Scenarios for Regional Rebalancing around Brazil: Implications for the Western Hemisphere & Beyond

1. Scenarios for Regional Rebalancing around Brazil: Implications for the Western Hemisphere & Beyond Presentation at workshop on “regional rebalancing”, AAU, DK. May 29-30, 2012. Steen Fryba Christensen

2. Regional rebalancing • Regional rebalancing is happening and has gained speed after the international financial crisis broke out in 2008. • Strengthening of East-South: Asia/China, much of the South. Relative weakening of United States and Europe. Tendency continues, particularly in parts of Europe.

3. Brazil’s role and politics in regional rebalancing and world order change • 1. Role in the region • 2. Role in the international system

4. Brazil’s main aims + foreign relations tools • 1. Economic development and strengthening 2. Political Influence 3. Change the global order via “new trade geography” and coalitions in global politics. Rebalancing development • Foreign relations has instrumental role. It follows a pattern of “variable geometry” – with priorities: 1. Regional integration. 2. South-South coalitions. 3. Bilateral partnerships (parcería): United States, Argentina, China and others. Economic emphasis.

5. Regional rebalancing around Brazil 2003 (Lula/PT) • South America as a stable and prosperous region as a high priority in 2003 (context of economic crises and socio-political instability). South American integration. • “Global Player” ambition – South-South coalitions and “reciprocity multilateralism” (of results) - IBSA, G20, bilateral relations with similar countries – China, India, South Africa. • The two aspects are initially emphasized in a balanced way and later with a low priority to the region and a high priority to the world – global aims.

6. Regional rebalancing around Brazil: the regional level - successes • Economy: South America a platform for Brazil’s competitive insertion in the global economy. IIRSA. Mercosur/ Andes trade agreements. UNASUR. Internationalization of Brazilian businesses. • Geo-politics/regional security: Brazil’s sphere of influence – South America as a pole in a multipolar order. Council of South American Defence (2009). Reducing US influence.

7. Regional rebalancing around Brazil: the regional level - challenges • Asymmetrical economic relations between Brazil and Mercosur/Andes countries. North/South (Argentina as partial exception). • Argentina’s breaking of rules, Bolivia’s nationalization of oil and gas. • Skepticism about Brazil’s leadership ambition: Perception: Brazil is pursuing a “hegemonic” strategy in the region rather than a “leadership strategy”. • Brazil’s “soft” responses – “firefighter” strategy with aim of being perceived as focused on common interests .

8. Regional rebalancing around Brazil: the regional level - challenges • Centrifugal tendencies: foreign policies and strategies of economic insertion. China (Asia) and United States as alternative poles of attraction. Makes leadership and regional unity difficult. • Regional rebalancing is not really centered on Brazil, although Brazil is important. It has been successful in institution building and it has become world’s 6th largest economy. It is typically recognized as a regional leader of South America, or Latin America by outside actors

9. Centrifugal regional tendencies • 1. The neo-liberal diversification strategy through FTA’s: Chile, Peru, Colombia: FTA’s with USA and China. • 2. The statist ressource-nationalist, anti-US and pro multipolarity strategy. Venezuela – China coop. • 3. The neo-developmentalist, reformed sub-regionalist strategy of Argentina. Skeptical of Brazil’s global leadership ambitions and its tendency to “go it alone”. Partnership + protecionism and nationalism. • 4. Brazil’s continental regionalism. Political, security, infrastructure and energy cooperation.

10. Regional rebalancing around Brazil: the international (global) level • Dilemma: Regional integration and global aims. • Brazil reduces priority of region.“Sovereign insertion”, global player priority. • High priority given to emerging powers: Institutionalization of BRIC 2007 (2009) (BRICS, 2011): Two aspects: cooperation (economy) and influence (world order) – recognition of peers boosts Brazil’s role in world affairs. • China’s centrality as export market (nr. 1 by 2009), large influx of Chinese FDI in Brazil from 2010.

11. Regional rebalancing around Brazil: the international (global) level • Change the world: “Reciprocity multilateralism” (of results) – create equality amongst nations. De-concentration of power/influence and development. • 1. From intervention/violence to negotiated solutions 2. More influence to BRICS in international economic organizations as representatives of developing world – G20. 3. WTO (G20) – unsuccessful, but significant in changing dynamics of WTO.

12. Global rebalancing: Brazilian agenda • Beyond rebalancing as balancing trade (development rebalancing – de-concentration). • Against US-dominated “global plutocracy”. (or simply joining this order through own rise in the global hierarchy?) • Changing the global order from the inside – counter-power coalition - aims. 1) a more balanced global economic order 2) representation of developing country interests 3) greater influence 4) against violence principle and for negotiation and non-interference

13. Global rebalancing • Brazil’s strategies contradict hegemonic stability theory and the idea about a necessary link between foreign policy strategy and regime type. • The significance of BRICS for Brazil? Two views: • 1. Great differences between BRICS, shallow coalition due to differences and conflicts of interests. (Very temporary and limited coalition). • 2. Important. Defends interests of developing countries. Seeks equality amongst nations – autonomy and development.

14. Some questions about the future • NOW: understanding 2 seems closest to reality. • However, China has not supported Brazil’s ambitions of a permanent seat at the UNSC univocally! • “New International Division of Labour”. China as the “new North” in economic relations with the South. Potential for growing tensions and spill-over to politics. • Will China’s interest in BRICS be maintained as China grows stronger? Or, is BRICS just a convenient “place to hide” and “tool to create strength” in the intermediate term?

15. THANK YOU!

16. Regional rebalancing • Regional rebalancing has accelerated with the financial crisis and its aftermath (2007-) • Stagnation, crisis, sovereign state debts in the United States and in Europe. Crisis of core “West” (North-West). • Rise of Asia, Rise of China, Rise of the Rest. East-South. Emerging markets shake of the crisis faster than traditionally dominant economies. • Adjustment to the crisis in East-South varies. “New international division of labour”. Challenges faced differ substantially between nations. • Brazil and South America: Re-commodification and dangers of (continued) de-industrialization.

17. Regional rebalancing • Regional rebalancing is happening and has gained speed after the international financial crisis broke out in 2008. • Strengthening of East-South: Asia/China, much of the South. Relative weakening of United States and Europe. Tendency continues, particularly in parts of Europe.