Latin America & Caribbean

The benefits behind challenging US-Brazilian relations

Brazilian President Dilma Rousseff and US President Barack Obama, Washington, April 2012 (file photo)
Image caption The presidents said they took the decision to cancel Ms Rousseff's trip together

Amidst recent allegations that the US National Security Agency (NSA) spied on Brazil, many view the decision by Brazil's President Dilma Rousseff on Tuesday to postpone her visit to the US as a setback to US-Brazilian diplomatic relations.

Yet, considering Brazil's need to strengthen its flagging economy and trade relationship with the US, this diplomatic setback will soon pass, as these conditions will motivate President Rousseff to restore their diplomatic ties.

The situation is also an opportunity for Ms Rousseff to revive her domestic political popularity while bolstering her geopolitical influence.

Although the decision to cancel her US trip scheduled for 23 October was taken by Ms Rousseff and US President Barack Obama together, it was still perceived as an affront and a threat to their long-standing relationship.

It was fuelled by President Rousseff's dissatisfaction with President Obama and Secretary of State John Kerry's explanations for why the NSA may have been spying on her activities, as well as the lack of resolve to investigate and end the NSA's alleged spying tactics.

Binding ties

But will these problems ruin the US and Brazil's relationship? This is not likely, and for two key reasons: economics and politics.

Economically, Brazil is not doing too well.

In recent years, annual economic growth rates have averaged between 2.7% in 2003, declining to 0.9% in 2012.

This pales in comparison to the high annual growth rates of approximately 4% since 2002.

What is more, there is a burgeoning public sector deficit - heightened spending in preparation for the 2014 World Cup certainly will not help - and increased price inflation.

To rejuvenate the economy, President Rousseff will need to deepen her trade relations with the US. Next to China, the US is Brazil's biggest trade partner.

Brazil benefits from exporting a host of agricultural and mineral products to the US, estimated to be worth $76bn in 2012.

With a growing international trade deficit, which was estimated at $4.98bn earlier this year, as well as an ongoing need for revenue, the Brazilian president will need to ensure that economic - and thus political - relations between both nations remain strong.

Forgive and forget?

The US is also relying on strengthening its economic ties with Brazil.

Image caption Protesters have been showing their discontent with the Rousseff administration

In recent years, US technological and manufacturing firms have invested heavily in Brazil, approximating a total of $71bn in 2011, up by 11% from 2010.

Brazil's need to strengthen its economy and to dispel recent allegations that it is no longer a rising economic power - indeed, prompting some scholars to question if the letter "B" belongs in the famous Brics acronym - therefore creates strong incentives for Ms Rousseff to forgive, forget, and press forward with stronger economic ties with the US.

But politics also matters.

On the eve of next year's presidential elections, the Rousseff administration has viewed recent tensions with the US as an opportunity to increase her popularity.

The consequence of mass social unrest and demonstrations resulting from inefficient social services, high taxes and excessive spending, President Rousseff's popularity rating substantially declined earlier this year, from 52% of the population believing that her government was doing "great/good" before these demonstrations, to 32% afterwards.

These daunting statistics prompted members of Ms Rousseff's Worker's Party to recommend that she take a firm stance against the US and its alleged spying activities.

Potential benefits

But there are also geopolitical benefits to be had.

Recently Ms Rousseff has worked with her minister of foreign affairs, Luiz Alberto Figueiredo, to establish an international consensus on the need to safeguard nations from internet spying and other types of cyber-attacks. To these ends, Mr Figueiredo will be exploring the creation of "joint partnerships" with other nations.

This kind of geopolitical endeavour is nothing new.

For years, Brazil has taken the lead in forming international coalitions committed to protecting other developing nations, mainly from the onslaught of disease, environmental degradation and poverty, all in the name of protecting state sovereignty and human rights.

President Rousseff therefore appears to be using this precarious situation with the US as an opportunity to strengthen Brazil's geopolitical muscle, displaying her ability to lead other nations, create new policies, while helping to protect her allies.

A diplomatic rift with the US therefore seems to have led to a surge in Brazilian "soft power".

Indeed, for Brazil, this setback with the US may eventually entail several economic and political benefits, in turn placing Brazil on a path of ongoing economic prosperity and influence.

Eduardo J Gomez is a senior lecturer in international development and emerging economies in the newly formed King's International Development Institute, King's College London.

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