The opportunity to seek alternative paths

Image: Lucas Vinícius Pontes


The opportunity that opens up for Brazil's international performance from 2023 onwards, if we have a new government

Can I do one more flight forward? I would like to speak a little about the enormous opportunity that opens up for Brazil's international performance from 2023 onwards, assuming, of course, that we do not commit the folly of re-electing the current President of the Republic.

Really huge? Sometimes I wonder if, in the burning hope of seeing a recovery in Brazil, I am not overestimating former president Lula or underestimating the difficulties he will have to face. It could be, but I don't think so. The opportunity is unprecedented and stems from the combination of three factors: (a) a country that is one of the world's giants with (b) an experienced and globally respected president, (c) in an environment of scarce political leadership in the world - leadership that are not only strong, but widely accepted.

If Lula were the great leader of a small country, like the Uruguayan Pepe Mojica or the Timorese Xanana Gusmão, he would not, no matter how great his qualities, be able to make a big difference outside his country. But Brazil is a continent in itself – the fifth largest country by land area, the sixth largest population and the eighth largest economy in the world. When he was president between 2003 and 2010, Lula demonstrated the great international impact that Brazil can have.

One difference compared to that time is the absence of world-class leaders. In the West, the picture is bleak – Joe Biden, Boris Johnson, Olaf Scholz, Emmanuel Macron are not convincing. After Angela Merkel hung up her boots, there was no one to match her. Strong leaders like Xi Jinping and Vladimir Putin, on the other hand, are viewed with suspicion and rejected by the West, particularly the Russian one. Lula, on the other hand, has a profile and trajectory that make him capable of dialoguing with everyone.

There is a special circumstance that favors even more the international action of the future government. By a happy coincidence (it even seems to be commissioned), it is up to Brazil to exercise in 2024 both the presidency of the G-20 and the BRICS! See, reader, that the timing it's ideal. 2023 would be too soon. 2024 gives time for the new to organize itself to produce a great global impact – with political repercussions, by the way, within our country.

The G-20 brings together all the main members of the “political West” (the United States, the main Europeans, the European Union, Canada, Australia, Japan, South Korea) and almost all the main emerging countries (the five BRICS, Indonesia, Turkey , Saudi Arabia, Mexico, Argentina). In recent years, and especially now in 2022, the G-20 faced its most difficult phase, mainly due to the increasingly intense disagreements between three of its members: the United States, China and Russia. After the invasion of Ukraine, divisions within the G20 were accentuated, with the United States, Canada and the United Kingdom refusing to participate in meetings in the presence of Russia. There were even unsuccessful attempts to expel Russia from the G-20.

By 2024, it is possible that the West/Russia conflict will lose some intensity and it may even be that Brazil, acting together with other countries such as China and Turkey, will play a pacifying role. More likely, however, is that the conflict will not be resolved anytime soon, which makes it more difficult for the G-20 to act effectively.

Thus, on the western side, the importance of the G-7 (United States, Germany, France, United Kingdom, Italy, Canada and Japan) and the BRICS (Brazil, Russia, India, China and South Africa) grows in the side of the emerging countries. .

Without putting too much weight on our sardines, I can calmly state that the BRICS felt a lot of resentment for Brazil's decline under the Michel Temer and Jair Bolsonaro governments. I give the testimony of someone who participated in the BRICS process from the beginning, in 2008: we Brazilians, with our creativity, energy and enthusiasm, were in many periods the main driving force of the group. Now we can be like that again, taking advantage of the opportunity to preside over the BRICS in 2024.

Much can be done. I give some examples. It is fundamental to reinvigorate the main financial initiatives of the BRICS: the monetary fund (called the Contingent Reserve Arrangement – ​​ACR) and, mainly, the development bank (named the New Development Bank – NBD). I dealt with the advances and pitfalls of the ACR and the NBD in my book Brazil doesn't fit in anyone's backyard, especially in the second edition, and in a book published in England at the end of 2021, The BRICS and the financing mechanisms they created. In these two books, I covered the negotiations between the BRICS, from 2012 to 2014, and the first five years of the ACR and NBD, from 2015 to 2020.

In this first five years, something was achieved in the ACR and the NDB, albeit with delay and difficulties. Since then, unfortunately, there is no evidence that the ACR has made any relevant progress. It still hasn't managed, for example, to define the location of its headquarters or economic monitoring unit. Worse is the case of the NBD, the most important financial initiative of the BRICS. Under the presidency, since 2020, of a mediocre Brazilian, appointed by the Bolsonaro government, the bank seems to be moving backwards. It is unable to carry out important projects in a significant amount, accumulates operational problems, takes a long time to promote the entry of new member countries and does little to replace the dollar with the national currencies of the member countries in its operations. The BRICS need, as they say in English, take a long and hard look (take a long, hard look) at the NBD and the ACR to fill in the gaps and correct the distortions accumulated over the past seven years.

In addition to resuming and rectifying past initiatives, would it not be the case to introduce new themes in the economic cooperation of the BRICS? The international monetary system is becoming seriously dysfunctional. Some time ago, any shame in using the dollar, the euro and the western financial system as weapons in economic wars was lost, the biggest and most recent one against Russia, which had about half of its international reserves frozen. Wouldn't that have increased the importance of defining alternative paths, which would reduce dependence on the dollar, the euro and American and European banks?

The world is moving towards growing economic, financial and monetary fragmentation, with hyper politicization of currencies and finance. Russia and China, for obvious reasons, have an urgent interest in this issue.

Discussion of the matter has already begun within the BRICS. Russia has proposed launching the R5 project, named after the coincidence that the five BRICS currencies start with the letter R – real, ruble, rupee, renminbi and rand. This project could lead to the improvement and multilateralization of payment agreements in national currencies, bypassing the dollar, with a reduction in political risks and transaction costs. And it could – who knows? – move towards more ambitious goals such as the creation of a new international reserve currency, supported by the strength of the BRICS economies.

At the last meeting of the group's Finance Ministers and Central Bank Presidents, on June 6, the BRICS Think Tanks Network for Financial Issues was established. Perhaps it is the appropriate channel to conduct this type of discussion over the next few years.

Brazil, under a new command from 2023 onwards and presiding over the BRICS in 2024, can give a decisive boost to these and other issues of strategic importance.

*Paulo Nogueira Batista Jr. he holds the Celso Furtado Chair at the College of High Studies at UFRJ. He was vice-president of the New Development Bank, established by the BRICS in Shanghai. Author, among other books, of Brazil doesn't fit in anyone's backyard (LeYa).

Extended version of article published in the journal capital letter, on June 10, 2022.

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