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Prospects on Bolsonaro’s foreign policy

January 18, 2019

The election of Jair Bolsonaro (Social Liberal Party, PSL) on October 28th, 2018 as Brazil’s next President signals a departure from the foreign policy conducted by Head of States affiliated to the Workers’ Party (PT) in the past decade and a half. In fact, Bolsonaro has constructed his political identity on a narrative of radical change [Link]. The main characteristic of Bolsonaro’s foreign policy orientation, confirmed by the appointment of his Foreign Minister Ernesto Araújo, is getting closer to developed countries and improving Brazil´s relationship with the United States (US), which influences most other expected traits of his future external action. However, the new government, which was inaugurated on January 1st 2019, has not yet announced any structured guidelines for the conduct of its foreign policy over the next four years.

All eyes on Brazil’s pension reform

Many take the risk to affirm that reforms will take place under the new government. The international community is following Brazil’s foreign policy moves, as well as its domestic decisions that can have an impact on the country’s economic scenario. The most emblematic reform is the pension reform, which has been announced as a priority for the first 100 days of Bolsonaro’s government. The project sent by Michel Temer to Congress includes, among other measures, setting a retirement age at 65 for men and 62 for women beginning in 2038 and minimum time for contribution at 15 years in the private sector and 25 years in the public sector. On January 3rd, Bolsonaro announced the establishment of a minimum age at 62 for men and 57 for women [Link] [Link] [Link].

1 – CLOSER TIES WITH DEVELOPED COUNTRIES

In his first address to the Brazilian people after the results of the elections were announced, President Jair Bolsonaro declared he would free the Ministry of Foreign Affairs from the ideological bias it was subjected to under the left-wing PT and reinvigorate Brazil’s close relations with developed countries [Link] [Link]. The US, the European Union (EU) and Japan were specifically mentioned.

The appointment of Ernesto Araújo as Minister of Foreign Affairs thus reinforces the idea that Bolsonaro will follow a foreign policy focused on a strategy of closer cooperation with the US [Link]. This represents a departure from a country that has for decades had a fairly stable relationship with the United States, but crafted its diplomacy to keep Washington at arm’s length [Link].

Promoted to the rank of Ambassador in June 2018, Araújo was Head of the Department for the US, Canada and Inter-American affairs, and shares with Bolsonaro the prioritization of relations with Washington, to present Brazil as an ally of the US in South America [Link].

In Araújo’s view, the “sky is the limit” for the bilateral relationship between Brazil and the United States during Bolsonaro’s Government. “For many years, there was a roof to the advancement of the Brazil-US relationship due the absence of a common vision of the world between the Brazilian and US Governments”. He noted a “qualitative jump” in the relationship: “for the first time in many generations, probably since the Baron of Rio Branco’s time1, the great moment in which Brazil dreamt of having a special relationship, an alliance with the US, we have the opportunity to build a relationship from this common vision of the world” [Link].

President Bolsonaro indeed announced that he would seek to strengthen bilateral relations with countries that can add economic and technological value to Brazilian products. Foreign policy is thought above all as an instrument of economic and commercial policy. The idea is to attract advanced technologies and investments, increase competitiveness of industries and services by participation in global value chains and open access to major consumer markets like the US [Link]. With this in mind, he will attend the Davos World Economic Forum starting on January 22nd. He will be accompanied by the Ministers of Economy, Foreign Affairs and Justice.

It is expected that the new Government will conclude the mutual recognition agreement of Authorized Economic Operator (AEO) programs. In fact, the Trade Facilitation Agreement (TFA) entered into force on February 22nd, 2017 and provides for “Authorized Operators”, who will need to meet specific criteria to enjoy trade facilitation measures [Link]. The mutual recognition arrangement is a quicker procedure to release goods, as a Brazilian AEO would be recognized as such by the US and vice versa. By introducing agility to trade with the US, it will inject US$ 50.2 billion to Brazil’s GDP in the following twelve months [Link] [Link]. As such, closer ties between Brazil and the US would be a big opportunity for a significant expansion of trade (at US$50 billion a year, it has not reached its full potential) [Link], increased cooperation on medical and scientific research and broader security partnerships, including fight against transborder trafficking [Link].

Also, the support of the US to Brazil’s entry in the Organization for Economic Co-operation and Development (OECD) is a “fundamental” priority. In fact, an appeal to the U.S. by Bolsonaro to lift Washington’s opposition could allow Brazil’s entry into the OECD, as the main obstacle to Brazil’s request brought forward by Temer’s Government in May 2017 was the opposition by the US and the U.S. Trade Representative’s office (USTR) in particular [Link]. The US so far has stipulated Brazil would become a member of the OECD only after Argentina’s integration into the organization.

Why is becoming a member of the OECD is important for Brazil?

Brazil’s accession plea to the OECD evidences the country’s continued participation in multilateral bodies, including to present its vision of the international order, and its tendency to have greater participation in international fora. This demand will likely increase Brazil’s international credibility, signaling the country’s goodwill to adopt OECD regulations and commitments, and granting Brazil a “quality seal” to its public policies. Indeed, OECD members are recognized for their best international practices, and Brazil will have to adjust to the organization’s rigorous economic and fiscal benchmarks. OECD membership can stimulate the acceleration of structural reforms, because Brazil must – and can receive support to – improve its public policies towards development (modernize institutions, reduce bureaucracy, improve public administration, legal security, transparency and good governance, and give agility to regulatory frameworks and tax regime). OECD membership can advance competitiveness, productivity and growth by encouraging investments and exportations, upgrading Brazil’s attractiveness and image abroad, stabilizing the business environment and reinforcing investors’ trust. Since the OECD is one of the most influential spaces defining the world economy, Brazil’s membership should strengthen its capacity to diffuse its experiences and have an impact on the organization’s decisions and on the construction of global rules and parameters. Also, Brazil’s entry into the OECD has a symbolic value as an expression of the country’s variety of international options: simultaneously a member of the BRICS and of the OECD, Brazil will be singularly positioned and hold a strategic position in the international system, advantageously participating in groups influencing the course of the global economy. Though Brazil is one of the OECD’s five key partners, Brazil becoming a full member of the “rich club” implies entering into the first world division. Brazil’s approximation to the OECD is the emblem of a new moment in foreign policy of closeness to traditional partners.

In addition, thanks to closer ties with the US, Brazil could also benefit from a flexibility on Section 232 tariffs – 25% on steel and of 10% on aluminum imports – established by the US in March 2018. Already in late August, relief was granted from the quotas on steel from South Korea, Brazil and Argentina and on aluminum from Argentina [Link] [Link].

According to US officials, “there is a conscious effort of the American Government, coming from the top of the hierarchy, to come closer to Brazil. The election of Bolsonaro brings someone ready to be a partner”, which might lead to “a golden era of relations” [Link]. But it is yet to be confirmed to what extent the US administration sees Bolsonaro as instrumental to defend and advance US geostrategic interests in Latin America [Link], where Venezuela is for example a major concern.

President Bolsonaro was invited by President Trump to visit Washington. The visit is foreseen to take place in March. The idea is to establish a bilateral partnership and cooperation agreement that would encompass a range of initiatives in trade, investments, energy, infrastructure and safeguard technologies.

2 – MERCOSUL

Paulo Guedes, Minister of the Economy, declared Mercosul, the second major regional bloc after the EU, would “not be a priority” for the new Government, as it is “very limited, that Brazil remained imprisoned by ideological alliances and this is really bad for the economy” [Link] [Link].

He stressed Brazil should seek commercial relations with the whole world, without limiting itself to the regional environment. Mercosul is thus seen as a constraint on Brazilian commercial potential, notably because of the Common External Tariff (CET) and the obligation to negotiate jointly with external partners. It is likely that Bolsonaro’s Government will act in favor of a tariff easing in the bloc, supposedly granting the country the ability to negotiate bilateral trade agreements [Link].

For Marcos Troyjo, Secretary for Foreign Trade and International Affairs, “one of the characteristics of the contemporary world is an agreement with buyer markets. Brazil’s economy remained really protected. Brazil needs to modernize its structure to deal with new trade characteristics, and open its economy” [Link].

In fact, the new Government has indicated a preference for bilateral agreements, leaving aside the priority traditionally given to negotiations within the multilateral trading system; “today, the dynamism is in bilateral relations and [Brazil] needs to adapt to this” [Link]. There were declarations indicating a new priority to be given to Chile, and a reduction of the traditional emphasis on the relations with Argentina [Link].

Yet, Mercosul brought concrete trade returns: commercial exchanges between founding member states were multiplied by nine from USD 4.5 billion in 1991 to USD 40 billion in 2017; Brazil’s position to negotiate free trade agreements with economic powerhouses is stronger using Mercosul as a platform [Link] [Link] [Link].

As for the EU-Mercosul free trade agreement (FTA), Bolsonaro said he has, for now, not rejected the agreement, but mentioned “insofar as [Europeans] require reducing the volume of [Brazilian] exports, commodities, logically they cannot count on [Brazil’s support]” [Link]. In addition, while politicians in Brussels called for the talks with Mercosul to be adjourned due to diverging values between the EU and Bolsonaro’s government, French President Emmanuel Macron conditioned his government’s support to the EU-Mercosul trade agreement to Bolsonaro’s position on the Paris Climate Agreement [Link] [Link] [Link].

Nonetheless, it is noteworthy that Otávio Brandelli, Director of the Department for Mercosul, was appointed Secretary-General of the Ministry of Foreign Affairs. He previously served in the Brazilian Representation to the European Economic Communities in Brussels and in the Permanent Delegation to Latin American Integration Association (ALADI) and Mercosul. He was President of the Brazilian Patent Office (BRPTO) from 2013 to 2015 and is an expert on intellectual property rights (IPR) [Link].

3 – CUBA AND VENEZUELA

The US administration has expressed hopes that new conservative heads of State in Latin America could help undermine “the troika of tyranny in this hemisphere”, i.e. the leftist governments of Cuba, Venezuela and Nicaragua.

In fact, Bolsonaro raised the possibility of severing diplomatic relations with Cuba [Link]. The Cuban government announced in November 2018 the end of the partnership with Brazil in Mais Medicos (More Doctors) that allowed Cuba to deploy health professionals in South America’s remote and poor regions. More than 8,000 doctors installed in Brazil were recalled. Indeed, Bolsonaro disapproved of the quality of doctors’ training in Cuba, denounced the exploitation of Cuban health professionals, accused the Cuban government to obtain the lion’s share of the funds, and wanted to change the terms of the agreement2 [Link] [Link].

Also, Bolsonaro has repeatedly criticized Venezuela’s regime; General Hamilton Mourão, Brazil’s Vice-President, mentioned the possibility of a peace mission, and affirmed Brazil has “to be part of this worldwide demand for Nicolás Maduro’s regime to open up the country”3 [Link] [Link] [Link]. The US administration believes that Brazil can be a “valuable asset” since it is expected to adopt a more drastic attitude against Maduro’s regime, differently from its current orientation, which condemns human rights violations but leaves space for dialogue [Link] [Link].

4 – ISRAEL

During his campaign, Bolsonaro has recurrently promised to transfer the Brazilian Embassy from Tel Aviv to Jerusalem, following the path of the US and Guatemala [Link]. In his view, as a sovereign state, Israel alone should decide which town is its capital city [Link]. This measure, which should satisfy some of Bolsonaro’s domestic supporters, would be a move away from Brazil’s equidistant stance in the Israeli-Palestinian conflict [Link] [Link] [Link].

Yet, this measure does not gather unanimity within Bolsonaro’s government in formation. While military officials fear the emergence of security problems by involving Brazil into Middle East geopolitics, economists recognize the importance of the commercial partnership with the Arab world and dread losing access to markets in the region. Brazil is the largest exporter of halal meat; whereas Brazil exported USD 9.3 billion to the League of Arab states from January to October 2018, sales to Israel equaled USD 269.6 million, almost 35 times lower [Link] [Link] [Link] [Link] [Link].

Also, Egypt, Qatar and the Organization for Islamic cooperation positioned themselves against the transfer; in November 2018, Egypt cancelled the visit of the current Brazilian Minister of Foreign Affairs. The risk of retaliation thus seems higher for Brazil than for the US [Link] [Link].

Moreover, on Thursday 6th November 2018, Brazil abandoned the traditional voting position (abstention) on the Israel-Palestine conflict, and followed Israel and the US on a UN resolution. The vote was the result of a US initiative, which condemned Hamas for shooting missiles against Israel. The resolution was not passed by the UN General Assembly [Link] [Link].

5 – THE UNITED NATIONS (UN) & MULTILATERALISM

Ernesto Araújo also shares Bolsonaro´s views on the prevalence of nation’s sovereignty over the idea of global governance, in opposition to supporting multilateralism. Araújo stated: “someone decided to define Brazil’s presence in the World based on its adherence to ‘international regimes’, for its obedience to a ‘global order based on rules’”. He also said: “the United Nations are nations united to better defend the uniqueness and personality of each of the nations, and not for them to dilute themselves in an unshaped global mass” [Link]. Bolsonaro declared he would pull out of the Human Rights Council (HRC) and abandon Brazil’s recent commitments on climate change. Also, Brazil announced on Tuesday 8th January it would leave the UN global migration pact signed on December 10th, 2018.

As for the US, the country withdrew from the Paris agreement in June 2017, abandoned the negotiations of the UN global migration pact in December 2017, and left the HRC in June 2018.

About climate change: the appointment of Araújo, who denounces “climate alarmism”, confirms the new Government is likely to send a chill through the global climate movement [Link] [Link]. On January 10th, the Ministry of Foreign Affairs announced it would not maintain its climate change division  [Link].

Brazil retrieved its offer (put forward only two months ago) to host the next Conference of the Parties (COP-25) in 2019. The alleged motives impeding the event’s organization were fiscal and budget restrictions – in view of an estimated cost of BRL 400 million – and the “transition process of the recently elected administration”. Bolsonaro also mentioned national sovereignty and the suffocation by environmental matters of the agribusiness, a prosperous economic sector in Brazil. Environmental policies cannot “disrupt Brazil’s development”. He also declared: “the great problem we have here is that environmental policies do not work in Brazil’s favor. They work in favor of interests outside Brazil’s territory” [Link]. This decision led to surprise amongst the international community, as it could signal the new Government’s will to break away from Brazil’s leadership in global climate change negotiations, where the country is a particularly relevant actor.

While Bolsonaro mentioned he would withdraw Brazil from the Paris Agreement, Ricardo Salles, Minister of the Environment announced on January 15th that the President agreed to maintain the country inside the accord [Link]. The Paris Agreement would put at risk Brazil’s sovereignty by creating a large area of environmental protection “Triple A”, a surface of 136 million hectares [Link], leaving less land open to agribusiness, miners, loggers and construction companies [Link]. Not only would Brazil leaving the Paris Agreement be different from Brazil’s diplomatic tradition based on the respect for international norms and commitments, and could cause a domino effect (i.e. countries pulling out of the agreement by using Brazil as a shield) [Link] [Link] [Link] [Link] [Link], but it could also lead to closure of foreign markets that would boycott Brazilian products and the degradation of relations with the EU. For one analyst, Bolsonaro has no interest in cutting relations with the EU; “insofar as lack of cooperation on climate matters undermines relations with the EU, he will back down” [Link] [Link].

About the UN Global Migration Pact: Araújo described it as an “inadequate instrument to deal with the problem”, since “immigration should not be handled as a global matter, but in accordance with the reality and sovereignty of each country”. The accord stresses principles like the defense of human rights, children, the recognition of national sovereignty and lists proposals to help countries face migratory flows, through the sharing of information and experiences, and the integration of migrants. It also forbids arbitrary detentions and only authorizes imprisonment as a measure of last resort [Link] [Link]. Brazil distancing itself from the multilateral process can put Brazilian nationals abroad in a situation of vulnerability, weaken the political momentum and undermine international efforts to tackle migration challenges [Link] [Link].

6 – ASIA

China: during his campaign, Bolsonaro has sent a clear signal to Beijing that he is committed to renegotiating the terms of the China-Brazil relationship, pushing back against China’s encroachment on different sectors of the Brazilian economy [Link] [Link] [Link] [Link]. He expressed unease at the prospect of Chinese companies buying significant stakes in Brazilian state companies: “China is not buying in Brazil, China is buying Brazil” [Link]. Similarly, Araújo sees China and its investments in Brazil’s energy, infrastructure and oil and gas industry as threats to the country’s sovereignty. In the perspective of closer ties between Brazil and the US, the American administration feels China’s expansion in Latin America can be reversed, and the US can regain ground, only with the help of the largest regional power – Brazil. In fact, there seems to be the belief from the pro-Trump group that Brazil’s proximity with China is an ideological choice and that in some way the US can substitute China as Brazil’s main partner [Link] [Link].

Yet, others in the new Government, like Minister of the Economy Paulo Guedes, view China differently, since it is Brazil’s top destination for exports, amounting to US$47 billion [Link] [Link] [Link]. Chinese investments in Brazil reached US$ 55 billion in the last ten years. For one analyst, “any attempt to politically move away from Beijing will meet resistance from the economic team, which will seek to maintain a pragmatic posture not to endanger the important benefits of this relationship” [Link] [Link] [Link].

Besides, Bolsonaro visited Taiwan in February 2018, upsetting Beijing, which considers the island part of its territory and denounced this move as an “affront to the sovereignty and territorial integrity of China”. As for the BRICS more generally, viewed in the past decade as granting Brazil the space for a “differentiated protagonism” on the international scene, Bolsonaro is expected to deepen the distancing process started by the Temer Administration [Link].

Japan: not only was Japan one of the few countries mentioned by Bolsonaro in his government plan, but the Asian country was also on the shortlist of States (he was as well in South Korea) he visited in February 2018 during his campaign [Link] [Link]. Bolsonaro received a warm welcome in that country, where he later won 70% of votes in the first round of the elections and 90% in the second round [Link]. He scheduled a series of encounters to discuss Japanese technologies with officials from Japan’s Ministry of Science and Technology, businessmen of Keidanren (Japan Business Federation) and the Brazil-Japan Chamber of Commerce and Industry [Link]. In a speech during his visit, he suggested to work in partnership with the Japanese for the exploitation of niobium in Brazil, one of his main proposals [Link].

 


1 At the time, Brazil hoped to obtain special deference for its weight on the continent and demonstrated its will to establish a collaboration relationship with the American government [Link].

2 Bolsonaro required that the doctors pass a proficiency test, that their salaries would be entirely to the individuals and not to the Cuban government, and that they brought their families along if hired.

3 Differently, General Augusto Heleno refuted the possibility of a Brazilian intervention in Venezuela, pointing out that Brazil does not have a tradition of interventionism [Link].