1063) Turismo academico (13): Brazil's role in South America

Continuando com minha prática de ser bonzinho e responder perguntas de estudantes (acho que vou comecar a determinar mais cuidadosamente minhas prioridades, pois do contrário não tenho tempo de fazer minhas próprias pesquisas e leituras), transcrevo abaixo minhas respostas a uma consulta recentemente recebida...

Brazil’s role in South America and in the global arena
Paulo Roberto de Almeida
Answers to questions presented by a (xxx) a M.A. Candidate 2010; Latin American & Hemispheric Studies, Elliott School of International Affairs - George Washington University

1) Is it necessary, or even desirable, for Brazil to use South America as a "springboard" to launch itself into the global arena?
PRA: It is not only a question of necessity or desirability, it is a pragmatic posture, as there is no much room for Brazil’s launching into the global arena besides its natural projection over the extended markets and opportunities open for its companies and capitals in the neighboring countries and regions. Brazil has no enough ‘accumulated power’ to enter into the global stage as such, as it lacks capital and technology to compete on a global scale, or its capability is not sufficient for a major upgrade. So, the gradual strengthening of a regional economy that has Brazil as its natural center seems to be a wiser and easier way to gain new capabilities to, in due course, compete globally.
Even if there is no clear plan or conscious project – that is, arising from government planners – to use South America as ‘springboard’ for this launching, that is the most available means, or route, for Brazil’s affirmation into global scenario. South America, starting by Mercosur, is a kind of ‘miniglobalization’ process, by which companies and people gain resources, confidence and experience to lauch themselves into a larger space, which means competing with the most advanced companies and nations.

2) Will Brazil's reluctance or ambivalence toward assuming a regional leadership role hinder the nation's ascension to a position of international prominence, or is this ambition more likely to be undermined by the reluctance and mistrust of neighboring countries toward Brazil's global aspirations?
The question of ‘regional leadership’ is clearly an ambiguous one: in normal circumstances, no nation, or no person, takes to itself or himself to affirm and proclaim a ‘leadership’ role, as this could be self-defeating or be taken as an arrogant move. It is highly preferable to be recognized naturally as a leader, arising from natural or acquired capabilities that give the candidate in species a preeminent role either in the economic sphere, in the strategic and security realms, in technological improvements, or even cultural factors. Leadership has to have legitimacy, so needs to be self-based, not offered or proclaimed unilaterally.
As the most important economy in South America, compared with Mexico in Latin American level, Brazil is already recognized as an important country on a global scale, or at least seen as such by the advanced economies of the G7. That arises from Brazil’s GDP, its internal market, the volume of foreign direct investment in Brazil (most of major Forbes companies are already there), its major role as producer and the strategic provision of certain commodities (and prospects for renewable energies, including fossil fuels) and a lot of other aspects, which could encompass also diplomatic leverage at global trade negotiations.
The fact that this leadership is not recognized as natural in the region, and not accepted as consensual, derives from other factors, historical and current ones. In the past, Argentina had the most important economy, had the most advanced society in cultural and educational terms, its per capita GDP was the double of Brazil’s, as well as in terms of scientific and cultural production. Nowadays, Argentina has a highly diminished GDP compared to Brazil’s, its per capita GDP is just 20 or 30% higher, has been surpassed by Brazilian scientific production and has no importance at all in the strategic balance (either regional or global). That is the most important factor that hinder Brazil’s assumption as regional leader: Argentina does not accept that Brazil speaks on his behalf, even less that Brazil is chosen to ‘represent’ the region in a reformed UN Security Council.
Other countries as well do not accept a Brazilian leadership. Either for historical experience – in the past, during the times of Lusitanian and Spanish empires in South America, Brazil’s territories were the half of today’s large mass, almost half of South America – or current fears, South American neighbors do not trust Brazil as ‘their leader’. The point is that Brazil is not immensely or disproportionately richer or powerful, comparing, for instance, with US huge differentials vis-à-vis its neighbors. Also, Brazil has no large resources for cooperation and investments to the benefit of its neighbors: there are limited amounts of Brazilian direct investment or projects financed by Brazilian institutions. So, objective reasons, as well as mistrust from the neighbors hinder Brazil’s aspirations for a leadership role in South America.

3) What are the implications of the Chavez's "Bolivarian revolution" on Brazil's consolidation of regional power, in light of Chavez's recent victory with regard to eliminating term limits? Do you think Chavez, or other left-leaning leaders in the region such as Morales or Correa, have the capacity to engender political or economic instability that would severely frustrate Brazil's efforts at regional integration? Thus far Lula has proved quite pragmatic with regard to his dealings with these leaders, but will further instances of economic nationalism or conflict erode this spirit of pragmatism and concession?
PRA: The big problem with Chavez, with ‘chavismo’ and with the Bolivarian states is that, besides their natural propensity for nationalism and dirigiste statism, there is no method at all in their actions, either in the domain of general governance (domestic) or in external policy. Chavez (and other leaders of his same ideology) is guided only by improvisation and opportunism, with the aim of consolidating what he calls ‘socialism for the 21st century’, a confusing assemblage of old beliefs in the collectivist economic role of the State, and some vague aspirations of ‘solidaristic’ integration, which does not goes through trade liberalization, but follows, instead, the political way of a pretense unified action against imperialism and foreign exploitative capital, considered, in a old fashion and démodé way, as the main culprit for the backwardness of the region. The main point to focus here, in connection with Chavez and chavismo, and his followers in Latin America (leftist leaders in Bolivia, Ecuador, probably Nicaragua, but in a lighter version, Paraguay and El Salvador) is that, besides their formal commitment with social policies and the ‘interests of the people’, they are inherently authoritarian, starting by Chavez himself, who is properly a fascist-like leader.
The problem with that are the limitations in the political discourses by Brazilian leaders, pretending to contribute to the regional integration under democratic rules. We already know that the Brazilian Workers’ Party (PT) is a typical leftist party, expressing sympathies for the left-wing regimes in Latin America, starting by Cuba and the sandinistas in Nicaragua. The problem for Lula is to reconcile those leftist sympathies with the defense of democracy in the region, which is an important condition for him to gain credibility and legitimacy at world level. Lula is trying to do the impossible: defend democracy and at the same time preserve his leftist friendships in the region, starting with Chavez, to retain the continuous support of the political left, domestically and elsewhere.
Actions by Chavez, supporting allies and other leftist candidates around the region, create political instability in many countries, as they exacerbate electoral fights and promote intervention in the internal affairs of other countries. Another implication of the Chavez and his allies is that they are effectively opposed to the kind of integration that Brazil and other Mercosur countries are trying to expand and strengthen in the region, one supposedly based on free trade and private initiative. Bolivarian integration, if there is one, is based on political solidarity among like-minded political leaders and on State-led trade and other economic interactions.
They are, already, undermining Brazilian actions to integrate economically South America, either because Chavez wants to assert its own political leadership, as against the natural Brazilian economic leadership, or because they in fact despise the continuing Brazilian adherence to ‘neoliberal’ economic policies. Even with Lula displaying ‘strategic patience’ with those entanglements and showing as much pragmatism as he is capable, the prospects for a deeper integration in South America seem to be not very bright with this division among neighbors.
Brazil proposed, as early as 2004, a policy framework for this integration, in the form of a light coordination called South American Community of Nations (Casa), focused on the physical integration (that is, transports, communications, energy, and some other projects for infra-structure and trade links). The idea was accepted in December 2004, and Brazilian diplomacy, offered, some months later to provide secretarial services in Rio de Janeiro, only to be rebuffed by other countries. Some months later, in a meeting held at Isla Margarita (Venezuela), Chavez commanded the replacement of Casa by the Union of South American Nations (Unasur), with a full secretariat in Quito, the capital of Ecuador. The constitutive treaty of Unasur took months to be readied, but was finally signed in a meeting in Brazil, May 2008, but there was no agreement yet as for the choice of a Secretary and for the extent of Unasur mandate and its relationship with other Latin American bodies (such as Mercosur, CAN, Aladi-Laia, Sela, among others).
Deep philosophical divisions were already visible between the two groups of countries in Latin America, the Bolivarian and the others, and the ongoing international economic crisis will probably deepen a little more the political divide among them. Brazil has not yet sufficient political clout or economical leverage to bridge those divisions within the region, even with the general acceptance of Lula’s government everywhere.

4) Finally, will the current global financial crisis help or hinder Brazil in terms of its perceived power and weight in the region and do you think this situation presents an opportunity for Brazil (if the nation so desires) to assume a more powerful role in the region or the world?
PRA: Both outcomes are possible, as there are perilous challenges as well as new opportunities arising from the present situation of a still undefined crisis and its yet unseen developments and consequences. Brazil, for the first time in years, perhaps even in decades, is not in the center of the crisis, and it is not even part of the crisis, which has it center in the most important economy of the world. During almost all previous experiences of serious unbalances in international economy – oil crises of the 1970s, debt crises of the 1980s, financial crises of the 1990s – Brazil was involved or at the center of all those disequilibria. Of course, Brazil is IN the crisis, as one of the various impacted countries in the periphery, and it should suffer in various degrees with the trade, financial and other economic impacts of this crisis, as in market access or investment attractiveness, for instance.
But, if Brazil is not part of the problem, it is not exactly part of the solution, at least not yet, or perhaps only in a limited way. Brazil has not enough economic clout to act as a ‘rescuer’ or a ‘fireman’, in the same manner as China, for instance, which is the big financier of the American consumer (and even for the Treasury). Nevertheless, Brazil rates among fourth or fifth provider of financial resources for the American Treasury, as ¾ of it exchange reserves (of more than US$ 200 billions) are invested in T-bonds. But Brazil is not as a big economy as China, or other, and not as a big exporter as Korea, to make real difference in world markets. It has no convertible currency, is not a big provider of development assistance, does not send troops for peace-making missions of the UN – just to a few peace-keeping operations – and practices many forms of protectionism and nationalistic devices in its domestic policies.
Brazil is of course an important protagonist of multilateral trade negotiations, a leader in the trade G20 of developing countries and now also an active participant in the financial G20 of the most important economies in the world. Differences among the later are inevitable, and Brazil aligns itself with the most ‘regulationist’ countries, a group that comprises France, Russia, and China, while also advocating Keynesian-like actions such as fiscal stimulus for renewing growth, as proposed by the US. It will take some time before real coordination of macroeconomic policies can emerge among the G20 countries, as this kind of coordination is difficult even between G7 countries, as those policies have some constraints both in monetary terms and in their fiscal sides. Brazil is probably not yet prepared to offer cooperation in large scale, or to provide sufficient resources as to make real difference in any financial scope conceivable.
Different is the situation in the regional scenario, where Brazil can have some impact, even on limited terms, on the economies of neighboring countries. Brazil is already the main trade partner of Argentina and for some of its small neighbors, as well as an important investor in the same countries. BNDES, the national bank for investments, is already providing financial resources for projects with Brazilian participation in South American countries. Brazil is also the main provider of resources for the Mercosur’s Fund to compensate for asymmetries among the member countries and plans to double its contribution for the same purposes within the bloc.
Although Brazil cannot compete with the U.S. in terms of market or investments, let alone in heavy financial support for its neighbors, it has some leverage on regional level, as it constitutes almost half of South American territory, a large part of its population and economy, and an important fraction of the region’s external trade and financial interactions. Having stabilized its economy since the Real Plan (1994) and adopted and flotation exchange regime and an inflation targeting system at the height of the financial crisis (1999), Brazil is prepared to serve as a kind of limited anchor economy to neighboring countries in these troubled times, provided they can adopt adequate policies and are open to economic consultations and coordination. Nevertheless, in order to really contribute to the stabilization of South America and play a larger role in the region and (although limited) in the global scenario, Brazil has to strengthen its economic basis and open itself to more economic interactions in global markets. The most important requirement to have the country be able to play such a role is to Brazil to pursue its process of economic modernization and enhancing its productivity gains, which can only be achieved by means of important reforms in the domestic arena.
In short, Brazil has to continue to strengthen its fiscal position, keep inflation under control, bring internal debt within reasonable level (in order to reduce the interest rates), reform it tax system (which is both absurdly cumulative and extraordinarily excruciating for the private sector), improve the quality of its education (in all levels, but especially at the basic level), render more flexible its labor legislation (giving more power to contractual agents, not to the law) and open its economy to foreign trade and investments. As it performs some of those fundamental reforms, Brazil will gain economic and financial strength to make its currency convertible, which is a required condition to play a larger role in the world economy.
The whole set of reforms is entirely domestic, and has nothing to do with United Nations Security Council, nuclear policy or strategic matters at large. Almost all, if not all problems that Brazil faces nowadays are Brazil-made, and have to be solved internally, by means of domestic reforms. Even the lack of international credit – which is a feature of today’s crisis – would not be so severe, and with direct impact in the Brazilian economy, if the level of Government expenditures would not be so large, crowding-out Brazilian savings and reducing domestic investments and financing for the private sector and the public.
The international crisis is a ‘good’ opportunity to redress those shortcomings and imbalances in the Brazilian economy, starting by the fiscal menace and the irrational tax system. Those are the challenges arising currently for Brazil, and they have to be tackled primarily domestically, before Brazil can project itself in the regional and the international scene.

Paulo Roberto de Almeida
Urbana, April 13th, 2009.