Europe needs a China Strategy (se possível a mesma dos americanos) - Julianne Smith (Brookings)

Os americanos continuam insistindo numa atitude confrontacionista em relação à China e pretendem que os europeus os sigam nessa trajetória agressiva. 

Europe needs a China strategy; Brussels needs to shape it

Julianne Smith

Brookings Institution, Monday, February 10, 2020

Europe’s momentum in developing a clear-eyed approach toward China has stalled. In March 2019, the European Commission issued a white paper naming China a systemic rival and economic competitor. That publication marked a fundamental shift in how far European institutions were willing to go in raising the challenges China poses to Europe’s openness and prosperity. It also reflected shifts that were occurring in capitals across Europe. Just as the European Union was rolling out its white paper on China, German Chancellor Angela Merkel was arguing that Europe should view China as a competitor as much as a partner, and French President Emmanuel Macron warned China that “the period of European naivety is over.”

However, since those March proclamations, neither the EU nor individual European leaders have taken the meaningful steps needed to close existing vulnerabilities in Europe’s relationship with China, stand up for European values of democracy and human rights, or strengthen Europe’s resolve against Chinese economic and political pressure. Certainly, the EU had significant distractions in the second half of 2019, as it managed a leadership transition and negotiated the Brexit arrangement, but EU leaders also had opportunities to press China on these key issues. During Merkel’s visit to China last September, she raised her concerns about Hong Kong’s pro-democracy movement but failed to bring up Chinese human rights abuses against Muslims in Xinjiang. Macron was even more reserved on human rights in his visit to China in November. He made no public mention of Chinese human rights abuses in Xinjiang, nor did he call on President Xi Jinping to respect China’s commitment to Hong Kong people’s rights.

Back home in Europe, national decisions on whether to ban Chinese tech company Huawei in Europe’s 5G telecommunications auctions on account of security concerns have been delayed and remain uncertain. Meanwhile, Greece, Portugal and Hungary have largely ignored the political leverage that comes with China’s promises of investment. Last spring, Italy became the first member of the G-7 to join China’s Belt and Road Initiative, a move criticized by Brussels, Germany and France. There is also talk among some European experts of pursuing an “equidistant” approach between the United States and China, as President Trump’s unilateral foreign policy and trade practices drive Europeans away from the transatlantic relationship.

The lack of strategy to address China’s growing role in Europe has been compounded by domestic instability within Europe. Powerful capitals including Paris, Berlin and London are mired in political turmoil or stagnation. The coming months are unlikely to produce better results. The EU will continue to face domestic and regional challenges, including ongoing protests throughout France, a weakening coalition government in Germany, and Britain’s formal exit from the union on January 31, which will trigger months—if not years—of additional work to implement.

If Europe is to regain momentum in developing a tougher China policy, it will have to come from Brussels. While recent months were consumed by a complicated and lengthy political process to confirm EU leadership, the new commission finally started in December 2019 and is off to an ambitious start.

The new president of the European Commission, Ursula von der Leyen, has called on the EU to become more “geopolitical.” She is leading an effort to revamp the EU’s competition laws to guard against unfair practices from state-owned enterprises and intends to appoint a “chief trade enforcer” for anti-dumping cases that hurt European companies. The EU’s new foreign policy chief, Josep Borrell, is also pushing for tougher member-state responses to China’s human rights abuses in Xinjiang. The EU has launched a framework for an EU-wide investment screening mechanism to address foreign (including Chinese) takeovers of European companies. Von der Leyen has also taken the lead on efforts to update and reform the World Trade Organization, which will be a central player in advancing cooperation between the United States and the EU on Chinese trade practices.

Von der Leyen’s ambitious agenda should be commended, particularly because 2020 will be a critical year for EU foreign policy as it hosts not one but two major summits with China and navigates intensifying competition between the U.S. and China. But neither von der Leyen’s plans nor the upcoming summits will be successful unless the EU does more to bridge the existing gaps across the continent when it comes to China. Europe already has several tools at its disposal to reduce vulnerabilities to Beijing’s economic leverage and political influence. Not everyone in Europe agrees, however, that China’s activities in Europe pose challenges.

Von der Leyen should therefore invest some time auditing China’s engagement in Europe, especially political influence operations. Some European countries are getting better at monitoring Chinese investments inside their own borders and many are sharpening their understanding of the complexities of the 5G debates. But individual capitals know little about China’s broader playbook in Europe. Among other policies, China is also doing its very best to keep Europe divided by pursuing regional forums like its “17+1” initiative for countries in Central and Eastern Europe. Brussels should therefore serve as a clearinghouse, enabling countries to share cautionary tales and best practices across Europe.

For example, EU members should hear from Zdenek Hrib, the mayor of Prague who recently broke sister-city ties with Beijing. How did he reach that decision, and what have been the ramifications? Brussels may also want to invite the Estonian government to share how the Chinese reacted when one of its daily papers, Postimees, published a three-part series on Chinese malign influence, intelligence gathering and soft power. Other governments could glean lessons from these stories.

In addition to auditing Chinese actions in Europe, von der Leyen and her team need to extract lessons from other democracies around the world. Taiwan, Australia and Japan have a lot to share regarding their own experiences with disinformation and foreign interference. In response to encroaching Chinese political influence, Australia passed a sweeping national security law in 2018 that banned foreign political interference and made it illegal to engage in covert activity on behalf of a foreign government, such as organizing a rally. The legislation also required foreign lobbyists to register on a public list. (In response, China canceled visas for Australian business leaders.) In Taiwan, the liberal democracy that receives the most disinformation spread by a foreign government, social media platforms are consistently flooded with disinformation from Chinese state-backed influence campaigns. This level of Chinese interference may not be on Europe’s radar yet, but China’s pressure campaign will likely move westward as its interests in Europe grow.

Just as it doesn’t have one perspective on Russia or the United States, Europe will never settle on a single view of China. But if von der Leyen manages to at least increase European awareness of Chinese activities in Europe, she could then turn to the important task of sharpening the EU’s existing toolkit. Here, there are three things she needs to do. First, she should use the Dutch decision to prevent China from acquiring one of its sensitive semiconductor equipment companies as a call to action. The Dutch government made that decision only after the White House gave the Netherlands prime minister an intelligence report on the dangers of China acquiring that firm. European governments should be able to make those assessments themselves, and European intelligence agencies should be raising similar concerns. Von der Leyen can lead policymakers toward more thorough evaluations of Chinese acquisitions.

Second, von der Leyen needs to strengthen European competition rules. Access to the single market is a major element of Europe’s geo-economic power. The EU should prioritize tougher regulation and enforcement laws to ensure that all companies, including Chinese state-owned enterprises, are playing by the same rules as European companies. Margrethe Vestager, the European commissioner for competition, is already looking into possible responses to state-owned companies outside the EU gaining an advantage over European companies. That’s a great start. The European Commission may also want to look at the Dutch proposal to add a pillar to EU competition law, allowing the EU to intervene if it finds that state-backed businesses are distorting markets and pursuing unfair practices.

Finally, von der Leyen needs to enhance European and national-level investment screening mechanisms. Chinese foreign direct investment in Europe increased 10-fold over a decade, peaking at 37.2 billion euros in 2016 (although it has tapered in recent years). In response, Brussels has been ramping up its efforts to develop an EU-wide approach. In April 2019, the EU created a new framework for foreign investment screening. It enables member states and the European Commission to exchange information and raise concerns related to foreign investments—an important first step. However, the screening framework has been watered down to accommodate internal differences and member states still have the final say.

The EU needs to strengthen this mechanism and continue to close loopholes. In doing so, it should look to the U.S. screening mechanism, the Committee on Foreign Investment in the United States (CFIUS), for both its strengths and its weaknesses. The CFIUS is well staffed and resourced. It reviews hundreds of foreign acquisitions per year and has proved capable of blocking or restricting investments that are deemed a national security threat. It also requires companies to provide notification of potential acquisitions in critical industries and does not allow them to proceed without CFIUS review. Still, the U.S. system does miss some smaller transactions and could do a better job profiling foreign investments that try to circumvent the CFIUS through real estate acquisitions or technology transfers. Such drawbacks could be corrected in the European approach.

Brussels has many of the ingredients it needs to forge a stronger and more coherent strategy on China. The new leadership appears committed to tackling these issues, and the EU’s existing toolkit is a solid foundation that simply needs to be strengthened and implemented. The one missing piece for Brussels is willing partners. If powerful EU member states step up and make important decisions on their approaches toward China, including whether to strengthen national investment screening mechanisms and work with Huawei on 5G, Brussels could make 2020 a defining moment for Europe’s China strategy.

Os ciclos economicos nos EUA: uma recessao a cada sete meses - Heather Boushey (Brookings)

Recession ready: Fiscal policies to stabilize the American economy

Heather Boushey

Brookings Institution, Thursday, May 16, 2019

Introduction

A constant in the history of economics is that countries encounter recessions. Since World War II, the U.S. economy has been in a recession for about one of every seven months and for at least one month in roughly one-third of the years over that period. Recessions have many causes—financial markets crashing, monetary policy tightening, consumers cutting spending, firms lowering investment, oil prices shifting—but at some point, economic expansions end and the economy begins to contract.

This volume lays out a set of changes to fiscal programs to improve the policy response to a recession in the United States. It starts from three main premises, which are described in more detail in the following chapter:

1. First, recessions are costly. Individuals lose jobs and income. The economy wastes resources and can sometimes even face a permanently lower output path.
2. Second, fiscal policy is an effective aspect of the government’s part of a response to a recession. Expansionary fiscal policy can increase output; it can increase the utilization of resources; and in particular, when monetary policy has reduced interest rates to zero, it can meaningfully shift the economy’s trajectory upwards.
3. Third, increasing the automatic nature of fiscal policy would be helpful. Increasing spending quickly could lead to a shallower and shorter recession.

Using evidence-based automatic “triggers” to alter the course of spending would be a more-effective way to deliver stimulus to the economy than waiting for policymakers to act. Such well-crafted automatic stabilizers are the best way to deliver fiscal stimulus in a timely, targeted, and temporary way. There will likely still be a need for discretionary policy; but by automating certain parts of the response, the United States can improve its macroeconomic outcomes.

The first chapter lays out the case for automatic stabilizers in detail. An important point is that we have sufficient data to discern when a recession is starting in real time, which is a solid foundation for implementing automatic stabilizers. Some stabilizers respond as underlying fundamentals shift—for example, regular unemployment insurance spending rises as more workers lose their jobs, so policymakers do not need to switch on this policy. But one can also tell when a recession is unfolding and more-robust measures are necessary—such as extended unemployment benefits. The policy rule articulated by Claudia Sahm in this volume would generally go into effect within a few months of the start of a recession. A rule like this is both quite timely and far more effective at signaling recessions than other metrics. In a subsequent chapter, Matt Fiedler, Jason Furman, and Wilson Powell III suggest triggers that could be used at the state level as well.

Although automatic stabilizers do exist, they are relatively small in the United States compared with those in other countries. At the same time, there have been frequent discretionary policy changes made in the face of economic downturns to push more money into the economy via tax cuts, direct payments, or increased spending. In the second chapter of this volume, Louise Sheiner and Michael Ng highlight the extent of the U.S. budget’s cyclicality over time. Whereas federal taxes provide a substantial amount of automatic stabilization—and discretionary federal policy is also strongly countercyclical—state and local fiscal policy is slightly procyclical.

The remaining six chapters of the book make concrete proposals for adjusting U.S. fiscal policy to expand the implementation of automatic stabilizers and make them more effective. The first two proposals entail creating new policies that are based on evidence from discretionary policies used in prior recessions. Both aim to avoid damaging contractionary responses to recessions, first on the part of households, and second on the part of state governments.

In the third chapter, Claudia Sahm suggests making an automatic direct payment to qualified households during economic downturns. Such payments have been used before in a variety of ways, through either temporary tax cuts or direct payments, but not in an automated fashion. Sahm demonstrates the effectiveness of such programs and shows how an automated set of payments could have been made earlier and more predictably than discretionary payments in the past. Given the large share of consumption in the U.S. economy and the propensity for consumption to fall during a recession, such a policy could be an important way to combat any sizable fall in demand in the economy.

In the fourth chapter, Matt Fiedler, Jason Furman, and Wilson Powell III suggest a way to provide funds to states to avoid sharp, procyclical cutbacks at the state and local levels. During a recession, the federal government is in principle able to counteract declines in economic activity by increasing spending, even while revenues decline—making up the difference with additional borrowing. However, a large portion of U.S. public spending occurs at the state and local levels, where borrowing is much more difficult and declines in tax revenues generally lead to declines in spending. Fiedler, Furman, and Powell address this concern in the context of Federal Medical Assistance Percentage formula funds, which were adjusted during the Great Recession and could be automatically adjusted to provide state-level fiscal support during future recessions.

There are also several current programs that could be adjusted to improve their effectiveness as automatic stabilizers. In the fifth chapter, Andrew Haughwout proposes setting up and maintaining a list of potential transportation infrastructure projects whose funding could be ramped up during downturns. Though Congress has often used transportation infrastructure as a method to generate spending during a downturn, this process could instead be automated by changing the spending rules for the BUILD program (formerly the TIGER grant program) so that the federal government would fund more projects during downturns and fewer during a boom. Because BUILD is constantly awarding funds, states would have projects ready to be funded and would be familiar with the funding stream, allowing for timely spending.

The programs that make up the social safety net constitute an important set of automatic stabilizers in the current U.S. policy mix. Because these programs provide resources to people with little or no income, the need for the benefits they provide rises along with the unemployment rate. As currently implemented, unemployment benefit spending and Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program) spending automatically rise as more people are unemployed or as their incomes fall. These programs, along with Temporary Assistance for Needy Families (TANF)—which is currently capped in nominal dollars by federal law—could be restructured in ways that would help them accomplish their core goals and serve as better stabilizers for the economy.

The unemployment insurance (UI) system is a core part of the U.S. response to both individual employment loss and overall labor market disruptions. By insuring workers against job loss, UI partially protects them from important risks while also mitigating the decline in consumption that occurs during a recession. In the sixth chapter, Gabriel Chodorow-Reich and John Coglianese propose changes to improve the take-up of UI, increase its benefits during recessions, and make its extended benefit formulas more responsive to changes in the labor market. These changes would enhance the already sizable role that UI plays in stabilization policy.

After federal welfare reform of 1996, the federal program that provides cash to families in need was block-granted, and funds were capped at their 1997 level. The newly created TANF program included a small emergency fund, which has been insufficient to allow TANF to function as needed for families or provide any cushion to the economy in a downturn. In the seventh chapter, Indivar Dutta-Gupta suggests shifting the structure of TANF so that it can expand in downturns as need rises and thus play a countercyclical role both for households and the economy. He also reviews the experience of TANF job subsidies enacted as part of the American Recovery and Reinvestment Act of 2009 and proposes expanding this approach, explaining how employment subsidies can play an important role as part of an overall policy response to economic downturns.

SNAP is the nation’s most-important food support program—and it is also an automatic stabilizer that supports the economy during downturns. In the eighth chapter, Hilary Hoynes and Diane Whitmore Schanzenbach propose reforms to SNAP that would make it a more-effective automatic stabilizer and increase its ability to protect families during downturns. In particular, they focus on ensuring that families in need of food support are not tied to work requirements that may be impossible to meet in an economic downturn; they also suggest increasing SNAP benefits during a recession.

Overall, this set of proposals builds on the best available evidence and analysis. They use programs that have been effective parts of U.S. fiscal policy and have either been an important part of discretionary or automatic spending in prior downturns. The proposals suggest a clear path toward improved automatic stabilizers for the U.S. economy. These programs already exist or have been pursued in the past, suggesting they are feasible and realistic. Though these policies could be implemented separately, there is an advantage in thinking of them as a package. As described in the first chapter, these policies would affect the economy at different points in time, would assist different types of households, and would address differences in economic conditions across places.

Direct payments are fast and can be executed on a large scale, but are not targeted to struggling regions or households. Likewise, though payments to states can stabilize their budgets, they do not necessarily help individuals who have lost their job or lift consumption. Transportation spending is sometimes done over a slightly longer time frame, but this allows continued spending as the economy recovers. Finally, the safety net policies are likely the best targeted, both to individuals and regions, given that their spending rises wherever economic distress is highest. Unemployment insurance is more likely to help middle-income families, while TANF and SNAP are targeted to low-income families. By setting up an array of stabilizers, policymakers can ensure that a wide range of families are supported and that demand in the economy is boosted across a variety of sectors.

Recessions exact a major toll on individuals, families, firms, and budgets throughout the United States. A key aspect of proper macroeconomic policymaking is to minimize losses by responding quickly and effectively to downturns. As discussed in the next chapter, lower interest rates have left the Federal Reserve with less room to cut rates in response to a downturn. This makes it all the more important that policymakers set in place the proper fiscal structures to make sure that fiscal policy plays an active and efficient role in combating recessions.

Economic forecasters rarely correctly call the timing of a recession. Perhaps the one thing they can all agree on, however, is that another economic downturn will come. A crucial part of preparing for the next recession is making sure fiscal policy institutions are ready to provide support when needed to minimize the damage the next recession could do.

Brazil's Global Ambitions - Harold Trinkunas (Brookings)

Brazil's Global Ambitions

Harold Trinkunas

Brookings, 6 Feb 2015

Harold Trinkunas is the Charles W. Robinson Chair and senior fellow and director of the Latin America Initiative in the Foreign Policy program. His research focuses on Latin American politics, particularly on issues related to democratization and security. He has also written on terrorism financing, borders and ungoverned spaces.

The world's seventh-largest economy needs a foreign policy that matches rhetoric with capabilities.

When President Dilma Rousseff first took office in 2010, Brazil’s future looked exceptionally bright. For nearly a decade, the country had benefited from Asia’s enormous appetite for its commodities. This allowed Brazil to reduce poverty and expand the middle class while at the same time sustaining a remarkable growth rate, becoming the seventh largest economy in the world in 2014.

But by the time Rousseff was sworn in for a second term on January 1, 2015, she faced serious decisions about Brazil’s future. Brazil’s development model based on domestic consumption and commodity exports has reached its limits and the real is significantly overvalued, thus undercutting the competitiveness of its non-commodity-based export sectors. Moreover, the Southern Common Market, Mercosur, which had once showcased Brazil’s leadership in regional integration, now ties Brazil’s flagging economy to two of the most troubled economies in South America—Argentina and Venezuela. At the same time, the two most significant global trade negotiations in a decade, the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership, are nearing completion without Brazil.

Brazil has sought to play the role of a major power on the global stage since the beginning of the twentieth century, but it will not earn this status just by virtue of its size, burgeoning population and impressive economic achievements. Historically, rising powers acquired dreadnoughts or sizeable armies to achieve influence. Today, they also seek to become a permanent member on the United Nations Security Council or lead the World Trade Organization.[1] Brazil under Dilma stands at a crossroads: it can try to parlay its rising economic might and soft power into global influence, or it can remain a regional power, albeit a significant one, with limited influence on the course of world events.  To turn its aspirations into reality, Brazil will have to deploy its national capabilities more effectively to shape the rules governing the international order.

Hard and Soft Powers

Unlike other global powers, which employ economic and military hard power to play a role in shaping the international order, Brazil has primarily relied on its soft power and exhibited a notable reluctance to compel other states to follow its lead. Brazil’s largely peaceful history and secure geostrategic position meant that it never felt the need to project power abroad through military strength.

Unlike other rising powers, such as India and China, Brazil’s regional security environment is enviably peaceful, at least at the interstate level. This has not only allowed Brazil to escape the costs of creating a formidable military machine, but encouraged Brasília’s policymakers to believe that shrewd diplomacy was sufficient to propel them onto the world stage. In 2012, Brazil was 68th in the world in terms of military expenditure as a percentage of GDP, and 11th in the world in terms of total amount spent.[2] Although Brazil has steadily increased defense spending over the past two decades—and although its defense budget accounts for over half of Latin America’s total defense expenditures—this has not yet translated into concrete capabilities that would enable its armed forces to conduct significant combat operations beyond its borders.[3]

At the same time, Brazil has been reluctant to leverage its hard economic power, either in the form of rewards or sanctions, to make other countries follow its lead. Brazil has made large strides in reducing poverty and growing its middle class.[4] Its national development bank, BNDES, is a significant player in both internal and regional development, with a total lending volume three times that of the World Bank in 2011.[5] However, Brazil has shied away from committing economic resources beyond South America. And its official international development assistance remains quite modest.[6]

In contrast to these historical and self-imposed limits on the use of its hard power, Brazil wields significant soft power relative to many states. It ranks 17th in the world, according to the Monocle/Institute for Government’s 2012 ranking of soft power, ahead of developing countries and many of the rising powers.[7] The emphasis of its foreign policy on equity, inclusion and universal institutions appeals to many states, especially small and middle powers. Brazilian diplomats are widely respected for their professionalism and effectiveness, and Brazilians consider themselves to be particularly adroit at bringing together parties with opposing points of view.[8] Domestically, Brazil provides an attractive narrative of economic growth with a strong state and a growing degree of social inclusion. As Brazil has substantially consolidated its democracy over the past three decades, its political success story contributes to its prestige in international and regional forums.[9]

Constraints in Cooperation

Brazil’s renewed attempts to rise to major power status benefit from two unique opportunities. The first is Brazil’s ascendancy in South America. For most of the twentieth century, Argentina was a regional rival to Brazil in economic and military terms. The Argentine-Brazilian rivalry is now history, marked not only by diminished military competition, but also a mutual agreement on nuclear non-proliferation that consolidated Latin America’s status as a nuclear-free zone. The likelihood of interstate war in South America involving Brazil has become very low, further reducing Brazil’s need for military capabilities.

During the past decade, Brazil has also worked steadily to constrain challengers within South America, principally through regional integration and multilateral diplomacy.[10] The reduction in security tensions was complemented by the negotiation of Mercosur, a new common market arrangement initially formed with Argentina in 1988 and ratified by Paraguay and Uruguay in 1991. This set of negotiations and agreements transformed Brazil’s main rival in South America into a partner.[11] Brazil also laid the groundwork for securing its regional ascendancy through new multilateral institutions that excluded the United States. These institutions evolved under President Luiz Inácio Lula da Silva to become the Union of South American Nations (UNASUR) in 2008. UNASUR excludes not only the U.S., but also Canada, Mexico and Central America, which are considered too politically and economically tied to Washington.[12] Most recently, Brazil has worked to create the Comunidad de Estados de Latinoamérica y el Caribe (CELAC), which includes South, Central American and Caribbean states—but pointedly, neither the U.S. nor Canada.

The second new opportunity arises from the fading of post-Cold War U.S. hegemony and the subsequent rise of global multipolarity. This geopolitical opening offers rising powers the opportunity to influence the international order more actively as their own capabilities improve relative to those of established powers. Moreover, the increasing number of powers critical in varying degrees of the existing liberal international order—Brazil is joined in this respect by Russia, China, India, South Africa, Turkey, and Iran—offers Brazilian policymakers a range of potential collaborators with common interests in revising the international system. Brazil hopes that the sum of the rising powers will have a greater impact than each acting alone.[13]

Since Brazil is not a regional rival to any of these nations, it can help facilitate multilateral networks among the rising powers. The BRICS summits, bringing together the leaders of Brazil, Russia, India, China, and South Africa, formally launched in 2009, are one example of new initiatives that exclude the traditional major powers and provide opportunities to craft alternative global governance institutions. In August 2014, for instance, the BRICS nations announced they were forming an international development bank with over $50 billion in starting capital. Brazil shares with its new international partners an interest in defending their sovereignty and autonomy of action, as well as in opening room for their participation in global “rule shaping.”

Brazil also claims to represent the concerns of a growing number of small and middle powers in the international system about global inequality.[14] Why would smaller nations accept Brazil’s leadership? Brazil’s attraction for smaller states has an economic and cultural dimension, but it is based, more importantly, on its promised commitment to more democratic, equitable and universal international institutions once it becomes a major power.

Brazil has not been able to fully exploit these opportunities. It has had limited success in persuading other states in South America to adhere to the new order it purports to have created or to support it in global forums. For example, Brazil’s leadership was challenged by Venezuelan President Hugo Chávez, who used oil diplomacy and relations with leftist and progressive movements around the globe in a bid for global influence. Brazil defused Venezuela’s aspirations for regional leadership, but only by incorporating some of Chávez’s ideological proposals into UNASUR and CELAC.[15]

While Venezuela’s regional challenge has faded, other sub-regional institutions have emerged as would-be alternatives to UNASUR and Mercosur, particularly the Pacific Alliance between Colombia, Peru, Chile, and Mexico. The free-market foundation of these new groupings undermines the more political logic for integration that Brazil has promoted within UNASUR. In addition, Mexico’s re-engagement with South America has undermined Brazil’s claim to uncontested regional leadership. Mexico and Argentina have also quietly networked neighboring states to undermine Brazil’s campaign to win a permanent seat on the UN Security Council (UNSC).[16]

Perhaps most tellingly, Brazil’s historical reluctance to place limits on its sovereignty through adherence to rules-based international regimes has diminished the utility of Mercosur, UNASUR and CELAC as platforms for its leadership. These institutions all have limited budgets, small cadres of personnel and inconsistent leadership. In the absence of capacity and commitment, these new multilateral institutions have essentially devolved into opportunities for presidential summitry in the region rather than institutions that can govern interstate relations or bind the actions of member states. Their weakness highlights a central problem in Brazil’s multilateralism: a willingness to evade the rules of the institutions it creates. For example, Venezuela’s domestic legislation did not meet many regulatory requirements for admission to Mercosur, nor did it fully adhere to the institution’s democracy standard. Nevertheless, with consistent backing from Brazil, Venezuela was admitted over the objection of other Mercosur member states, such as Paraguay.

Brazil has also been unable to attract support for its aspirations from the U.S. and other established powers, a major problem when Brazil’s strategy relies on soft power. Its frequent criticism of the present international order limits the chances that such powers will support Brazil’s efforts to play the role in world affairs that it believes it deserves. Consider Brazil’s quest for a permanent seat on the UN Security Council, spearheaded by former President Lula da Silva. The lack of U.S. support for its campaign has been a particular source of tension between Brasília and Washington, even though Brazilian diplomats recognize that Russia and China also oppose Brazilian permanent membership. Here, the contrast with Washington’s support for India’s bid for a permanent seat has been particularly galling for Brazilians.

Changing the Rules or Just Criticizing Them?

Brazil’s ability to act as a major power will depend on its contributions to shaping and enforcing the rules that govern the international order. Two recent episodes highlight the dilemmas Brazil faces: the global financial crisis and international responses to imminent threats to human security. Brazil has consistently privileged the use of diplomacy over all other state capabilities, but its reluctance to assume economic and military costs to contribute to global order prevents it from participating effectively. Moreover, its desire to minimize the role of military power in settling major conflicts, such as those in Iraq, Libya, and Syria, sometimes leads it to propose solutions that are discarded as unrealistic by the established powers.

Brazil had an unprecedented opportunity to insert itself into the heart of international economic and financial governance during the 2008 global financial crisis. The rising powers, which by and large were much less affected by the crisis, garnered even more importance once reform and recapitalization of the International Monetary Fund (IMF) became necessary. The incumbent major powers turned to Brazil, India and China for support after experiencing great economic turmoil, and Brazil was able to negotiate a redistribution of IMF voting weights to better reflect the actual economic power of the member states. Brazil’s role as a key member in the G-20, the small group of states that coordinate international economic policy, indicates that it has joined an exclusive group of major powers at least in the financial domain. This is quite a contrast to Brazil’s stance during the 1980s Latin American debt crisis, when it went along—often grudgingly—with IMF-recommended austerity packages.[17] Brazil’s challenge will be to translate its new institutional weight in the IMF—which has been delayed because of U.S. congressional inaction on altering member country voting rights—into meaningful, positive changes in how the IMF views the developing world and conducts its business.

Since its reluctance to use hard power diminishes its influence over policy outcomes, Brazil has been less successful as a global actor in responding to international security crises. Brazil is frequently critical of the selectivity with which international law is applied by the major powers, especially in cases where the international community intervenes in the internal affairs of states. Brazil’s stance runs counter to the prevailing liberal international order, which is premised on the belief that violations of popular sovereignty and humanitarian crises can at times trump national sovereignty and permit the use of force to pursue humanitarian goals or contain rogue states—and was codified in the concept of Responsibility to Protect.

Brazil’s participation on the Security Council during the 2011–2012 term brought it into direct conflict with this prevailing order.[18] First, Brazil’s decision to caucus with BRICS in the UNSC was not viewed positively by the three other permanent members of the Council. The matter came to a head during the UN response to the conflict in Libya in 2011. Brazil opposed the UN’s authorization of the use of force by NATO to justify an expanded campaign against a broad range of government targets in Libya, leading to the fall of Colonel Muammar Gaddafi. The expansion of the intervening powers’ objectives in Libya provoked criticism from the BRICS and developing countries that Responsibility to Protect was being used as a cover for regime change.

Brazil, instead, proposed the concept of Responsibility While Protecting (RWP), advocating that before states deploy military force to protect civilians in humanitarian and human rights crises, they carefully consider collateral damage. The U.S. and many European states rejected RWP as unrealistic, thus highlighting the ongoing disagreement between Brazil and the West over norms governing the use of force in response to humanitarian crises.[19] In the end, the initiative, while a major Brazilian diplomatic effort, received scant support among the UNSC powers, demonstrating Brazil’s inability to influence the core security debates among the major powers and shape the rules governing the use of force in the international system.

Reconciling the Rise with Ambition

President Rousseff has some difficult decisions ahead of her in 2015. Brazil needs to implement an economic adjustment plan to address its overvalued currency, persistent inflation, high levels of consumer debt, and slowing economic growth. Brazil’s prospects in the energy sector, particularly the offshore oil field known as the pré-sal, are not as bright as they once seemed. Finally, Rouseff’s thin margin of victory in the 2014 presidential elections indicates that she will preside over a divided country in which the Brazilian middle class will continue to demand improved government effectiveness, efficiency and accountability.

None of these issues present an insurmountable obstacle to Brazil’s rise. Nor do they represent a long-term threat to its success. Brazil has an unprecedented set of opportunities: a large economy, considerable soft power, a lack of regional rivals, and a network of partners among other rising powers and the developing world. But Brazil needs to do a better job of using the hard power it does have—military or economic—while still maintaining its commitment to the norms that have historically guided its foreign policy.

Given that Brazil’s regional security environment is likely to remain peaceful, its shortage of military hard power is likely to endure, and the government is right not to emphasize this dimension. Rather, Brazil should seek another avenue to shape the international order by extending the scope and size of its contributions to international peacekeeping, focusing in particular on developing the types of capabilities that are in short supply among peacekeeping-contributing nations: intelligence, logistics, aviation, communications, command, and control. By developing these capabilities, Brazil would acquire greater influence on the terms under which its peacekeepers deploy and the UN mandates under which they operate.

Brazil can also achieve greater influence by extending the global reach of its humanitarian and development assistance. Brazil currently ranks 23rd among international donors.20 Although Brazil’s overseas development assistance has risen in the past decade, as the seventh largest economy in the world, Brazil should be able to increase its humanitarian aid contributions above the 0.2 percent of gross national income it donated in 2011.[20] Brazil has extensive domestic experience in developing social programs to reduce poverty and foster social inclusion. Through its Agência Brasileira de Cooperaçaõ, it is already using this knowledge in its international assistance programs in the Americas and parts of Africa. It could also expand the reach of its national development bank, BNDES, to fund a broader range of projects overseas and work with the new BRICS bank to ensure that its lending portfolio benefits from Brazil’s domestic experience.