Two Nations, One Future: Brazil and the U.S.

 

 Introduction

Brazil has advanced from its position as Latin America's largest and most resource-rich country to become one of the world's most powerful nations. Brazil is not a conventional military power, does not compete with China or India in terms of population or economic size, and cannot match Russia's geopolitical history.  These internal achievements boost Brazil's agenda on a global scale. Brazil has leveraged its own advantages and triumphs to improve its position in fields such as energy and climate change, peace and security, and trade and finance. Understanding and developing a strategy to aid the success of this new Brazil is beneficial to the United States.

Current U.S. policy toward Brazil

According to President Obama's prior statements, US policy toward Brazil is based on engagement and "mutual interest and mutual respect," with the belief that a strong relationship promotes both the United States and Brazil's interests. However, US and Brazilian behavior has not always matched the rhetoric. In a relationship marked by distance rather than intimate friendship, substantive collaboration has been limited and prone to misinterpretation.

Building on the foundation laid by the Clinton and Bush administrations, the United States is currently establishing a framework for a bilateral cooperation with Brazil. Brazil and the United States interact on a variety of specialized issues, including biofuels cooperation, defense, peacekeeping, and nonproliferation, among others.2 Presidents Obama and Rousseff recently unveiled an extended agenda that includes civil aviation, space exploration, innovation, science and technology, and education. Senior officials from both countries periodically maintain lines of communication on major international security issues. Nonetheless, for a variety of reasons, including competing goals and internal politics in each country, neither administration has been able to weave the various threads of their collaborative operations into the fabric of a cohesive strategic strategy.

The Task Force encourages Brazilian policymakers to adopt the report's findings and recommendations to guide their own actions regarding the United States. The new presidency in Brazil offers an opportunity to reset the relationship. Presidents Obama and Rousseff's recent conference in March 2011 underlined both countries' commitment to strengthen and grow their relationship.

The Task Force believes it is in the best interests of the United States to recognize Brazil as a complex international actor whose influence on today's defining global concerns is only going to expand. Furthermore, the US is interested in Brazil's peaceful revolution, which has spanned two decades and includes democracy, markets, and extensive social policies. Despite Brazil's growing importance, the Task Force determines that its complexities and relevance are misunderstood and undervalued in Washington.

BRAZIL TODAY

The world is watching with interest as Rousseff works to build on the legacy of the enormously popular former president Luiz Inácio Lula da Silva (Lula) while crafting her own path. Prior to being chosen as the ruling party's candidacy, Rousseff served in two cabinet positions and as Lula's chief of staff. Rousseff, the daughter of a Bulgarian immigrant and a schoolteacher, was imprisoned and tortured for her underground activities. She is an economist who has never run for politics before. Rousseff is now one of the world's most powerful and influential women, owing to her ambition, results-oriented approach, and pragmatic outlook.

Former presidents Fernando Henrique Cardoso and Lula presided over sixteen years of democratic consolidation and successful economic initiatives. Brazil was well equipped to weather the global economic slump of 2008, having fixed its currency, combated rising inflation, strengthened its banking system, and accumulated dollar reserves, and emerged relatively unscathed in 2009.

Unlike in the past, Brazil's booming stock market, bonds, and currency remained stable following the 2010 presidential election and subsequent political transition, reflecting foreign trust in its stability. Foreign direct investment (FDI) in Brazil remains strong: among non-OECD countries, Brazil is second only to China as a destination for foreign investment. Though inflationary pressures remain a major issue, the Brazilian economy is expected to rise by more than 4% this year, building on a strong performance in 2010.

The country that Rousseff inherited in 2011 varied greatly from the one Lula inherited in 2003, as did the international landscape. In the early days of her presidency, Rousseff underlined the importance of Brazil's domestic agenda in driving and supporting the country's international engagement. In that vein, Brazil's foreign policy priorities under her leadership are likely to be centered on integration with South America, deepening ties and investing in Africa, managing a complex relationship with China, improving relations with the United States, and increasing Brazil's influence in multilateral institution restructuring.

Brazil's economy is market-based, yet the state still has a significant role in establishing industrial policy. Brazil's development model includes the government owning and controlling key enterprises, serving as the primary source of capital and long-term local currency financing, participating in company decisions, and increasing social spending. For example, the Rousseff administration has urged Brazil's largest private companies, known as "national champions," to reinvest domestically, even if it means sacrificing shareholder value. Furthermore, the state-owned development bank (BNDES, or National Bank for Economic and Social Development) provides discounted credit to key firms (both Brazilian and international) in critical areas. Brazilians across the ideological spectrum appear to accept.

Expect the government to play a key role as an investor, provider of social services, and driver of growth.

Along with job creation as a result of strong economic growth, large-scale social programs have resulted in considerable reductions in poverty, inequality, unemployment, and malnutrition—issues that have plagued Brazil for decades and must be addressed further. Brazil's socioeconomic development during the past decade is largely due to nationally supported social assistance programs like Fome Zero (Zero Hunger) and Bolsa Família (Family Allowance), as well as a minimum wage hike.3 Between 2003 and 2009, Brazil's lower middle class grew by over 30 million people, accounting for more than half of the total population. This growing consumer class contributes to a more diverse, yet still commodity-dependent, economy.4

Brazil, a big and diverse country, is rich in natural resources. Brazil's economy is based on raw resource exports. Brazil is the world's largest producer of beef, sugarcane, and coffee, and the second-largest producer of soybeans. Its agricultural strength is bolstered by ample water resources and technological breakthroughs in crop adaptation to tropical temperatures, such as soy. Brazil also boasts the world's sixth largest proven uranium reserves and one of the top five iron reserves.