Obama’s Visit to Latin America: Redefining U.S.-Brazil Relations

President Obama’s visit to Brazil comes at an important time in U.S.-Brazil relations. Over the past eight years of President Lula’s government in Brazil, serious disagreements emerged between the two countries. In particular, the former Brazilian president angered the United States when his government sought closer ties with Iran in an attempt to support Iran’s development of nuclear energy for peaceful purposes. Despite this and other diplomatic setbacks, relations between the two countries still remain fairly constructive on a range of issues, including counter-narcotics, trade, energy, the environment, promoting bio-fuels, intellectual property rights and providing security in Haiti.

With Brazil’s new president, Dilma Rousseff, there are signs of warmer relations between the two countries. Brazil’s foreign policy is now less ideological and more pragmatic, particularly in gaining U.S. support for Brazil to have a permanent seat in the UN Security Council. Rousseff has made clear that Brazil will abandon its ambiguous stance on human rights issues. Brazil has softened its rhetoric on the Iranian nuclear issue and no longer wants to be part of the negotiations. During a recent interview, President Rousseff made it clear she wanted to improve U.S.-Brazilian ties.

Brazilian foreign diplomacy has historically advocated for creating a world order that is more welcoming to a diversity of interests. However, Rousseff has a new approach for Brazil’s foreign policy, which continues to preserve its commitment to multilateralism while at the same time maintain an unwavering independent voice in international affairs.

Despite recent hiccups in the U.S.-Brazil relationship, the U.S. economy is more commercially interconnected with Brazil that ever before. The United States has acknowledged that managing its relationship with the new Brazilian administration is a growing priority for U.S. foreign policy and economic interests. During Obama’s visit to Brazil, he will certainly take advantage of Rousseff’s foreign policy recalibration and look for Brazil’s support on a variety of issues. However, “currency wars,” trade disputes and other geopolitical issues will certainly test the wills of both presidents.

Despite these challenges, there are still opportunities for cooperation on issues like climate change mitigation, energy security, trade and global poverty reduction. For example, how Brazil manages deforestation in the Amazon and exploits its petroleum will have an important impact on global efforts to address climate change and energy issues. Brazil’s oil giant, Petrobras, is the world leader in offshore drilling and its expertise would be very welcome in the United States. In addition, both countries want to maintain regional stability. However, Brazil’s new leadership role in Latin America creates a different regional political landscape for the United States, which now must realize that any new military base in the region would first need Brazil’s stamp of approval.

One issue which has been a particular source of friction in U.S.-Brazilian relations is trade. Last year, trade tensions grew sharply after Brazil prevailed in its WTO cotton subsidies suit against the United States. Brazil was granted permission to retaliate with trade barriers on several U.S. goods. The United States quickly managed to buy itself a couple of years by subsidizing Brazilian cotton growers. However, this approach is unsustainable. Both countries are food producers and are therefore competitors. The U.S. government should allow for its subsidies to expire so that free market competition can take place. The same is true for ethanol. Brazil has the technical knowhow of producing high-quality ethanol that is cheaper and cleaner than U.S. ethanol. Yet, the American ethanol market is closed for Brazil.

Regardless of the disagreements, it is not all is gloom and doom. After all, the United States is Brazil’s second biggest trading partner. As tensions grow between Brazil and China over Beijing’s trade practices, there is certainly potential for the United States and Brazil to find a compromise to some of their trade discrepancies. Showing the Chinese that Brazil has options — such as playing along with the United States — could help apply some pressure on the yuan issue and create opportunities for Brazilian companies in the Chinese market.

Brazil has increased its weight in multilateral forums, which has been well received in the United States. The Obama administration has supported Brazil’s efforts to gain more voting power at the IMF and World Bank. However, the United States has remained quiet on Brazil’s efforts to become a permanent member of the U.N. Security Council. The fact that Brazil has significantly raised its international profile and is becoming an increasingly important global player should entice Obama and the United States to seek a strategic partnership with this rising power.

Therefore, the United States should encourage Brazil’s quest for a permanent Security Council seat. Why? Because while it is true that Brazil has still daunting tasks ahead – such as reducing poverty, corruption, infrastructure, and sustaining growth – Brazil’s rise as a global player appears to be institutionally sustainable. The Obama administration could also use this as an opportunity to ease trade tensions that are likely to increase due to Washington’s unwillingness to back down on ethanol and cotton subsidies.

Brazil’s rise as a major global player has redesigned the lines of power in the southern hemisphere. As a result, both countries need to develop institutionalized and ad hoc lines of communication that will increase understanding.

For its part, the United States has shown understanding of the new regional reality and appears to be positioning itself to somewhat pragmatically advance the relationship where both countries can see eye to eye while Brazil works toward achieving certain domestic pre-requisites before becoming a truly sustainable global player. During this transition, disagreements in certain issues and collaboration in others will be the order of the day.