COHA Opinion: Brazilian Election: What Does South American Giant Want in Post-Lula Era?

In a scene from my first book, Hugo Chávez: Oil, Politics and the Challenge to the U.S. (Palgrave-Macmillan, 2006), I discuss how Brazil became an ally of Venezuela during a key moment of heightened political tensions. It was December, 2002 and Venezuelan President Hugo Chávez was facing down an economically damaging lock-out of the oil sector launched by the right wing political opposition. The lock-out capped a tumultuous political year for Chávez: just eight months earlier, he had scarcely managed to face down a coup d’etat launched by pro-U.S. elements within the country’s military and business elite.

As a result of the lock-out, Venezuela was obliged to import gasoline for domestic use. Chávez, who at the time was locked in a bitter political struggle with the Bush White in Washington, desperately needed allies. Fortunately, just across the border Venezuela found an important diplomatic supporter in Brazil. In a clear sign that the South American giant was in no mood to cooperate with U.S. efforts designed to isolate Venezuela, Brazil shipped half a million barrels of oil to the Chávez government.

Luiz Inácio “Lula” da Silva of the Workers’ Party had just won the Brazilian presidential election two months earlier, defeating conservative challenger José Serra. Though he had not yet officially taken office, Lula was reportedly involved in the sensitive decision to ship oil to Venezuela. In moving to help Chávez, Lula had his own political concerns: if the Venezuelan was overthrown, Lula said privately, “tomorrow” it would be his turn and this could give rise to a domino-like effect throughout the region.

Chávez made sure to personally be on hand in the Venezuelan port of Puerto La Cruz as fuel was unloaded from the Brazilian tanker Amazonian Explorer. With Brazilian assistance, Chávez was able to weather the oil lock-out and subsequently went on to rally Latin American political and public opinion against Bush’s foreign policy. Without important Brazilian help, Washington was stymied and failed in its efforts to effectively place a cordon sanitaire around Venezuela.

The Election

Eight years later, Brazil is nearing the end of charismatic Lula’s second term in office and must decide whether it wants to continue to pursue a more independent foreign policy which could ultimately risk Washington’s ire. While the two leading candidates vying to succeed Lula in Brazil’s October 3rd presidential election do not differ substantially on domestic issues (even José Serra, the conservative candidate, supports the government’s popular Bolsa Familia anti-poverty program) they have staked out very different positions when it comes to the country’s role on the world stage.

Serra, Lula’s erstwhile challenger in 2002, is now back again. As candidate of the opposition Brazilian Social Democracy Party or PSDB, he would prioritize relations with the United States and Europe while having little patience for the likes of Chávez or the Castro brothers in Cuba (interestingly enough, Brazil’s third presidential contender, Marina Silva of the Green Party, has also questioned Brazil’s ties to Venezuela though she is seen as having little chance of success in October). Workers’ Party candidate and former Minister of Energy Dilma Rousseff meanwhile would maintain friendly ties with the U.S. but continue Lula’s warm embrace of Venezuela.

The election, therefore, has real geopolitical consequences for South America’s so-called “Pink Tide” which in recent years has swept leftist regimes into power. A Serra win would dilute these gains, casting doubt on the long term viability of progressive politics. What happens in Brazil matters: the country is Latin America’s largest economy and under Lula Brazil has seen solid economic growth. With the United States increasingly sidetracked in the Middle East, Brazil has leapt into the breach, becoming a key economic, energy, and diplomatic leader throughout the region. Indeed, the Lula government has claimed more forceful leadership in Latin American affairs than its predecessors in Brasilia.

The Lula Legacy

Whoever becomes the next president of Brazil, he or she will have a lot more leverage on the world stage. Under Lula, Brazil has witnessed a massive economic boom which has translated into significant international clout. To the envy of other South American nations, Brazil has seen a vast expansion in key areas of its economy such as heavy industry. In addition, as I describe in vivid detail in my latest book, No Rain in the Amazon: How South America’s Climate Change Affects the Entire Planet (Palgrave, 2010), Brazil is in the midst of a huge agribusiness boom and has become a major soy exporter in the process.

While many intractable social problems remain, Lula has done much to put Brazil’s economic house in order. Though the President enchanted investors through market-friendly policies, the president also pushed through successful social programs and under his watch a whopping 20 million people were lifted out of poverty. If that was not impressive enough, Brazil is slated to host both the World Cup in 2014 and the Olympic Games in 2016. Many Brazilians are more optimistic about their country’s newfound clout than ever before and Lula leaves office with more than 80% popularity.

Brazil is seemingly on a roll: the country’s power is tied to successful anti-poverty programs, political stability, a sturdy democracy and fast economic growth. Brazilians are so proud of their country’s political stability that the nation’s Trade and Investment Promotion Agency is eagerly flying foreigners including myself down to Brasilia to observe the upcoming election and final presidential debate [for media inquiries pertaining to my trip, click here].

Though Lula bonded with the likes of George W. Bush and the United States remains Brazil’s second-largest trading partner, the South American President risked the disapproval of his northern neighbor by also developing warm ties to the Castro brothers and building a friendly relationship with Venezuela’s Chávez in the days after the Amazonian Explorer episode.

Geopolitical Backdrop

Having suddenly vaulted to the world’s attention, Brazil is only now coming to terms with its status. Will the South American giant seek to leverage its new position by challenging the U.S.? The upcoming election is unfolding against a backdrop of barely concealed geopolitical tensions. Scarcely more than a year ago, Obama spoke of the need for a new beginning in U.S.-Latin American relations during the Summit of the Americas held in Port of Spain, Trinidad. Yet, despite Obama’s pledge to move toward an equal partnership between Washington and Latin American nations, the White House has expanded U.S. military bases in Colombia, thus alienating Hugo Chávez in Venezuela.

Elsewhere, Obama has done little to mend relations with other leftists such as Evo Morales in Bolivia and, despite much talk, there’s been little thaw in U.S.-Cuba relations. Meanwhile, critics charge that Obama did little to push for the restoration of ousted president and Chávez protégé Manuel Zelaya following last year’s military coup d’etat in Honduras.

While neither Serra nor Rousseff would retreat from Brazil’s newfound global influence, the two candidates differ in their attitudes toward the South American left. A win by Rousseff would give nations like Venezuela and Bolivia some breathing space, but a Serra triumph could spell trouble. In an inflammatory move, the PSDB candidate has accused Bolivia of complicity in drug trafficking.

Moreover Serra, a former congressman and governor of the heavily industrialized state of São Paulo, laid into Lula for refusing to recognize the new government of Honduras, which was dubiously elected while the coup regime was still in power in Tegucigalpa. In other respects, Serra tows the U.S. line: the Brazilian candidate accuses Venezuela of sheltering FARC insurgents, the main guerilla group fighting the pro-Washington Colombian government in Bogotá.

The Stakes for South American Integration

Perhaps even more seriously, a Serra presidency could derail South American economic and political integration which has taken place along progressive lines. Serra has expressed skepticism about the South American trade bloc Mercosur which groups Argentina, Brazil, Paraguay and Uruguay into a common market.

As I point out in my last book, Revolution! South America and the Rise of the New Left (Palgrave, 2008), many countries within the group are left-leaning and major energy producers. In recent years Lula has prodded Brazilian state energy company Petrobras to invest in Bolivia and Venezuela so as to enhance regional integration. It might be said, then, that energy has helped to solidify tighter economic ties amongst politically aligned countries within the region.

Venezuela, one such major energy producer, is set to join Mercosur though its bid to join the bloc has been recently held up by the political opposition in Paraguay. If Chávez should succeed in his effort, Venezuela could inject a bit more progressive politics and economics into Mercosur, heretofore dominated by Brazil which has maintained warm relations with its South American neighbors but also cordial ties to the U.S.

Mercosur is merely a free trade bloc and hardly constitutes a viable break with market capitalism. However, to the degree that South American countries encourage their own free trade zone, Mercosur promotes independence from the U.S. Currently, Mercosur prohibits member countries from signing separate accords: like the musketeers of yore it’s all for one and one for all.

Perhaps an even greater challenge to U.S. hegemony however could be the South American Community of Nations, known by its Spanish acronym Unasur, which builds and improves upon Mercosur and includes Brazil and other left-leaning countries such as Venezuela, Argentina, Uruguay, Paraguay and Ecuador. After Unasur’s formation in 2008, leaders stated their intention of creating a new bloc to replace Mercosur, a kind of supranational regional union which could serve as a counterpoint to the U.S.-influenced Organization of American States. Unasur, which models itself after the European Union, seeks to strengthen cooperation amongst member states, chiefly in the arenas of defense, economy, finance, social development and culture. In addition, it aims for the integration of energy and transportation networks and immigration policies.

Implications for South America’s Left Bloc

If real political and economic political integration gets off the ground in South America, this could pose a geopolitical problem for the U.S. Serra, however, might drive a wrench through such plans by taking a tough line in trade disputes with Argentina and Mercosur. Reportedly, the PSDB candidate told a group of Brazilian investors that he was fed up with Mercosur as the bloc represented “an obstacle for Brazil signing its own individual trade agreements.”

Needless to say, realigning Brazil’s trade policy towards Europe or the U.S and away from Mercosur could prove to be thorny: currently the South American giant exports 90% of its manufactured goods to Mercosur and other Latin American countries. Such economic realities don’t deter Serra, however, who recently remarked that Mercosur’s common customs market was “a farce,” except when it served to put up barriers for Brazil. Serra’s comments were widely reported in the Argentine press and must have led some jittery South American investors to wonder about the economic implications of a PSDB win come October.

Perhaps sensing that he had gone too far, Serra attempted to walk his positions back: in an interview with the Brazilian paper Folha de São Paulo, the conservative denied that he wanted to “do away” with Mercosur but stated nonetheless that the trade bloc should be more “flexible” so as to guarantee his country more independence in its trade policies. While Serra did not specify concretely what such “flexibility” might entail, the PSDB candidate argued that Brazil ought to have the right to pursue free trade agreements with third countries.

Integration and the Energy Card

With an open question mark hanging over Serra’s adherence to Mercosur, let alone more ambitious proposals such as Unasur, integrationists may take some comfort that Rousseff is currently surging in voter surveys. According to Datafolha, a leading Brazilian polling organization, the Lula protégé is favored by the public with 49 per cent of the vote compared to just 29 per cent for Serra.

On the surface at least, Rousseff’s success would seem a bit surprising: a former chief of staff and Minister of Energy under Lula, the candidate of the Workers’ Party has never run for office before. Rousseff however has benefited enormously from her boss’ star power and seal of approval. If her lead in the polls holds during the election, the Workers’ Party candidate could actually win an outright majority of votes on October 3rd, thus invalidating the need for a second runoff on October 31st.

While Rousseff is expected to maintain Brazil’s ties to the U.S., embracing Washington adversaries like Chávez could place her relationship with the White House under strain. A former guerrilla who was active during Brazil’s 1964-1985 military dictatorship, Rousseff moreover supports Latin American integration and gives top priority to Mercosur. On a regional level, she has remarked, Brazil should “strengthen ties with all our South American neighbors…through solidarity and not imperialism.”

What might one expect from a Rousseff administration in terms of South American energy integration? For answers, one need merely look at the record. Up until recently the Workers’ Party candidate served as chairwoman of the board for the Brazilian state-run oil company Petrobras which has an important energy profile within the wider region. Even more importantly, as Minister of Energy Rousseff met with her regional counterparts in an effort to form Petrosur, a pan-South American oil company favored by Hugo Chávez. Additionally, she signed important deals to share technical and energy know-how with Venezuela.

In neighboring Bolivia, the leftist government of Evo Morales has pursued a course of energy nationalism in an effort to reclaim sovereignty over the nation’s gas sector. Brazil, a voracious energy consumer which must service burgeoning sectors of its economy such as agribusiness, receives significant natural gas from Bolivia where Petrobras operates. Far from balking at Bolivia’s newfound resource nationalism, the Lula government and Rousseff have pursued friendly relations with Morales which in turn provides La Paz with important political cover. What is more the future looks bright: in a recent interview with the Bolivian paper La Razón, Rousseff said she would build upon energy ties as president so as to enhance relations with the Morales government.

As Brazil Goes, So Goes the Continent?

With Rousseff likely to win the election, Chávez, Morales and the Castro brothers might heave a sigh of relief. If she should win outright in the first round, the Workers’ Party candidate might find it easier to put together a government to her liking. In the realm of foreign policy, Rousseff could name Brazil’s current deputy foreign minister, Antonio Patriota, as Brazil’s chief diplomat. From his perch at Itamaraty, Brazil’s Ministry of Foreign Affairs, Patriota has been a key player pushing Lula’s more assertive foreign policy in Latin America.

Take, for example, Patriota’s handling of the Honduras imbroglio. Following the dubious election of Porfirio Lobo in Honduras, which took place under the auspices of the coup government in Tegucigalpa, U.S. Secretary of State Hillary Clinton declared that the small Central American nation should be readmitted to the Organization of American States (OAS). Patriota, however, was much more circumspect, stating that Honduras’ return to the OAS should be contingent on reestablishing democratic norms and guarantees, as well as creating the necessary conditions under which deposed president Manuel Zelaya could participate once more in national political life.

Elsewhere in South America, Patriota has pursued key diplomatic ties with Pink Tide regimes. “I believe that there is a strong sentiment within Brazilian society and Congress as well that our future is linked to our neighbors,” he has remarked, “and we just saw this with the approval of Venezuela’s entry into Mercosur.” Patriota meanwhile has been a critical player in helping to secure important energy agreements with neighboring Paraguay, a nation which has turned the page on its militaristic past and which recently inaugurated a new left-leaning government under Fernando Lugo.

Beset with its own internal problems and contradictions, Latin America’s Pink Tide may not see a vast political advance any time soon. Indeed, for every leftist gain in South and Central America there have been almost an equal number of recent rightist or conservative victories. The key question therefore is how the Pink Tide conserves necessary breathing space which will allow it to take stock of its situation. While a Rousseff triumph will not transform the left bloc’s fortunes, it will give neighboring countries a necessary respite from Washington and international pressure.

By Nikolas Kozloff, PhD (Oxon), Formerly Senior Research Fellow, Council on Hemispheric Affairs (COHA) . Dr. Kozloff’s most recent book, No Rain in the Amazon: How South America’s Climate Change Affects the Entire Planet , was published in 2010.