Tag Archives: Consequences

Brazilian Elections 2018: What does it mean for the EU?

By Joao Lucas Hilgert, Adviser to the board of the Munich European Forum

Part 3 of 3

If you have been paying attention to western media coverage of the Brazilian elections, you would probably think that Brazil, along with Britain, the US and the Philippines, has gone off the right-wing cliff and is about to crash and burn. President-elect Jair Bolsonaro’s previous statements have made him somewhat infamous in this context. His opinions on the failure of democracy and his praise of the Brazilian dictatorship were controversial to say the least. His comments on homosexuals, women and people of color have offended many, and rightfully so. Which lead to the surprise of many, when upon winning the election Bolsonaro called for national unity of a country made up of “many opinions, colors and orientations”. He repeatedly referred positively to the constitution and vowed to uphold democratic principles. He didn’t speak of threats and fears, but of hope and prosperity. His whole victory speech was underlined by one concept: Liberty. As he himself put it: “Freedom is a fundamental principle. Freedom to come and go, to walk on the streets everywhere in this country. Freedom to innovate. Political and religious freedom. Freedom to inform and to hold an opinion. Freedom to make choices and be respected for them.” Exactly the opposite of what would have been expected of a populist, fascist, right-wing strongman.

 

Is it too early to tell what he will make of the executive office? Yes, definitely.

Is it too early to say if he will indeed become the threat to democracy that so many fear? Undoubtedly.

One could argue that his older remarks should not be taken at face-value and that we should shift our focus to his more recent and more moderate rhetoric. His comment that he was in favor of torture, for an instance, took place nearly twenty years ago. In the last few months he has made more affable comments towards homosexuals, women and racial minorities. However, not all of his remarks were made that far in the past. In 2016 he proclaimed that the mistake of the military dictatorship was that they tortured instead of killing. Furthermore, one could in turn argue that his recent, seemingly more moderate stance is simply electoral pandering, or just a way to calm down his detractors, especially if taken into account that there was an almost successful attempt on his life in September. Though he will not appear publicly as often now that the election is over, there are definitely concerns that such an attack could happen again before he’s sworn into office.

 

What has been more constant throughout the election has been his liberal economic stance. He has run on a decentralized, small government platform, with particular focus on open trade policies. And this is where the consequences for the EU lie. If his more authoritative views are implemented, he will definitely be seen as an enemy to European values such as democracy. However, what has escaped the focus of most European commentators during this election is the fact that a less isolationist Brazil is extremely beneficial to the European Union and particularly those EU members that heavily rely on exports, such as Germany. According to the German-Brazilian chamber of commerce 10% of Brazil’s industrial gross domestic product is created by German companies alone, and São Paulo, Brazil’s largest and richest city, has the largest amount of German companies of any city in the World (excluding obviously Germany itself). Brazil alone is the EU’s 11th largest trading partner, according to the European Commission, and considering Brazil is the World’s 9th largest economy, there is still room to grow when it comes to trade.

In the last 15 years, Brazil has shifted its foreign policy towards the so-called South-South axis. This means that Brazil gave preferential treatment to the Southern Hemisphere in terms of bilateral agreements and trade relations. The net result of these policies is simply bad. Perhaps the best example of this trend is the government-owned National Bank for Economic and Social Development (BNDES). It financed many projects across countries in Latin America and Africa. However, many of those were handed to countries lead by left-wing governments with an arguably negligible trade balance with Brazil, raising the suspicion of an ideological bias in the selection process for possible prospects. Many of these countries now find themselves in tough economic situations and are unable to pay back these loans. Venezuela for an instance still owes Brazil €787 million. The fact that they almost defaulted on their payment of US$ 274 million earlier this year does not exude reassurance that they will be able to repay that debt any time soon. And Venezuela is not alone. Mozambique owes € 375 million and has forfeited a payment of US$ 22 million. The third and largest creditor on that list is Angola. While their situation is less dire, the fact that they owe a total of € 1 billion to Brazil as well as € 19.6 billion to China and Russia raises concerns that they will not be able to pay these loans back in the future. Since the BNDES is a publicly owned bank, these outstanding loans have to be covered by the Brazilian Treasury, i.e. the Brazilian taxpayer. Most of those loans were used to finance big infrastructure projects, something that Brazil desperately needs itself. And, as mentioned previously, that money was given to countries that bring much less to the table than one would expect. Brazilian exports to these three countries combined totaled € 1.7 billion, a full € 4.3 billion less than Germany alone and € 29.4 billion less than the EU as a whole.

 

It’s no surprise that in his victory speech Bolsonaro vowed to “free Brazil and Itamaraty (Brazil’s foreign ministry) from ideologically based international relations” and “seek bilateral relations with countries that can aggregate economic and technological value to Brazilian products.” He didn’t specifically name any countries (or unions thereof), but it is implied that he means the US and the EU. Furthermore, this message resonates with many Brazilians, who feel those investments would be much better spent in a country in dire need of an infrastructural overhaul and that Brazil should focus on countries that actually bring something to the table.

While the possibility of an authoritarian government in Brazil could prove to be devastating to its constitutional democracy, a Brazil “open for business” might be the best outcome for Europe.

Also check out Part 1 and 2 of our special series!

 

Please note that the views expressed are those of the author and do not necessarily represent or reflect the views of Munich European Forum e.V.