Where is Lula Taking Brazil?

Where is Lula Taking Brazil?

A few weeks into his term, the contours of the Brazilian president’s agenda is starting to take shape.

Lula reiterated his commitment to Latin American integration, saying that Brazil would support Argentina in its current economic travails by providing financing for the Argentine purchase of Brazilian goods (presumably through BNDES). But despite his gestures toward regional unity, he has been willing to put Brazilian interests first. After initial hesitation, he supported the successful candidacy of orthodox Brazilian economist Ilan Goldfajn for the presidency of the Inter-American Development Bank, even though Goldfajn had been proposed by Bolsonaro. This chagrined Mexico, a traditional rival of Brazil’s for prominence in the hemisphere, which had promoted its own candidate.

He also used his visit to Argentina to deal with thorny issues regarding the Southern Common Market (Mercosur), where the draft text of a free trade agreement with the European Union had been earlier reached but which some EU members, notably France, had put on hold, citing Brazil’s poor environmental record under Bolsonaro. Lula, who seems genuinely committed to improving Brazil’s environmental performance, has urged progress on the agreement while suggesting that some further renegotiation may be in order. (Argentina, in weaker economic shape, is in no hurry to support an agreement with the EU, so its future remains in doubt.)

But there may be other motives behind Lula’s interest in reviving the agreement with the EU. Little Uruguay, which has an export-oriented economy based on its efficient agricultural sector, has chafed at Brazil’s sluggishness on trade expansion and has begun to negotiate its own free trade agreement with China, something to which Brazil and Argentina object to as inconsistent with Mercosur’s common external tariff. By showing new interest in the EU agreement and promising then to turn to China once it is completed, Lula may be hoping to persuade Uruguay to put its negotiations with China on the back burner for now, thus avoiding an internal Mercosur crisis.

Relations with the United States: The Feel Good Factor, for Now

Lula’s early meeting with Biden is a sign that he is viewed as a refreshing change from Bolsonaro, who had close ties with Donald Trump. And the parallels between the January 6, 2021 assault on the U.S. Capitol and the events of January 8, 2023 in Brasilia unsurprisingly were highlighted at the meeting. Likewise, Lula is definitely striking a tone on environmental issues that the Biden administration can appreciate.

But beyond these areas, the prospects for a shared agenda start to thin out quickly. Although the United States has shown some signs of wanting to modulate its confrontation with Venezuela, Lula’s bland assertions of the need for dialogue, which seem to put Venezuela’s embattled opposition on the same level as the Maduro regime, which uses all the elements of state power to throttle it, will ring hollow to many.

And on the Russian invasion of Ukraine, there is a real gap between Washington and Brasilia. Lula maintains the view while Russia’s invasion was unacceptable, its causes are “unclear.” (In fairness, Bolsonaro, despite his professed pro-Americanism, took a similarly equivocal stance. He made pro-Russian statements immediately after the invasion, and while his government voted for the United Nations resolutions favoring Ukraine, it did not support the economic sanctions the United States and Europe imposed.)

Lula has offered Brazil as a mediator between Russia and Ukraine in a “club for peace,” together with China and other large states, just as during his previous administration he had suggested that Brazil undertake a similar role regarding efforts to check Iran’s nuclear ambitions. He is likely to get the same polite cold shoulder in this case as before.

We can expect Lula to keep Brazil on a democratic track, no small thing given the authoritarian adventurism of his predecessor. On his economic policies, the jury is still out as to whether he will turn the spending tap on to the point where inflation, devaluation, and a major loss of investor confidence become a real problem. And on foreign policy, Brazil may be occasionally helpful to the United States, but Lula’s fundamental orientation likely means that there will not be much common ground once the initial period of good feeling between the two governments passes.

Richard M. Sanders is a Global Fellow of the Woodrow Wilson International Center for Scholars. Formerly a member of the Senior Foreign Service of the U.S. Department of State, he served as Director of the Office of Brazilian and Southern Cone Affairs from 2013 to 2016.

Image: Marcus Mendes/Shutterstock.