When Luiz Inacio Lula da Silva left Washington last February, wrapping up just his second trip abroad since assuming Brazil’s presidency, his compatriots could not hide their disappointment at the lackluster US support for their president’s most critical priority. : raise US$50 million to help stop deforestation in the Amazon. Joe Biden showed little interest in Brazil and Latin American politics, Brazilian analysts insist, until Lula colluded with President Xi Jinping in Beijing and Russian Foreign Minister Sergei Lavrov in Brasilia.
Now, after the trip to China, and after Lula once again pointed out that Washington and Kiev share responsibility for the war in Ukraine (something that angered President Volodomir Zelensky, who invited the Brazilian president to visit the invaded territories to see the consequences of the Russian siege), the Biden administration responded with an offer of US$500 million for the Amazon Fund, created by Lula in 2008 during his second term, to attract international support for his environmental agenda.
Dollars
So far, only Norway, which has stacks of petrodollars to finance environmental efforts around the world, had given more. Brazil “is grateful for the trust and American contribution to the fund,” the Brazilian presidency said in a statement to Bloomberg News. He has a lot to be thankful for. He didn’t just get a promise of cash. He discovered a geopolitical strategy to build support for Brazil’s development: simply exploit Washington’s unlimited fear of Beijing.
Biden finally understands that Brazil is a potentially vital partner that could help address the many crises emerging across the southern hemisphere, from Venezuela and Haiti to the river of migrants fleeing Mexico to Honduras.
And finally, the competition with China is real. During the two decades that the US left for war in the Middle East, turned to Asia, and turned again to help fight another war in Europe, China became South America’s largest trading partner, and in the main financier. If the United States wants to maintain its influence, it must invest more resources and attention in the continent. And Brazil is not a bad place to start. But Lula should also be careful not to overdo it. China’s embrace could easily become too tight for her comfort.
Economy
Meanwhile, Brazilian political analysts explain that Lula’s domestic priorities are much more urgent than any foreign policy agenda. He needs economic growth to shore up his declining support (his popularity has fallen by 10 points since he took office), and he must sow ties with Brazilian agribusiness, most of which are supporters of his rival Jair Bolsonaro.
China, the biggest export market for Brazil, to which it sold $60 billion worth of soybeans, beef and other raw materials in 2020, can help meet both. Lula’s visit to Beijing produced 15 trade deals, from semiconductors to energy, worth some $10 billion. And China’s BYD is negotiating to buy a Brazilian Ford factory that has been idle since 2021 to make electric cars there.
Fernando Haddad, Brazil’s Finance Minister, pointed out that Lula’s visit to China served to “bring in direct investment” and “support a reindustrialization policy.” However, China’s forays around the world over the past quarter century have focused on acquiring the raw materials with which to build an industrial powerhouse at home.
The Brazilian experience has not been the exception. Of the US$68 billion that Brazil exported to China in 2020, US$60 billion correspond to raw materials. And of the US$66 billion of Chinese investment in Brazil between 2008 and 2022, according to a study by the American Enterprise Institute, China spent very little of that amount on developing Brazil’s manufacturing base: 75% went to development projects. energy.
Hug
Jorge Arbache, an economist at the University of Brasilia and adviser to Brazil’s national development bank, argued that Brazil’s asymmetric partnership with China reminded him of the siren song in Homer’s Odyssey. “It benefits Brazil in the short term, but it encourages Brazil’s increasing dependence on the Chinese economy in the long term,” he said.
And a report by Tatiana Rosito, now Secretary of International Affairs of the Brazilian Ministry of Finance, notes that “Brazil has not been able to satisfactorily implement its declared official priorities in relations with China: diversification and increased participation of high value-added products. in Brazilian exports.
In any case, Lula is obliged to attract investment to reverse a falling streak in jobs in the industry: today they represent 20%, compared to 23% 15 years ago. And the industry’s value added has declined to 18.9% of gross domestic product, from 23.1% when Lula first took office. In China, on the other hand, industry absorbs 27% of jobs and represents 39.4% of GDP. An equation that he does not want to alter in the slightest.
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