From an historical perspective, relations between Brazil and the United States over the past 165 years were not as smooth as many now assume they were. In broad terms, the relationship could be reasonably characterized as marked by considerable mutual suspicion and distrust most of the time. It is important to acknowledge and understand this checkered past so that we do not fall prey to false optimism about the future. Recent transformations in both countries, and in the world at large, suggest that the U.S.- Brazilian relationship over the next decade will require careful tending.The effects of globalization, the importance of emerging countries like Brazil and the shift of the world’s main political, economic and trade axis from the Atlantic to the Pacific, especially owing to the rise of China, have fundamentally altered the foreign policy of many countries. The global economic crisis that began in the United States in 2008 accelerated these transformations, and one of its consequences was a relative decline in U.S. global influence. A new, multipolar world now challenges more than ever U.S. and European predominance. Although the United States retains unmatched in military and strategic power, it must now share with emerging countries like China, Russia, India and Brazil its traditional role of shaping global political, economic and financial decisions. Meanwhile, uncertainties on the global stage have multiplied, not only because of chronic instability in the Middle East and the threat of terrorism but also more recently because of the rise of popular movements in that region and in the north of Africa. Political instability there has caused significant volatility in the price of oil, which may threaten the stability and economic recovery of developed countries. Likewise, global climate change could jeopardize food production, disrupting the availability of agricultural commodities and forcing their prices sharply upward. The challenges facing Brazil-U.S. relations will continue and may perhaps intensify as a result not only of global transformations in general, but also Brazil’s increasing global prominence. At the same time, the economic, political and social transformations taking hold in both countries may create new opportunities for the relationship. Three challenges to the bilateral relationship stand out: connecting Brazil-U.S. interests; altering U.S. perceptions of Brazil; and imposing greater clarity on the question of what Brazil expects from its relationship with the United States. U.S. and Brazilian values converge when it comes to the general principles of democracy, human rights and free trade. In theory, too, the security interests of the two countries are basically aligned, even though reality has occasionally defied theory. Still, except on a few occasions and for very specific reasons, the two countries have failed to clearly identify the mutual interests and values that would foster closer relations. Brazil and the United States lack a solid tradition of cooperation, and they lack cadres in government who are committed to maintaining and expanding such traditions. Over the next few years, the decision-makers’ role in both countries will be to attract the attention of the economic agents that make the most of the concrete economic interests that will be created. Over the short term, at the least, the task of identifying common interests will become even more daunting owing to Washington’s likely focus on problems far from Latin America, such as the Iraq and Afganistan wars, the Middle East conflict, terrorism and the crises in North Africa and some Middle Eastern countries. Latin America in recent years has presented neither a threat to U.S. national security nor alluring opportunities for its major corporations. The region has long flown under the radar of senior policymakers in the United States, but the growth of Latin America’s economies heralds change and is starting to attract attention and capital from U.S. companies and investors. Accounting for 52 percent of South America’s GDP, Brazil will undoubtedly play an essential role in the integration and economic development of the region, as well as the improvement of its social conditions and the strengthening of its institutions. Sustainable growth will bring greater opportunities for foreign partners. The United States has already achieved burgeoning trade surpluses with Brazil over the past two years. If recent growth rates continue, Brazil’s GDP over the next five years will surpass that of Italy, France and Great Britain, making it the world’s fifth-largest economy. This growth will broaden the scope of Brazilian interests and heighten their significance in the view of its foreign partners, not least the United States. Moreover, China’s ascendance is very likely to cause U.S. and Brazilian interests in the region to converge. In the long run, the two countries will discover a strong, shared interest in pursuing adequate supplies of strategic mineral resources, food and oil, all of which the Chinese increasingly require to fuel their growing economy. The transformations that have taken place in South America over the past decade—especially those born of nascent social movements and the sense of legal insecurity arising from past failures to enforce standing contracts and agreements—have the potential both to move Latin America forward and to send it off track. Brazil provides an exemplar for moderation and for the wisdom of securing social and political stability. The Dilma Rousseff Administration in Brasília, which took office in January, has signaled a willingness to adjust the course of the country’s foreign policy. There will be no sudden changes in Brazil’s fundamentals, in its South-South cooperation policy objectives favoring developing countries, or in its special focus on relationships with regional partners. South America will continue to have high priority. There have already been important changes in areas like human rights, relations with Iran, and the tone of dealings with the United States. All signs point to a more pragmatic approach, and a gradual distancing from the ideological bias that informed the policies of the Lula Administration. The search for real opportunities for Brazil-U.S. cooperation in matters of mutual interest is now becoming a real priority. Gradually Changing U.S.
Perceptions of Brazil
Brazil remains, to a great extent, unknown to Americans in general and to Washington decision-makers in particular. Except among those who directly oversee regional issues, there is wide misinformation about Brazil, its goals and its importance to the United States. Addressing this deficiency is the critical first step toward advancing the bilateral relationship in accordance with the political and economic interests of both countries.The issue for the United States is one of managing relations with a rising Brazil with an increasing presence outside of the Americas. Traditional assumptions underlying the U.S.-Brazil bilateral relationship are changing and quickly giving way to new thinking. In the face of Brazil’s broadening global reach, the United States will have to live with different and even conflicting agendas, as is already the case in Latin America. At present, the two countries maintain divergent policies toward Cuba, Venezuela, Colombia and Honduras, as well as toward newly established political institutions such as the Union of South American Nations (UNASUL), the South American Defense Council, and the Community of Latin American and Caribbean Nations (CELAC), none of which counts the United States as a member. Washington increasingly regards Brazil as a regional power and a factor of stability in the region, a country with global economic weight and an important role to play in major topics like climate change, the environment, renewable energy and oil, human rights, the reform of international organizations and other global issues. With an economy built on solid foundations and an expectation of sustainable economic growth, Brazil has emerged from the economic crisis more powerful and ready to take its place on the world stage through a more active foreign policy. In the future, trade and investment will continue to be the focal points in Brazil-U.S. relations. The U.S. government views Brazil as a force for moderation and stability in a region that is host to the newly formed Bolivarian Alliance (ALBA), an organization that is critical of the United States. Thus granting special status to Brazil among Latin American nations would serve Washington’s interests. It might also, in the medium term, engender a new, more realistic and nuanced view of Brazil, one that is less informed by stereotypes. Such a view would acknowledge Brazil’s separateness from the rest of Latin America and open the way toward a new global partnership. What Brazil Wants
Brazil’s new role on the international stage will lead to more frequent engagement with the United States beyond the confines of the Americas. This will create opportunities to arrive at shared policy positions more than it will raise opportunities for discord. I believe that tired slogans such as “special relationship” and “strategic partnership” cannot adequately describe what is in store for the future.As it did in the United States, Brazil’s growing global presence will in time show us more clearly how it will seek to uphold and fulfill its national interests. This means that certain grand ideas and political experiments, like the Free Trade Area of the Americas, and the more recent “Pathways for Growth in the Americas”, will have to be retired so that the two governments can focus on genuine matters of mutual interest. From Brazil’s perspective, the great challenge of the moment is to identify and shape its national interest in the context of globalization and the international economic crisis. Brazil will have to take on the challenges of its status as both a regional and an emerging world economic power. This does not mean that Brazil should resign itself to either a passive or a reactive role; rather, it must anticipate these changes in light of its national interests. Brazil will therefore have to redefine its relations with both the United States and China, our main trading partner and a world power in its own right with growing investments and interests in Brazil. President Rousseff’s first state visit outside South America was to China in April of this year, just after she received President Obama in Brasília. A long- and medium-term Brazilian policy for the United States must be based on our expanding economic and commercial interests, international prominence and the many interests we share in Africa, the Middle East and Asia. Such a policy will both encourage collaboration and provide a setting for the countries to discuss diverging views. The possibility of Brazilian sales of pre-salt petroleum to the United States over the next five to ten years could yield profound strategic, political and commercial consequences for the relations between the two countries. Identifying concrete interests like these will enhance Brazil’s importance to U.S. foreign policymakers. Defense of national interest and mutual respect should guide the bilateral partenership on a new basis so that the potential for mutual collaboration can be identified. The United States should not count on Brazil to automatically align with it in support of every interest. In turn, Brazil should not persist, as it has over the past few years, in the error of presenting itself as an alternative to the United States as it seeks the favor of neighbors and others. Both the United States and Brazil must strengthen the mechanisms already in place for shaping this new partnership. In 2003, the two countries decided to cooperate at a more advanced and complex level. President Lula’s visit to Washington yielded several mechanisms: presidential meetings between equivalent ministers and secretaries, working groups on various topics, hemispheric cooperation and meetings on global matters of mutual benefit. As participants in the establishment of a recent working group on defense and economic and political strategies announced, all of these mechanisms are ready to be launched and even broadened. In the private sector, the two governments decided to establish a CEO Forum made up of various U.S. and Brazilian companies to discuss presenting a constructive agenda to both governments. High among the priorities on this putative agenda are tax and investment treaties. In the foreign policy area engagement between Brazil and the United States held outside of the Americas will likely allow for greater cooperation, especially in countries in regions such as Africa where Brazil enjoys comparative advantages and where we can foresee more trilateral cooperation on education, health, governance and economic development. Although our views on international organizations do not always converge, we can hope for greater cooperation on matters of peace and security, the environment and climate change, G-20 energy initiatives, and technical assistance and cooperation. If this cooperation catches on, and Brazil assumes the responsibilities inherent to its newly acquired global status, it will surely find less resistance on the path to a coveted permanent seat on the UN Security Council when the international community, led by the United States, follows through with UN reform. This would put to rest one of the most intractable issues in the bilateral relationship. It is interesting to note that U.S.-government priorities in innovation, education and infrastructure, which President Obama announced in his January 2011 State of the Union address, are closely aligned with Brazil’s. Companies in both countries can build on this shared vision through the development of substantive projects. Washington’s decision to revamp the U.S. energy mix by shifting 85 percent of domestic consumption to renewable sources and diversifying fossil fuel supplies by 2035 presents broad opportunities for Brazil to become a major long-run supplier of ethanol and petroleum to the U.S. economy. There might be similar opportunities with respect to the enormous reserves of natural gas also found in the underwater pre-salt layer along Brazil’s coast. Attracted by a growing Brazilian market, U.S. companies may decide to form partnerships with cutting-edge Brazilian firms. These Brazilian companies will then reap competitive benefits from product innovation and technology transfers in industries such as IT, telecommunications, and bio- and nanotechnology. There will be enormous bilateral investment opportunities spurred by biomass, hydroelectricity, pre-salt gas and oil, and other energy sources for both U.S. companies in Brazil and Brazilian companies in the United States. Furthermore, Brazil’s hosting of the forthcoming World Cup and Summer Olympic Games opens up opportunities in infrastructure, transportation, security, safety and transportation. As for trade, U.S. exports to Brazil are expected to continue to increase its trade advantage, with large trade surpluses as it has been for the past two years. By correcting domestic distortions that compromise the competitiveness of Brazilian products in international markets, manufactured and capital goods may once again find their way into U.S. markets. Differences between the two countries will continue to exist. The protectionist policies of both countries—for instance, the U.S. positions on cotton, orange juice, ethanol, steel and shrimp—will be channeled to the World Trade Organization, the appropriate venue for handling trade disputes. With the WTO having decided against the United States in the case of the first three of the above-mentioned products, and with long-run changes in the international scene, we can expect trade in these products to be liberalized to meet the interest of U.S. consumers. This will remove irritants in U.S.-Brazil relations. Other sectors that may benefit in the medium and long run from this cooperation are the environment, strategic minerals (including rare earth elements and uranium), deep-sea minerals prospecting and exploration, aerospace, non-proliferation, nuclear energy and defense. With regard to the environment and climate change, in May and June 2012, Brazil will host Rio+20, an event that will boost proposals aimed at restricting greenhouse gas emissions. After twenty years the targets for emission reduction have not been met. A few months ago, an international declaration recognized the need to expand protected areas and the sovereignty of each country over its biodiversity resources. It also recognized the two countries’ interest in sharing information on resource-extraction (the rules governing this sharing have yet to be determined). Worldwide deforestation fell to about seven million hectares last year, but that number is still quite high in absolute terms. Brazil and the United States can cooperate on all of these issues even as they prepare strategies for achieving substantive results at the upcoming summit. Brazil for the past decade has pursued very active, non-defensive policies that open up broad opportunities for collaboration with the United States in international organizations and for promoting business deals between companies from both countries. Following in the footsteps of countries like India and China, Brazil is ready to support projects in these areas, but on the condition that the two countries come to an agreement on technology transfers and partnership in domestic production between companies of both countries. This policy may promote investments and partnerships in rare earth elements, uranium exploration, deep-sea prospecting and defense. Business opportunities cooperation in aerospace, nuclear energy, nuclear-plant construction and non-proliferation could be expanded along the lines of recent U.S.-India agreements. Reconstruction of the Alcantara base for competitively priced commercial satellite launchings, something that has attracted the interest of U.S. companies, could lead to cooperation with U.S. manufacturers once obstacles to a U.S.-Brazil technology-safeguard agreement are overcome. The two terms of the Lula Administration marked a long period of tension between the United States and Brazil, caused by anti-American ideology as well as trade and foreign policy disputes. The governments of Brazil and the United States have decided to set the troubles of the past few years behind them. A joint communiqué signed by the two Presidents and released on the last day of President Obama’s official visit to Brazil in March offers a roadmap for a new global and bilateral partnership, rather than what was previously described as the gradual construction of a strategic alliance, which presupposes a gradual construction between two alleged equals. Both leaders elevated discussions on a number of strategic global, economic, financial and energy partnerships to the presidential level. The two leaders signed ten agreements aimed at exploring new opportunities for cooperation in trade, education, innovation, infrastructure, air transportation, aerospace, mass sporting events, aviation biofuel, and third-country relations, primarily in Africa. Four of these agreements are worth mentioning in more detail:
The meetings between Rousseff and Obama laid the foundation for relations over the next few years, opening the way for substantive developments that will benefit public and private sectors alike. Both sides are beginning to address the challenge of aligning their interests. There are a handful of examples, some already mentioned in passing. The U.S. government is interested in becoming a major purchaser of Brazil’s pre-salt oil, and the Brazilian government may move ahead with its space program by rebuilding the Alcantara base with the help of U.S. companies. Large infrastructure projects will undoubtedly attract heavy investment, and U.S. companies can help Brazil meet rigorous construction deadlines for the 2014 World Cup and 2016 Summer Olympic Games. The Department of Defense, the world’s largest purchaser of kerosene for aviation, seeks the energy security of aviation biofuels, thus creating great opportunities for the private sectors in both countries.According to a National Intelligence Council study, by 2025 Brazil will have achieved global economic power status, with a GDP ranking among the five largest in the world. Owing to its vibrant democracy, diversified economy and sound economic institutions, Brazil is a global model as well as a regional one. Its ability to grow economically while enforcing an ambitious social agenda to reduce poverty and income inequality will have a profound effect on economic performance and governance throughout the region for years to come. Under these circumstances, Brazil will likely become increasingly active and important in the region. The emergence of Brazil as a global economic power by 2025 will pose new challenges for both its own foreign and trade policies and those of the United States—challenges that will form the building blocks of a rewarding partnership. Policymakers in both the United States and Brazil must therefore redouble their efforts to identify substantive interests that form the basis of an ever broader, more varied relationship between the two countries in an increasingly complex and changing world.