010. Basic and semimanufactured products jumped from 38.2 percent in 2000 to 58.6 percent in 2010.

Hence the importance of South America, which would become the main market for industrial exports: 84 percent of Brazilian exports to South America that year were manufactured goods, turning the South American market into a strategic economic space.

In absolute terms, Brazilian trade expansion to South America between 2000 and 2008 was 245 percent, but on the import side the region saw a decrease in Brazilian purchases, from 19.5 percent in 2000 to 14.2 percent in 2010 (Couto, 2013: 198–199). Only Bolivia, thanks to its gas exports, accumulated trade surpluses with Brazil. However, this regional trade was not accompanied by a significant flow of Brazilian investment. The Brazilian Development Bank responded to the interests of Brazilian private actors who participated in regional ventures, and its financing was directed toward large civil construction and engineering companies. According to Carneiro and Bruhn (2017) and Rodríguez (2017), between 1998 and 2015 the bank financed more than R$14 billion so that the main Brazilian contractors would undertake projects abroad: Odebrecht, R$9,778,411,902; Andrade Gutierrez, R$2,875,354,488; Camargo Correa, R$627,719,298; Queiroz Galvao, R$533,846,458; and the OAS Group (OAS Construction Company, and OAS Empreendimentos), R$216,256,636.

That said, these companies also exported corruption, Odebrecht being the most prominent example. After Operation Car Wash in 2014, the Brazilian authorities investigated a network of bribes issued to politicians from different countries and parties to secure contracts with Odebrecht and the government’s Petrobras. Odebrecht admitted to having bribed politicians, officials, and political parties on three continents since 2001 to obtain public works contracts. According to the U.S. Department of Justice, the company paid about US$788 million in illegal commissions for more than 100 public construction projects in 11 Latin American countries and in Angola and Mozambique (information gathered by Mileska Romero Quezada from sources including Silva, Fischer, and Davel [1999] and Hernández [2019]).

Brazil’s Relations with South America

Lula identified South America as the starting point for a new incorporation into the international system (Lima, 2008: 99). According to Cervo (2008), no other government undertook such consistent efforts in this regard. However, despite the goal of making regional integration a multilateral and consensus-built affair, Brazil’s relations with other South American countries were disparate and evolved differently.

Global Alliances

In 2003, Lula initiated a regional strategy meant to promote a review of international institutions created under U.S. hegemony. With a proactive policy in multilateral forums, he sought to present himself as a representative of the South and especially South America, a process that began at the World Trade Organization summit in Cancún in 2003. To this end, he developed international and regional coalitions and promoted new regional governance instruments such as the CSN, UNASUR, and the CELAC. This policy was identified with regional leadership (Bernal-Meza, 2015; Saraiva, 2016). ¹

In cooperation with its peers at BRICS, Brazil sought to improve its relative position in the global power structure while maintaining its superiority among South American countries in the process of integration (Bandeira, 1996; Souto Maior, 2006; Lima, 2008; Almeida, 2014; Bizzozero, 2011). Both Lula and Rousseff reiterated that Brazil wanted to link its destiny to that of South America (García, 2013; Mercadante, 2013). Bringing the country into world politics required the building of alliances, active participation in the new international management, and a permanent place on the United Nations Security Council. However, during the last two years of Lula’s second term, Brazil’s international and internal conditions changed for the worse. Its position in the international political economy deteriorated (Cervo and Lessa, 2014). Internationally, the intra-BRICS reproduction of a core-periphery relationship and the disappointment of not having attained a peer relationship with China, along with the fact that Beijing did not incorporate it into its global policy, weakened Brazil’s presence in BRICS and its North-South relationship with China. This affected its capabilities as an emerging power and its potential role as leader of the Second World in the new world order.

Why did Brazil join BRICS? Guimarães (1999) pointed to reasons that countries such as China, India, and Brazil should have a distinctive place in the international system. Brazil represented South America in this group of emerging economies linked by their extraordinary economic development (Brainard and Martinez-Díaz, 2009) and had a vocation for regional leadership (Bernal-Meza and Bizzozero, 2014; Almeida, 2014; Bernal-Meza, 2010; Cervo and Lessa, 2010). Through its membership in BRICS it took its place on the world stage (Bernal-Meza, 2015a; Christensen and Bernal-Meza, 2014), and Beijing was seen as its most important global partner.

Li (2019) notes that China’s capitalist stance contests Western capitalism but maintains North-South relations including elements of dependency in other regions and countries such as its relationship with Brazil in BRICS. While BRICS has served a counterhegemonic function by advocating for strengthened multilateralism (which tends to limit hegemonic power) and some global agendas (such as the reform of the Bretton Woods order and the strengthening of strategic regional and collective security), from an economic point of view the China-Brazil relationship follows the core-periphery model formulated by Raúl Prebisch.

Brazil had a special role in counterhegemonic policy by promoting a new map of institutions alongside the traditional U.S.-led inter-Americanism (the Organization of American States) without openly confronting it. It achieved this with the creation of UNASUR, the Council of South American Defense, and the CELAC. This policy was driven by Lula’s governments and maintained in Rousseff’s political discourse but not in her actions. The dilution of Brazil’s proactive policy during her presidency diminished its regional and global political role. According to Saraiva (2014; 2016; 2017) and Cervo and Lessa (2014), the country began losing prominence in world politics and on a regional level as it moved from a proactive to a reactive dynamic.

Emerging Powers, New Capitalisms, and New Dependencies

One of the central features of BRICS was that its members stood for new varieties of capitalism (Becker, 2013). Brazil represented the South American component of this group of emerging economies, combining its significant economic development with an aspiration to regional leadership. As a nonnuclear regional powerhouse, it used the soft power of its leadership as a balancing factor against Russia, China, and India, which in turn were finding it difficult to prevail as leaders in their own regions. It was a weak element of the group, and its position weakened the association.

Brazil was the only country in the region that shared China’s aspiration to reformulate the global order and sought to participate with it in global alliances, but it was not the only nation with a counterhegemonic strategy as part of a larger international goal; Venezuela and Cuba were others. Brazil and China’s strategic relationship included an increase in trade flows ² but not other agendas that were of interest to Brazil. China kept Brazil as a partner in South-South cooperation but did not associate it with the major issues of world politics and did not support Brazil’s demand to join the Security Council (Bernal-Meza, 2015; 2012; Saraiva, 2017). Brazilian frustration with regard to China and the questioning of BRICS by Itamaraty (Saraiva, 2017) highlighted the crisis underlying their relationship and its impact on BRICS’s cohesion and strength. Paradoxically, during the period when Brazil was most interested in BRICS and China (under Lula’s governments) the core-to-periphery relationship deepened. In 2000, raw materials exports and natural-resource-intensive products sent to China accounted for 66.7 percent and 13.8 percent of the total, while in 2011 they accounted for 83.7 percent and 10.3 percent. Meanwhile, imports from China amounted to 79.6 percent of manufactured goods in 2000 and 87.9 percent in 2011 (Salama, 2017).

The Failure of the Strategic Alliance with China

China introduced a serious imbalance in the region and in Brazil’s role in South America (Dussel, 2016; Bernal-Meza, 2016; 2012) when it became a key player in the economic integration of Latin America and particularly South America into the world order. Amaury Oliveira (2013) points out, citing the economist Barros de Castro, that Brazil’s concern was that Sino-Brazilian relations were taking on a global dimension, which gave rise to reflection on how Brazil might react to the challenges and opportunities arising from Chinese dynamism. The first sign of the failure of the desired strategic alliance with China was the structure of bilateral trade. According to Becard (2017: 405), “the two countries are interested in but not fully capable of promoting long-term horizontal relations.” Oliveira (2013: 60) notes that “for some time, our exports of durable goods increased significantly, but at the beginning of the new century it was the exports of raw materials that increased as manufacturing sales fell.”

Although China has been acknowledged as Brazil’s largest trading partner since 2009, this is not yet the case when it comes to investments and loans. Foreign direct and indirect investment flows are still a function of China’s trade needs and preferences. Brazil’s pursuit of innovation in science and technology has not yet been included among China’s priorities (Becard, 2017: 405). The accelerated development of a core-periphery or North-South relationship in trade between the two countries has been observed by Barbosa and Jenkins (2012), Sevares (2012), Bernal-Meza (2012), Vadell (2013), and Oviedo (2014). Perceived threats have shifted from the classic topics of the Cold War and the post–Cold War period (security, democracy, human rights) to the effects of China’s heightened economic-commercial presence (Oliveira, 2012). Uehara (2013: 36) has described this in terms that reflect disillusionment regarding the bilateral relationship. He points to a reversal after 2004 of the trend in trade relations, with more growth in imports from China to Brazil than in exports from Brazil to China, and to a tendency for Brazil’s imports to be products of higher value added and its exports to be commodities. “The increase in imports of Chinese goods has been viewed as a threat by some industrial sectors and . . . . the Brazilian government has started to develop defensive trade policies.”

It was in the political dimension of international alliances that this strategic bond had to be ratified for Brazil. Albuquerque (2013: 87–88) argues that this dimension would have involved a division of shared tasks and objectives that went beyond trade flows and that Brazil and China had no strategic alliance because the international political dimension had only a residual function:

Lula undertakes, in his speech, to deflate the political nature of the UNSC [United Nations Security Council]. To his own rhetorical question—“How do you explain that Brazil is not part of it?”—Lula has no answer, because it would imply a discussion of power relations in the world order and the impossibility of a political partnership between Brazil and China in the case of UN reform.

Despite Brazil’s being a regional power, its fate with regard to China was no different from that of the rest of the region. From a Latin American perspective, China went from being an opportunity to being a challenge (Bernal-Meza, 2016). The primarization and reprimarization of Latin American exports were reproduced throughout the territory, as noted by Barbosa and Jenkins (2012), Oliveira (2016), ECLAC (2015), Medeiros and Cintra (2015), and Dussel (2016). The common conclusion was that the development of trade relations between Latin America and China had led to a strengthening of primary exports. According to the ECLAC (2015: 41–42), the export basket from Latin America and the Caribbean to China was much less sophisticated than that from the rest of the world. The trade was purely interindustrial: manufactured goods in exchange for raw materials.

The fact that Brazil did not achieve the goals it expected in BRICS led to questioning by Itamaraty, whose diplomats had originally supported the analyses, diagnoses, proposals, and initiatives carried out under both of Lula’s administrations and Rousseff’s early years (Pimentel, 2013a; 2013b; Baumann et al., 2015). China did not associate Brazil with its global policy, support its candidacy for the UN Security Council, or incorporate it into strategic security negotiations such as those involving Iran and North Korea. A document prepared by the Secretary-General of the Presidency and the Special Secretary of Strategic Affairs of the Presidency (Kalout and Degaut, 2017) strongly questioned foreign policy under the PT administrations: BRICS, the South-South cooperation strategy that replaced the South-North relationship promoted by Cardoso (Cervo, 2002), the insistence on a permanent seat on the Security Council’s without seeking the support of key players in world politics. Extraregional trade policy and South American integration were also presented as major diplomatic errors.

BRICS was a distant idea in the South American view. Brasilia never sought support regarding BRICS’s international agendas from other South American countries (Bernal-Meza, 2015a), its Mercosur partners, or even Argentina, and it did not bring to that forum the views of other countries in the region. China’s relationships with other South American nations prevented Brazil from becoming their indispensable trading partner because the South American export supply of raw materials (copper, soybeans, iron, oil) always harmonized with Chinese demand rather than Brazil’s needs.

China’s Impact on Mercosur

Brazil’s aim in South America, starting with the relationship with Argentina in 1985 and the creation of Mercosur and later UNASUR, was to become an indispensable player in the region. Bandeira (1996) has argued that Mercosur was a target of Brazil’s economic and industrial expansion. Cervo (2008) says that, during Lula’s administrations, South America became Brazil’s priority, but it was China that became indispensable first for the world political economy (Li, 2010; 2012) and then in trade and, for Mercosur countries such as Argentina, Uruguay, and Venezuela, a key player in foreign investment and loans. Thus the countries that were supposed to be Brazil’s natural partners ended up being China’s. According to Hiratuka (2016: 237–238),

China consolidated itself as the region’s main trading partner after 2009, but this situation is linked to a typically cross-sectoral flow with very low levels of industrial product participation in exports beyond a very high concentration on a few products. In contrast, imports involved more technologically sophisticated products. While Chinese demand for primary products strongly affected Mercosur’s exports, China’s imports took over the trade between the regional partners themselves. . . . China contributed to the difficulties facing regional integration within Mercosur. The Chinese emergency explains the insufficient progress in the establishment of a South American regional community with a regulatory and institutional apparatus. Intrabloc economic flows gave way to an increasingly multilateral dimension.

During the last two years of Rousseff’s government, Brazil’s status as a successful form of capitalism declined as a result of its technological backwardness, the economic crisis affecting the Brazilian economy since 2008 as a result of the decline of commodities export prices and the deterioration of the country’s once proactive regional political leadership (Saraiva, 2017; 2013; Cervo and Lessa, 2014), and the political weakness of the Rousseff and Temer administrations given their stance toward South America (Saraiva, 2017). The export of corruption via large companies damaged Brazil’s entrepreneurial image, and this directly affected the PT governments because the investments for the projects were financed by the Brazilian Development Bank, which was under the government’s control. Brazil in fact exported corrupt practices that were already being implemented internally under Lula’s government. After Rousseff’s arrival, the lack of leadership favored the emergence of alternative projects such as the Pacific Alliance, which did not involve a greater Mexican presence and rivalry with Brazil for leadership only because competing against Brazil was not on Mexico’s agenda. The existence of regional models opposed to Brazil’s view of integration (the ALBA and the Pacific Alliance) reflected the obstacles it faced in pursuing leadership and promoting that view.

Rousseff’s foreign policy abandoned the focus on South America and the pursuit of regional leadership. The internal crisis—political, economic, and social—damaged the nation’s status as an emerging economic power and weakened its regional political position and economic leadership. This can be seen by comparing three of the biggest crises experienced by Latin America in the past decade, those in Honduras, Colombia, and Venezuela. While during the first two Lula took a very strong stance in defense of sovereignty, security, and democracy through unilateral decisions and UNASUR, Rousseff and Temer maintained a low profile with regard to the Venezuelan crisis.

Conclusions

Lula promoted the treatment of South America as a political unit via the CSN and UNASUR and formed strategic alliances with Argentina and Venezuela. However, he struggled with both partners—particularly with Venezuela, which, under Chávez, challenged Brazil’s regional leadership. Meanwhile, the Argentine governments of the Kirchner period criticized his regional policy because they wanted Brazil to favor the consolidation of Mercosur over regional projects. These key situations negatively affected Brazil’s desired integration of South America. As Saraiva (2017), Bernal-Meza (2015), Mercadante (2013), and García (2013) point out, between 2003 and 2010 Lula’s administration structured its foreign policy so as to position Brazil as a global power. To this end, the then-president adopted a policy of international initiatives and activism through the construction of international coalitions aimed at the revision of global law enforcement institutions and sought to structure regional governance in South America under Brazilian leadership. These initiatives were based on a favorable coincidence of foreign (the relationship with China and the creation of BRICS) and domestic (turning Brazil into an economic power) factors, and these goals were attained in certain areas. The relationship with China and participation in BRICS were strategic decisions through which the country attempted to move toward a position of greater influence and prestige in international politics, a goal it failed to achieve. At the same time, China became a disruptive player in relations between Brazil and other South American countries, weakening its role as an important trading partner and adversely affecting subregional integration.

The fact that the aforementioned report from the Presidency in 2017 pointed to the foreign policy of the PT governments as a series of serious mistakes called into question the continuity of any Brazilian effort to strengthen BRICS. Saraiva (2017) concludes that the criticisms made in that document, coupled with the changes in Brazil’s foreign policy in 2016 and 2017, killed the belief in an Itamaraty-based monopoly and a lasting and homogeneous foreign policy.

The failure of the strategic alliance with China—the absence of participatory commitments binding the large BRICS members (China and Russia) with the weaker ones (Brazil and South Africa) so as to jointly direct global policy strategies of major interest to them—threatened Brazil’s future in BRICS. Politically speaking, China’s failure to support Brazil’s (and India’s) membership in the Security Council led to a failure of strategic alliances and prevented BRICS from becoming a highly influential power bloc in the international system. China’s political decision regarding the Security Council essentially maintained the status quo of five great powers.

The deterioration of the Brazilian economy called into question the credibility of an economic model that would supposedly serve as an alternative path to development and an example for other Third World countries. The reasons for this failure involve technological backwardness and a weakened leadership that failed to continue Lula’s plan. Rousseff’s mistakes included a political crisis, corruption, refusal to listen to advice or suggestions, and a lack of vision with regard to Brazil’s role in the region and the world.

Brazil remains the most powerful nation in the region, but this is more because of its recent past than because of its present. It will need to reassert its regional leadership aspirations in an area where competitors are espousing other models of regionalism—models that, in fact, detract from the visibility and dynamism of Brazil’s projects. China is not a strategic partner, either bilaterally or internationally. Consequently, BRICS will not amount to more than it already does (at least from the Brazilian perspective), and, in this regard, Brazil has failed to achieve an important role in international politics. The end of UNASUR also marks the end of Brazil’s multilateral foreign policy project involving South America. The stances taken by nations opposed to that organization have clearly shown that Brazil’s leadership cycle has ended. The country’s challenges now lie in industrial and scientific/technological development and finding a new will to achieve South American leadership.