Brazil and the BRICS, With Oliver Stuenkel

LINDSAY:
Welcome to The President's Inbox. I'm Jim Lindsay, the Mary and David Boies distinguished senior fellow in U.S. foreign policy at the Council on Foreign Relations. This week's topic is Brazil and the BRICS.

With me to discuss the evolution of the BRICS groups in the aftermath of its seventeenth summit, and what Brazil sees as the group's purpose, is Oliver Stuenkel. Oliver is an associate professor at the School of International Relations at Fundação Getúlio Vargas FJV in São Paulo Brazil. He is also a Senior Fellow at the Carnegie Endowment for International Peace and a non-resident Senior Fellow at the Belfer Center at Harvard University's John F. Kennedy School of Government. Oliver has written widely on Latin American politics and foreign policy as well as on Chinese and U.S. policy toward Latin America. His books include "IBSA: Rise of the Global South," "BRICS and the Future of Global Order," and "Post-Western World." He recently wrote a piece for Foreign Policy titled "In Rio, BRICS Tries to Play It Safe." Oliver, thank you for joining me on The President's Inbox.

STUENKEL:
Thank you for having me, Jim.

LINDSAY:
Oliver, Brazil hosted the annual BRICS Summit earlier this month. The host country typically gets to set the agenda for such meetings. What was Brazil hoping to accomplish with this month's meeting in Rio?

STUENKEL:
Jim, I think that Brazil above all thought to pursue its current strategy of what it's called multi-alignment. It's become a very turbulent world, a very unpredictable world and the consensus in Brazil, not only in the current government, is that the best strategy for Brazil is to preserve ties to all major powers: the United States, Russia, China, India, Europe, and others. And BRICS is seen as one key element of that strategy. Brazil is also pursuing a historic free trade agreement with the EU. It's seeking to preserve, despite the ideological divergence between President Lula and the current U.S. president, its relationship to the United States, which continues to be the biggest single foreign direct investor in Brazil. But at the same time, BRICS is seen as crucial for Brazil to diversify its partnerships. China has now become Brazil's—or has since 2009 actually—been Brazil's biggest trading partner. And given what is seen from Brazil as a somewhat unpredictable strategy of the U.S. president, the main concern in Brazil was not to provoke Washington. Basically was to keep this as technical as possible, continue to fly below the president's radar, and quietly deepen and broaden ties both to the existing old BRICS members such as China, Russia, India, South Africa, but also to the new BRICS members. Since the expansion last year, BRICS has now grown to ten members, and particularly countries like Indonesia are quite interesting to Brazil. They seem to become more important in the coming decades, but countries that Brazil or Brazilian companies don't yet know that well. And I think that was the concern to not provoke also has to do with the fact that Brazil will host the COP30 in November in the city of Belém, the climate summit. And for that to be successful, Brazil must really get everyone on board. So the perception was that this is not the right moment to confront and which is why the attempt was to keep this as, I wouldn't say vague, but let's say to not provoke that much and ideally focus more on economic cooperation, the fight against climate change, development, and strengthening ties between BRICS members.

LINDSAY:
So Oliver, it sounds like we could describe the motto for this conference to be a version of the physician's declaration, first do no harm.

STUENKEL:
From Brazil's perspective, that was certainly the strategy. The trouble is now that there's of course quite some tension also within the BRICS grouping. Brazil was opposed to expansion. It has sought to kick it into the long grass because China has been talking about expansion for quite some time. Because for China, of course BRICS may be seen as part of a new order, a one element of a more Sinocentric global structure. So from a Chinese perspective, it does make sense to bring new countries on board. And in 2023, there was perception that Brazil and India, which had also been opposed to expansion, were unable to defend a moratorium on expansion because pressure was becoming quite significant. And then really China imposed expansion; one of the demands by Brazil was not to include countries with an explicit anti-Western rhetoric. That obviously failed because Iran was accepted as a full member. That has been a headache for Brazil. And now you have, broadly speaking, a division amongst the BRICS countries between a more anti-Western wing dominated by Russia and Iran, and another faction that pursues multi-alignment that thinks that being part of BRICS is useful, but which also wants to preserve or even deepen ties to the West, such as India for example. Brazil also has been designated in 2019 by the United States, a major non-NATO ally and has a very broad security relationship with the United States. India obviously has been deepening ties and has been moving away from its historic security relationship with Russia. So that has caused some tension and that also explains why Brazil was obviously unable to exclude some of the more tense topics, some of the more sensitive topics entirely, but has clearly aimed to make sure that in the end, in the final declaration, they are, as I said, as vague as possible. An example is the criticism of U.S. and Israel's military strikes against Iran, which obviously Iran insisted to include in the final declaration, but Brazil and India guaranteed that this part of the declaration would not mention Israel or the United States.

LINDSAY:
I also noticed that the final declaration criticized Ukraine for attacks on Russian infrastructure, but was notable in its silence about Russia's much more frequent, much more devastating attack on Ukrainian infrastructure and population centers.

STUENKEL:
Absolutely. So that to some extent also shows how Russia has benefited greatly from BRICS membership. I would say that sometimes people ask why are these countries so keen on being part of BRICS? It's such a strange group and there's so many differences between them. I think the first element of course, that particularly prior to expansion for a country like Brazil, it was a status booster. It was quite glamorous to be part of a small exclusive group; direct access to Xi Jinping. You're being compared to nuclear powers like Russia and China. So that was quite useful. But the second key issue really is that it's like a diplomatic life raft, right? There was a certainty that if you're part of BRICS, your fellow BRICS members may not actively defend you, but they will not contribute to Western efforts to isolate you, right, and that has really worked quite well for Russia. Brazil did, for example, vote occasionally at the UN. They support resolutions criticizing Russia, but it's very opposed to Western attempts to mobilize other joint sanctions, for example. So the Russian-Brazil trade has flourished just like a trade between Russia and India. So from that perspective, yes, the declaration was a win for Russia, and it's of course quite critical to criticize attacks on Russian civilians in a broader context where Russian attacks on Ukrainian civilians are much more frequent and it doesn't actually mention Russia's illegal invasion of Ukraine. So from that perspective, it shows the benefits that some of these members have. Even though I would say that even without BRICS countries like India or Brazil would have probably taken a fairly "neutral stance," which from a Ukrainian perspective, a Western perspective of course often comes across as de-facto aligned with Russia's pro-Russian stance.

LINDSAY:
I noticed, Oliver, that only five BRICS heads of state showed up in Rio for the summit, the most notable no-shows being Russian President Vladimir Putin and Chinese President Xi Jinping. They instead sent their foreign ministers. Should we make anything of the fact that so many BRICS leaders didn't show up?

STUENKEL:
So the case of Russia, it does show that even though there's some inclination to protect Russia from diplomatic isolation, it only goes so far because both South Africa, which organized a previous summit and Brazil, are signatories to the International Criminal Courts and cannot simply override that.

LINDSAY:
And that's significant because if Putin showed up, they were under an obligation to put him under arrest.

STUENKEL:
There's an arrest warrant out against the president of Russia, and both South Africa and Brazil would be required to arrest Putin. And Lula at some point even said publicly, "The Russian president is welcome to Brazil, I will guarantee that nothing will happen to him." But then actually numerous lawyers and representatives of the judiciary spoke out and said, "Actually, the president cannot make that decision. This is actually a decision of Brazil's judiciary." And Lula then backed off. So I think Russia is an interesting example of how BRICS could protect Russia from economic isolation. So they've been quite relevant. I would even go so far to say that if we weren't in a multipolar order where powers like China, India, Turkey, and Brazil are big enough to sustain Russia in the face of Western sanctions, then Russia probably couldn't have invaded Ukraine because in a unipolar order without other major powers, Western sanctions on Russia would've been too much for Russia to handle. So BRICS can do that, but also particularly in countries like Brazil, there's a lot of criticism of Russia's invasion of Ukraine. So simply having Putin in Brazil come to a BRICS summit and ignore the ICC would not have been politically viable for Lula because some of the statements he sometimes makes come across as anti-Western or fairly pro-Russian or pro-Chinese. But the broader consensus is that Brazil should not take sides, and that involves not making these kinds of decisions of having Putin over, which would clearly be seen as a signal that Brazil is moving closer to Moscow. Now, when it comes to Xi Jinping, this is the first time he did not show up at a summit, it's quite significant because he is the key person of that block, right? Clearly he's as important to BRICS as the United States is to NATO, right?

LINDSAY:
But I would also imagine, Oliver, that Brazil is important to China to the extent that China is trying to build up a group of, dare I say, like-minded countries that are concerned about American hegemony or American dominance. Brazil would have to be near the top of the list for China in terms of countries to build good relations with. And part of good relations is showing up.

STUENKEL:
And that I think add to what the reasons that make countries be interested in joining BRICS. That's certainly another key reason. Despite all the differences, there is a notion that some type of coordination to deal with the United States, to contain U.S. influence is useful. These countries disagree on how to go about this, for example. So Russia would like to challenge the dominance of the dollar. If you ask, the Indians would certainly not want to create a joint currency with the Chinese. Brazil sometimes utilizes that rhetoric to mobilize part of Lula's voters, but it doesn't really want to head on sort of challenge the role of the United States.

LINDSAY:
Did anything happen at this recent summit that would have moved the ball in a meaningful sense forward in terms of de-dollarization or pushing forward with an alternative BRICS currency?

STUENKEL:
No. So definitely nothing on an alternative BRICS currency. The Russians like to talk about that, it may certainly be attractive to Iran. There's some initiatives of using local currencies for bilateral trade, but it's mostly symbolic, really. I mean, there's not a joint project in this direction. Just a word about Xi's absence, Brazil is clearly important to China. It's a key provider of commodities. It does have a lot of critical minerals. It's going to be a key player in the energy transition, large economy with perhaps the most admirables of clean energy matrix in the world. So a partner that China values. Now, Xi was in Rio in November last year for the G20. Brazil was originally supposed to organize the BRICS Summit last year, but then requested to change with Russia because it would've been too much for Brazil to handle both the G20 and the BRICS summit. So organizing the BRICS summit this year made it somewhat easier for Brazil's diplomats, but also created the risk of Xi saying, "Well, it's a little too much for me to travel twice to Brazil." So this is exactly what happened. Add to that, Lula was in Beijing in May. On both occasions, they did sign a lot of agreements. So I think from a Chinese perspective also, there wasn't really that much to agree on because the two had met twice over the past six months. That was certainly one thing, but the other was—and China, it's always a bit difficult to have Chinese diplomats speak off the record, of course, but there was a sense, I think, that at this point in time, it's so important for Xi Jinping to focus on the bilateral relationship with the United States, very tense moment where the trade relationship is being redefined, and that that perhaps wasn't the right moment to take an airplane for more than twenty hours to participate in a summit, which isn't really that much about negotiation. There's a lot of choreography, a lot of symbolism, and pictures being taken. But unless there's really key issues to be resolved in the bilateral meetings, it doesn't really make that much sense to show up. But I think it certainly was also an effort by Xi to not be seen by Trump as kind of the leader of a group that has an anti-American purpose. So that was, I think, the intent. It almost happened. It was quite interesting. The first day of the summit was pretty low energy, and then at the end of the first day—

LINDSAY:
It's hard for me to imagine anything in Rio being low energy, Oliver.

STUENKEL:
I mean, compared to let's say a previous summit, it felt a bit that everybody was trying to not be too provocative. A lot of these countries are negotiating trade deals with the United States right now. Brazil is also in this midst of trying to build agreement around climate. So it's a fairly standard procedure. And then at the end of the first day of the summit, Trump issued a warning or threatened to impose tariffs against BRICS countries. It's quite interesting that that jolted the participants of the summit to some extent also energized the summit because by attacking all the BRICS members, Trump in a way unified this group, which, you know, does really look at the world in a specific particular way. I mean, a lot of disagreement, the Brazilians were really unhappy to have Iran in the grouping now because it does give it an anti-Western veneer, especially at this time of recent conflict between the United States and Iran. So the second day of the summit was much more interesting because leaders suddenly had to deal with this situation, and Brazil realized that the effort to fly below Trump's radar had failed.

LINDSAY:
So as you look at it, Oliver, how do you think Brazil is thinking about the BRICS going forward? You alluded to this earlier. For some members of the BRICS, the idea is it's a non-Western organization to other members. I think Russia, I think Iran, probably China as well. It's an anti-Western organization, it's been around for more than a decade, the cost of membership relatively low, perhaps some benefits to it. The United States pretty much ignored it. But it seems as if President Donald Trump has decided that he wants countries who are sympathetic to BRICS or maybe members of BRICS to pay a price. So how is this all being processed in Brazil?

STUENKEL:
Well, that's the big question now, exactly, that for the first time a U.S. president pays attention to BRICS, this had never happened before. And it really poses a challenge to Brazil's current foreign policy strategy, which is diversify as much as possible. Basically, there's a sense that it's impossible to predict how growing great power tensions will play out. If there's going to be some kind of great power concert that Brazil will certainly not be part of, some sort of temporary agreement between the United States and Russia and China, akin to what we've seen in the nineteenth century in Europe, whether it will be permanent tension, the rise of a digital iron curtain, a world in which you must decide whether to embrace U.S. or Chinese technology, is all very unpredictable for Brazil, a country that has very limited hard power, has invested very little in its armed forces and really depends on a predictable global order. And this is a country which for more than a century, and I'm saying here not only since World War II, but during The Hague conferences from the nineteenth to the twentieth century has really said, "Our best bet is to embrace international law, multilateral institutions, and defend our interests at these platforms. So this is the best way we can handle the situation. Now, in the midst of all this uncertainty, we cannot afford to cut ties to anyone," which has caused a lot of frustration in the West when Brazil, despite being culturally much closer to the West, was unwilling to denounce Russia explicitly and to limit its trade relationship to Russia. And the key element here wasn't that Brazil was somehow sympathetic to the Russians or that it somehow thought the invasion was justified, but that it felt that multipolar order was the best way to contain the impulses of a traditionally unrestrained unipolar actor, the United States, and that having strong ties to Russia, to China, to others is the best bet to reduce vulnerabilities basically. Now, the big question is, is the current U.S. government willing to go along with that, right? Because basically what Trump did was to say, you can be part of BRICS, but it'll cost you, and there's a price for that, and you'll have to make decisions. And this is precisely what Brazil doesn't want to do. There's a really interesting example. When Trump was president and Bolsonaro was elected as the most pro-American president in Brazil's history, he traveled the White House and asked Trump, "What can I do to be closer to the United States?" And Trump said, "Ban Huawei as a component provider in the midst of this process of building the 5G network. Get rid of Huawei because we don't want you to depend on Chinese technology." Bolsonaro, who is willing to move closer to the United States, came back to Brazil, and the entire Brazilian elite said, "We can't do that. We can't cut ties to the Chinese. They're too important. Let's find a way to make both major powers happy." And in the end, what Brazil did was to tell the Americans, "Look, we'll build two 5G networks, one for the population, the Brazilians, and we will use Huawei and we'll build a separate 5G network for the government, and that will allow U.S. to keep exchanging intelligence with the United States. So this is a typical example of how Brazil wants to go about this, but the BRICS Summit was a reminder that maybe Trump will actually make it difficult for Brazil to pursue this strategy of multi alignment. So it's a bit unclear, I think, of how Brazil will handle this, especially now that Trump has made a specific tariff threat against Brazil. That of course now touches on domestic political dynamics.

LINDSAY:
Let me ask you about that, Oliver, because that seems to complicate the narrative. I mean, originally President Trump was upset because Brazil was part of BRICS. The president sees BRICS as anti-American or hostile to the United States. He wants to up the price for every member of BRICS, you can no longer take potshots at the United States, or if you do, it's going to cost you something. But the more recent tariff threat about the treatment of former President Bolsonaro really is the United States intervening in Brazilian domestic politics. How is that being read across the Brazilian political spectrum?

STUENKEL:
Well, it provides a challenge to Brazil because ultimately, until recently, Brazilian presidents would, according to their ideological stance at home, adjust their rhetoric. So left-wing presidents would be a bit more critical of the United States, whereas right-wing presidents would be closer to the United States, more critical of China. But ultimately, if you looked at the numbers, Brazil's overall strategy wouldn't change much. The great example of that is Bolsonaro, who got elected on an anti-China platform, traveled to Taiwan during the campaign, where he promised to end Brazil's partnership with what he called Communist regimes such as China, but during his presidency, trade with the Chinese only grew. So in the end, and Brazil received Chinese vaccines against COVID and so on. So it didn't really make that much of a difference, and that was seen as a strength. That you could somehow sometimes adopt a somewhat polarizing rhetoric. But ultimately both Washington and Beijing knew that you would more or less embrace a moderate multi-line policy, for example, welcoming both Chinese and American investments. Now that we have the Trump's terror threat, Lula has of course capitalized on that and said this is an outside interference. There's been clearly a rally around the flag effect.

LINDSAY:
Lula must regard this as a gift.

STUENKEL:
Absolutely, absolutely. I mean, if Trump wanted to help Bolsonaro, it has really not worked out because for Brazilian right-wing politicians, it's a really difficult situation now because you have part of the Bolsonaro voters who are clearly in the MAGA camp, but it's only about, let's say twenty percent of these voters who say we are with Bolsonaro and Trump until the end, even if they impose sanctions against us, but the majority of the country clearly says this is an outside interference, so it doesn't matter if you're left-wing or right-wing, we need to defend ourselves against this kind of threat. So the risk of course, for right-wing politicians is to be seen as submissive to U.S. interests, which is one of the worst accusations you can get as a Latin American politician.

LINDSAY:
Doesn't sound like a winning brand.

STUENKEL:
Exactly, exactly. So they've been struggling, whereas Lula's approval ratings have gone up. I would even say that if the terrorists would end up being implemented as promised on August 1, it could actually benefit Lula even more because he has now got both his opponent at home to blame, but also the United States to blame for any kind of economic misfortune, which may occur for the remainder of his mandate. I mean, countries have done that for a long time, which are exposed to U.S. sanctions of course. And these tariffs are so high that the psychological effect is somewhat similar to sanctions. So that makes this multi-alignment strategy slightly more difficult. I still think that the Lula government will embrace this nationalist rhetoric and say, "We will not negotiate. We cannot negotiate, and we're being threatened here. So we'll stand up for Brazil." But they may at some point, of course, have a dialogue because even though only twelve percent of Brazil's exports go to the United States, it's sort of the best part of the exports, right? It's value-added goods, a lot of industrial goods, whereas almost a third of Brazil's exports go to China. A lot of that is just commodities.

LINDSAY:
Well, I was going to say on that score, the United States and Brazil are competitors, particularly in agriculture. Soybeans being one of the big commodities that both the United States and Brazil produce.

STUENKEL:
Exactly. Which is why it's very unlikely for the United States to currently negotiate some kind of trade deal with Brazil, of course, because Brazilian agriculture competes directly with U.S. agriculture. So that's of course now a pretty significant challenge and Brazil's case is quite special and different, I'd say, from other tariff negotiations that Trump has initiated with other countries for two reasons. The first is that the United States has a trade surplus with Brazil, which is why when Liberation Day came and Trump signaled he would impose tariffs, Brazil was actually pretty tranquil about this and said, "We have a trade deficit with the United States. He's not going to impose significant tariffs on us." Because the whole rationale was to rebalance the U.S. trade relationship with countries like China, for example.

LINDSAY:
Well, in the case of U.S.-Brazil trade, since the U.S. is running a surplus from Donald Trump's point of view, the United States is winning.

STUENKEL:
Exactly, exactly. So this is why Brazil didn't actively prepare for this. Now, the second reason for why this is such a challenge was that this was not just a letter seeking to renegotiate the trade relationships. There were two key elements in the letter, which were seen by Brazilians as a clear interference in domestic affairs. The first being Trump's accusation, that there is a "witch hunt" against Bolsonaro who's currently facing a prosecution of allegedly having staged a coup at the end of his presidential term. And the second is for the legal challenges that U.S. tech firms are currently facing in Brazil over content moderation. And clearly there's the demand by social media companies, which are mostly from the United States, with the exception of TikTok, asking the U.S. government to put pressure on Brazil to refrain from stricter rules on content moderation, which is costly for these companies. Now, these two issues are very sensitive in Brazil, and they're also controlled by the judiciary. So threatening Lula on these two subjects is a very difficult proposition for Brazil because even if Lula wanted to accept or to offer something to the United States, he cannot do that because he doesn't control the judiciary in Brazil. So these two issues have of course turned the whole letter into something hugely political and really quite evidently seen as offensive to many, many Brazilians and that has also caused a lot of questions about what's the point of this letter? Is it actually to help Bolsonaro? Is it to help the U.S. tech companies? Or is it to renegotiate the trade relationship? And I think the Brazilian government still isn't quite sure of what the key goal is of Trump's tariff threats against Brazil.

LINDSAY:
It sounds, Oliver, as if Brazil's very accomplished diplomats are going to have their hands full in the months to come.

STUENKEL:
Absolutely. Also, because negotiations may have a political cost at home. You may see a similar effect to that scene in Canada or Australia, for example, where Trump's threats have actually benefited the government and have weakened the MAGA candidates, so to say, or those more which were closer to Trump. So Lula must be careful, of course, because if he travels to Washington, for example, and engages in some kind of negotiation, that may be seen by Brazilians as some kind of treason or sellout basically.

LINDSAY:
Betrayal.

STUENKEL:
Betrayal, exactly. That he is selling out, that he shouldn't be negotiating at all. So that's the first problem, of course. The second is that tensions may actually increase because Bolsonaro is widely accepted to be imprisoned during this year. So this may be seen by Trump as an additional provocation. It may actually have him seek to renegotiate if there's something negotiated up to that point. The big question is also how long can Lula ride on this nationalist wave? Because at some point, part of the private sector may say, "This is all fine and good, but we need to continue to have access to the U.S. market." And fifty percent is so high that you will have lots of companies basically going out of business. The CEO of Embraer, one of the major Brazilian companies, which has benefited greatly from selling its products to the U.S. market—

LINDSAY:
Makes airplanes.

STUENKEL:
Exactly, has said that if this comes to pass, we may have a COVID-type impact on our company. So this is quite a big deal for Brazil. It's certainly the biggest foreign policy challenge Lula has faced since coming back to power. And right now, I would say the only thing that's for sure is that it adds a layer of uncertainty and coming back to BRICS, in a way, I would say it has made Brazil more convinced of the need to diversify, to have BRICS. It was interesting that recently the addition to the BRICS summit, Lula had a state visit in Brasilia by India's prime minister, Modi, had an important bilateral meeting with President Subianto from Indonesia. So all this in a way reinforces the need to find new friends that have as many friends as possible. The urgency to ratify the trade deal with the Europeans has only increased. Even if Trump gets a beneficial trade deal, I think it does end up undermining Brazil's relationship to the United States because it adds a constant layer of uncertainty, and companies that have depended on the U.S. market for decades are frantically, currently, seeking new markets, new partners, because they will not be able to sell their products simply domestically, which they can no longer sell to the Americans.

LINDSAY:
On that sobering note, I'm going to close up The President's Inbox for this week. My guest has been Oliver Stuenkel, associate professor of International Relations at Fundação Getúlio Vargas in São Paulo, Brazil. Oliver, thank you very much for sharing your insights, and I suspect I'm going to be coming back to you in a couple of months to do a recap given the turbulence you have just sketched out.

STUENKEL:
Thank you for inviting me, Jim.

LINDSAY:
Please subscribe to The President's Inbox on Apple Podcasts, YouTube, Spotify, or wherever you listen and leave us a review. We love the feedback. The publications mentioned in this episode and a transcript of our conversation are available on the podcast page for The President's Inbox on CFR.org. As always, opinions expressed on The President's Inbox are solely those of the host or our guests, not of CFR, which takes no institutional positions on matters of policy. Today's episode was produced by Justin Schuster, with recording engineer Jamie Stoffa, and director of podcasting Gabrielle Sierra. Special thanks to Isabel McDermott for her assistance. This is Jim Lindsay. Thanks for listening.