I closely followed President Jair Bolsonaro’s visit to Washington in March, 2019. After participating at the World Economic Forum in Davos in January, the President launched his international dialogue with his visit to the United States.
There is great symbolism in this choice, both for Brazilian foreign policy and in the geopolitical context. Despite the general positive assessment, there are people here in Washington who called the visit shocking, due to the enormous sympathy expressed by the two Presidents to each other and for the genuine admiration and affection with which Bolsonaro treated Trump. He even declared support for Trump’s re-election in 2020, a rare gesture for a foreign Head of State.
China was mentioned several times. It looked like a message to Beijing and to the whole world: before, Brazil would never choose a side, but now it chose the United States. Until then, both in the political and economic spheres, Brazil was adopting multilateralism. Now, there is a different trend.
Soon after returning from the United States, President Bolsonaro went to Chile. This agenda, again, was an unusual choice: to begin the international dialogue with Argentina, Brazil’s main partner in the Mercosur, would have been more conventional.
In Santiago, Bolsonaro, along with right-wing presidents Sebastian Piñera (Chile), Mauricio Macri (Argentina), Mario Abdo Benítez (Paraguay), Martin Vizcarra (Peru), Iván Duque Márquez (Colombia) and the newcomer to the rightist’ club Lenin Moreno (Ecuador), created an alliance called Prosul, a replacement for the Unasul (Union of the South American Nations), which is considered to be left-leaning.
Besides Uruguay, Brazil’s loyal partner in the Mercosur, other countries were left behind: Bolivia, Guyana, Suriname and Venezuela. The Uruguayan president, Tabaré Vázquez, has already stated that he will not sign the new agreement, for being an ideological construction, as was the case of Unasur, which it is supposed to replace.
In a week, President Bolsonaro plans to go to Israel. He announced a broad business agenda there, but the controversial decision to transfer the Brazilian embassy from Tel Aviv to Jerusalem, following the United States’s example, is pending. Trump’s recent decision to recognize the Golan Heights as Israel’s territory, contrary to the United Nations resolutions, created friction with Iran and may have a negative impact on Brazil. It could cause tension with Arab countries and Iran, all of them important trading partners, mainly in the agricultural area.
Now the question remains: why did Bolsonaro choose the United States? Because it is the world’s largest economy or because of his personal sympathy for Trump? The visit here was prepared in a hurry and there were only a few concrete results. The rapprochement between the two countries is extremely positive. There are numerous opportunities for trade, investment and technological cooperation. And a good relationship helps a lot.
But what if Trump does not get re-elected next year? Will Brazil change partners? If a Democrat is elected in 2020, will the partnership lose its charm in the eyes of Bolsonaro? The bet seems very risky for our country.
The Brazilian economy, which is struggling to get out of one of the most severe recessions in history, faces the challenge of increasing productivity and needs investment in capital and in technology transfer. Foreign investors are worried about Brazil’s foreign policy decisions. What leaves the market apprehensive is not the shift in ideological bias, but the confrontational way in which this transformation is taking place.
One of the most striking examples is our relationship with Mexico. As in Brazil, the Mexican population made political choices because of the revolt against corruption and violence. The only difference is that in our case, we had a left-leaning government and the population chose the right-wing candidate. In Mexico, it was the opposite − they elected the left-leaning candidate because they were dissatisfied with the previous center-right government.
And now? As Mexico is an important business partner of Brazil, will Bolsonaro invest in the relationship with President AMLO (Andrés Manuel López Obrador)? Are we going to expand free trade and cooperate in other areas? Or will our president alienate Mexico for ideological reasons?
Returning to the US visit, we should not underestimate the declaration of the United States’ support for Brazil’s accession to the Organization for Economic Cooperation and Development (OECD), known as the “rich countries’ club.” It is a very impressive result and a few weeks ago it was considered very unlikely. In this respect, the relationship probably helped.
In exchange for support in joining the OECD, Brazil agreed to begin to forgo the special and differential treatment it now enjoys within the World Trade Organization (WTO). But what does it mean?
Currently, a quarter of WTO members have the status of developing countries, including large economies such as China, Mexico and South Korea. This status allows longer time periods for implementing agreements and commitments, and more flexibility in negotiating trade agreements. Agreements negotiated until now are still valid, but from now on Brazil will have to change. I think it is fair – if we want to join the club of developed countries, we will have to start acting like one.
The perspective of OECD membership is extremely positive for Brazil, because it will force us to do what I have always been advocating here in this column: opening our economy, now considered one of the most closed in the world, and expanding our interaction with the rest of the world, both through trade and through investments.
But to be actually approved as a member of the OECD, Brazil will have to do a hard job at home, especially with regard to the regulatory and business environments. And for that, Bolsonaro will have to rely much more on internal support – from the Congress and from his constituency – than on outsiders. The social security reform and other major structural reforms are part of this challenge.
Furthermore, it is important to eliminate the difference that exists between the discourse of the government’s economic team and the practice. Much has been said, but there is still no clear action plan. For example, one of the stated goals is to increase Brazilian foreign trade as a share of GDP from the current 23% to 30% in four years. According to the government, this objective will be fulfilled through new trade agreements “with no ideological bias”.
However, the negotiating agenda that the government intends to complete to meet such an ambitious goal in such a short time has not been released so far. International negotiations are very time-consuming and require a lot of political effort, so we need to act soon.
Here in the United States, for example, there was hope that the presidents would announce the the negotiation of a free trade agreement. Why do we not take advantage of the opportunity for rapprochement? Why was the creation of an import quota of 750,000 tonnes of wheat with zero tariff (instead of the current rate of 10%) an isolated act and not part of a tariff reduction encompassing a larger product group from both sides?
If we really want to join the OECD, with all the investment and growth that this brings, Bolsonaro’s government needs to mobilize the country around this agenda. The dramatic fall in the president’s popularity, reported by Ibope (a pollster) this week, demonstrates the size of the challenge. Pragmatism, and not personal ideological choices in international politics and in the domestic context, would be a better option.