The Pandemic Depression
The Global Economy Will Never Be the Same
It was early fall in southern Florida, and a standing-room-only crowd of about 300 gathered at a steakhouse to see a right-wing presidential candidate whom most experts were dismissing as too radical, divisive, and inexperienced to win office.
The candidate was not Donald Trump but Jair Bolsonaro, a retired Brazilian army captain and longtime member of congress whose tough talk about corruption, praise for Brazil’s former military dictatorship, and promises to give police “carte blanche” to kill drug traffickers and other suspected criminals were, by October 2017, already beginning to propel him upward in polls. Many in the crowd had themselves fled Brazil’s spiraling violence and the worst recession in its modern history, which had caused the economy to shrink nearly ten percent on a per capita basis from 2014 to 2017. The 300,000-strong diaspora in Florida, like many of their relatives back home, were hungry for the most anti-establishment figure they could find.
Bolsonaro took the stage 40 minutes late and delivered a speech unlike that of any significant Brazilian presidential candidate in recent memory. He defended the legacy of Brazil’s dictatorship, vowed to protect the country from communists and “thieves,” and slammed “fake news” back home. “What I’m saying there [in Brazil] is very similar to Trump here,” Bolsonaro concluded. “If I’m elected, you can be sure Trump will have a great ally in the Southern Hemisphere.” And then, as the crowd chanted “U.S.A.! U.S.A.!,” Bolsonaro turned around and saluted a TV image of a waving American flag.
A year later, Bolsonaro has accomplished the once unthinkable: he has won the presidency of Latin America’s largest country, which accounts for approximately 40 percent of the region’s population and a roughly equal share of its GDP. And, as his speech in Florida suggested, Bolsonaro will likely preside over the biggest foreign policy shift in that country’s recent history—a change that will have important reverberations throughout the Americas and across the globe.
Brazil has long charted an independent foreign policy course.
Bolsonaro has made clear his intention not only to be one of Washington’s strongest allies but to borrow much of his international agenda directly from Trump’s playbook. He has promised to withdraw from the United Nations Human Rights Council, move the Brazilian embassy in Israel from Tel Aviv to Jerusalem, decisively counter China’s economic advances, and consider a radical regime change policy in Venezuela. (He originally promised to withdraw from the Paris agreement on climate change, as well, but has since gone back on that pledge.) The list goes on.
It is worth pausing to note just how much of a departure this is from precedent. Brazil has long charted an independent foreign policy course. Even during the military dictatorship that lasted from 1964 to 1985, and which mostly enjoyed strong support from Washington, to salute the American flag would have been politically suicidal for a Brazilian leader. The same was true under the administration of President Fernando Collor de Mello (1990–92), who embraced the so-called Washington Consensus of deep market reforms. President Fernando Henrique Cardoso (1994–2002) had a warm personal relationship with former U.S. President Bill Clinton, but did not hesitate to tangle with Washington over issues ranging from pharmaceuticals patents and U.S. military assistance to Colombia to relations with Venezuela’s former President Hugo Chávez and Peru’s former President Alberto Fujimori. Cardoso resisted attempts to create a hemispheric free trade area, ultimately helping sink the initiative. More recently, the leftist governments of Brazilian presidents Luiz Inácio Lula da Silva (2003–10) and Dilma Rousseff (2011–16) frequently sparred with the United States over issues such as Iran’s nuclear program, the Edward Snowden leak, and Brazil’s attempts to build a more multipolar world order.
Why would Bolsonaro break so dramatically with tradition? To be sure, angry, exhausted voters in Brazil view anything that signals change positively. But the deeper answer lies in a dilemma that has redefined the way many Brazilians see the world in recent years. On one side is Venezuela, which has devolved into economic chaos, authoritarianism, crime, and mayhem. Bolsonaro and his supporters have carefully cultivated a narrative in which recent presidents—particularly Lula and Rousseff—were hell-bent on taking Brazil down this same road. On the other extreme is the United States, where (again, in the social media reality created by Brazil’s ascendant right) Trump is a popular, enlightened leader of a strong, safe, prosperous nation. In this binary world, anything that brings Bolsonaro closer to Washington is immensely appealing to his base.
The irony, however, is that some of Bolsonaro’s proposals and tactics are taken straight from Hugo Chávez —such as increasing the number of Supreme Court justices in order to tame the court and giving the armed forces an outsized role in government. Not surprisingly, when Chávez first visited Brazil in 1999, then Congressman Bolsonaro called him “the hope of Latin America” and said that he wanted to bring his philosophy to Brazil.
Some analysts see Bolsonaro’s foreign policy posture as mere campaign rhetoric that will likely come to nothing. They argue that policy priorities at home—namely an economy that has not shown healthy growth since 2012 and a government that chronically overspends—will quickly consume Bolsonaro, while Brazil’s professional foreign policy establishment inevitably forces his diplomacy back to the mean. In the end, Brazilian diplomacy will continue along the same lines it has followed for the last 30 years, they say.
But there are good reasons to take Bolsonaro both seriously and literally. Brazil’s executive branch retains almost full control over foreign policy, so Bolsonaro can act virtually unchecked by legislators in this area. Once in office, he will have strong incentive to make good on his rhetoric, and foreign policy will be low-hanging fruit for the new administration: the president can deliver easy wins to his base, reaffirming his ideological commitments without going through a fragmented and slow-moving congress.
What’s more, Bolsonaro can use foreign policy as a distraction while he tackles Brazil’s economic crisis with potentially unpopular policies. The crisis is acute: the World Bank forecasts 1.2 percent growth in 2018, unemployment is above 12 percent, and the budget deficit hovers around eight percent of GDP. If the new administration is serious about fiscal consolidation, its first step will be to reform Brazil’s pension system—a change most Brazilians, including key sectors within Bolsonaro’s own base, oppose. A meeting with Trump in the Oval Office or at the new embassy in Israel could help solidify support from key constituencies, such as evangelical and far-right groups.
Outside Brazil, Bolsonaro’s promised foreign policy pivot should also be treated literally and seriously, as it will have tangible and enduring consequences at the global level. Climate change is one example. Brazil is the seventh-largest global emitter of greenhouse gases. The country has been at the forefront of multilateral efforts to combat global warming and protect the environment, starting in the early 1990s and carrying through the Kyoto Protocol and the Paris agreement. Bolsonaro has not called global warming a “Chinese hoax” (as Trump did), but he did say that the Paris agreement and measures designed to protect indigenous communities were part of a foreign conspiracy to put the Amazon under “world control.” Therefore, in his view, killing the treaty and opposing any multilateral action against climate change is a matter of sovereignty.
Even in areas where Bolsonaro appears to differ from Trump, such as trade policy, there are good reasons to believe that, in the end, a Trumpian mentality will prevail.
Bolsonaro’s policy team has said it may merge the environmental and agricultural ministries, defund environmental protection agencies, and virtually give agricultural producers a blank check to destroy forests inside their properties. The inevitable result will be a surge in deforestation, the biggest driver of Brazil’s emissions, in coming years.
Even in areas where Bolsonaro appears to differ from Trump, such as trade policy, there are good reasons to believe that, in the end, a Trumpian mentality will prevail. As a candidate, Bolsonaro repeatedly attacked Brazil’s trade strategy under the Workers’ Party of Lula and Rousseff as protectionist, ideological, and anti-West. Bolsonaro has portrayed himself as pro-trade, in alignment with the ideas of his main economic adviser, the University of Chicago–trained economist Paulo Guedes. He has called for more free trade agreements, while promising to respect the rules of the South American customs union, Mercosur, and to reclaim its original mission of reducing trade barriers.
But Bolsonaro’s nationalistic instincts emerge in telling ways. While visiting a banana-producing region in late 2017, the candidate slammed a new trade facilitation agreement with Ecuador that had increased banana imports, and promised to “do something” on his first day as president to halt the cheaper competition. “Where have you seen a region that has always produced bananas importing them?” he asked.
Bolsonaro has also repeatedly attacked China—Brazil’s largest trade partner and a fellow member of the BRICs association of emerging economies—saying, “China is not buying in Brazil, China is buying Brazil.” After he visited Taiwan in March, the Chinese embassy in Brasília accused Bolsonaro of violating the One China policy, which Brazil has followed since the 1970s. Leading Brazilian exporters to China, including mining giant Vale, are already urging Bolsonaro to tone down the criticism.
He may also end, or greatly reduce, his country’s participation in the BRICs and in other groups that seek to counter a U.S.-centric world order, while possibly seeking to join Colombia as the second Latin American global partner of the North Atlantic Treaty Organization (NATO).
The support of an emerging market country such as Brazil at the United Nations, the G-20, the WTO, and other global forums will be a significant boon to the Trump administration’s policies on the environment, human rights, and trade. The Bolsonaro government will validate U.S. positions that the vast majority of other nations reject. However, South America— especially Venezuela—will likely feel the most immediate and intense shocks from Brazil’s foreign policy earthquake.
Under the Workers’ Party, Brazil was a strategic ally to Venezuela’s former presidents, Hugo Chávez and Nicolás Maduro. Yet following Rousseff’s impeachment in 2016, diplomatic coziness between the two governments gave way to overt antagonism, as her more conservative successor Michel Temer took a somewhat harder line. Now Venezuelan refugees are pouring across Brazil’s northern border—37,000 have requested asylum since January— and the crisis in Venezuela has entered Brazilian domestic politics and become critical for public opinion.
Under Temer’s tougher approach, Brazil played an important role in the creation of the Lima Group, an informal alliance of Latin American countries committed to reestablishing democracy in Venezuela. The country contributed to regional efforts at the OAS and elsewhere to isolate the Maduro regime. At the same time, Brazil refused to support any U.S. or European sanctions against Venezuela or Venezuelan authorities, sticking to its decades-long principle that only the United Nations Security Council can impose such penalties. When Trump publicly flirted with the idea of taking military action against Maduro or supporting a military coup in Caracas, Brazil made clear that it would never support such actions.
But under Bolsonaro, “never” is a big word. The far-right candidate favors imposing sanctions and establishing refugee camps for Venezuelans along the border. Speaking with voters from the state of Roraima, where most of Venezuelan refugees are, he made a promise: “You can count on me, I will do whatever is necessary to defeat that government.” In the first round of voting on October 7, Bolsonaro received almost 70 percent of the votes in the state capital of Roraima, Boa Vista. The Workers’ Party got only ten percent. The possibility of Brazilian support for, or even participation in, military action against Venezuela—unthinkable until recently—will be on the table under Bolsonaro.
The new Brazilian president’s policy positions will likely please Washington in the short term. But what their longer-term effect will be, for both Brazil and the United States, is worth asking. Bolsonaro’s past statements and current policy proposals suggest that his presidency will pose a direct threat to democratic norms and institutions, the rule of law, social justice, and the improvement of security in Brazil. The past 30 years have been an era of progress for most of Latin America, thanks in large part to those values. Saluting the American flag cannot compensate for the real risk that Bolsonaro will abandon them.