Brazil & Southern Cone - May 2006 (ISSN 1741-4431)

When President Lula da Silva came to power in January 2003 he was the poster boy of the much-publicised leftwards swing in Latin America. Today, he cuts a solitary figure in the region, outmanoeuvred by his fellow leftists and disbelieved by radicals at home. Through a combination of poor judgement and bad luck, Lula's, and Brazil's, influence in Latin America is on the wane.

A promising start

Lula's current isolation is a far cry from 2003. The world keenly awaited Lula's accession, wondering what the first leftwing leader to take charge of Brazil since democracy was restored would do. The markets, initially panicked, were soon impressed by the orthodox economic policies of Antonio Palocci.

Given Brazil's size and importance, it is a natural leader in Latin America, and Lula's first year in office made sure his government lived up to that reputation. Despite claiming good relations with Washington, Lula stood up to the US on a number of issues, most notably at the World Trade Organization (WTO) summit in Cancún, Mexico, in September 2003.

In Cancún, Lula was a driving force behind the G20 group of developing nations from Latin America, Asia, and Africa which prevented the Doha round of WTO negotiations from succeeding in protest at the agricultural policies of the world's economic superpowers, notably the US and the EU.

Two months later, in November 2003, Lula was again a thorn in the US's side, this time during negotiations in Miami over the proposed Free Trade Area of the Americas. Washington and Brazil had very different ideas as to what the FTAA should look like, and once Lula's administration had made plain its objections to the US version, the Bush administration embarked on a strategy of building up a network of bilateral free-trade agreements (FTAs) and FTAs with smaller regional blocs.

Lula sparred again with the US at the Summit of the Americas in Mexico in January 2004 when the Brazilian president only agreed to attend if it solely dealt with economic and social problems in the Americas and provided no reference to the FTAA. The US, however, insisted on mentioning the FTAA and managed to include on the final document a date (1 January 2005) for the ending of negotiations. President Bush made a speech defending the FTAA, affirming that the best way to eradicate poverty is through commerce.

The two governments clashed soon afterwards when the US tightened immigration controls at its airports, forcing Brazilian visitors to languish in queues for hours before letting them through. Lula's government responded in kind, making Americans undergo special checks when they arrive at Brazilian airports. The measures remain in place in both countries.

Mid-term drift

The promising start to Lula's diplomatic career soon ran out of steam, however. His relationship with Mercosur, and Argentina in particular, became an unhappy focus for the Brazilian president's foreign policy. At the same time, he was unwisely wooed by China's wealth. Relations between Lula and his Argentine counterpart, fellow leftist Néstor Kirchner, started promisingly enough, and in October 2003 the pair signed the Buenos Aires consensus which promised to take regional integration within Mercosur to unprecedented levels. However, it became clear than the Lula-Kirchner axis would be vulnerable to, and undermined by, the traditional Argentina-Brazil rivalry. 

Much of the subsequent problems between Lula and Kirchner were down to economics: the Argentine president felt that Brazilian factories were pricing Argentine producers out of Argentina's domestic market, thereby inhibiting Argentina's recovery from the horrors of 2001/02. Kirchner wanted to impose restrictions on Brazilian imports such as shoes and white goods; Lula pointed out that such restrictions would contravene the free-trade ethos behind Mercosur not to mention violate the recently signed Buenos Aires consensus.

But the falling-out between Kirchner and Lula was also due to a clash of personalities. Kirchner felt that Lula was getting too big for his boots following his success in Cancún. The Argentine president was irked at Lula's belief that Brazil should have a permanent seat on the UN Security Council, and that the Brazilians should take up senior positions in the WTO and the Organization of American States. "They even wanted a Brazilian pope," Kirchner once quipped.

Also, in 2004 Lula welcomed the Chinese with open arms. When President Hu Jintao visited in November of that year promising investment worth as much as US$9bn in Brazil's infrastructure, Lula fell over himself to offer China market economy status, thereby casting aside much of the protection Brazil might have used to protect its domestic producers from a flood of cheap Chinese goods. This was not a shrewd move. Chinese investment has been much slower in getting to Brazil than its exports, and Brazilian industry is suffering the consequences. Lula's love-in with the Chinese was as brief as it is regretted.

One positive development in 2004 was a conference of leftwing parties held in São Paulo in November. The meeting, organised by Lula's Partido dos Trabalhadores (PT) reaffirmed Brazil's ideological credentials by bringing together the most powerful leftwing parties from Venezuela, Mexico, Uruguay, El Salvador, Chile, Cuba, Ecuador, Colombia and Nicaragua.

Fizzling out

Over the course of 2005, Lula's stock fell both at home and abroad. Corruption scandals within the PT tarnished the ruling party and the government, and Brazil's bid for a seat on the UN Security Council and Lula's desire to represent the developing world both faded. The president attracted criticism for doing a large amount of travelling for little reward; a trip to Africa during which Lula apologised for the ills of slavery was a case in point. Brazil's leadership of the UN mission to Haiti following the overthrow of Jean-Bertrand Aristide was given only a cautious welcome, though it has since proven itself.

As Lula's influence has waned, Venezuela's President Hugo Chávez has taken a lead role in the region. His political clout boosted by the high cost of oil, Chávez has gone about his task as self-appointed spokesman for Latin America with a good deal more panache than Lula ever mustered, eclipsing his Brazilian counterpart along the way.

Lula was anonymous at November's Summit of the Americas in Mar del Plata and attracted little attention at the Latin America-European Union summit in Vienna in May. The Vienna meeting followed after the defining moment of Lula's decline when Bolivia's new president, Evo Morales, nationalised his country's hydrocarbons sector, leaving Brazil's Petrobras in the cold.

Chávez backed Morales not only because (or so some commentators claim) the Venezuelan president wants to squeeze Petrobras out of Bolivia and put the Venezuelan PDVSA in its place, but also because he wants to diminish Brazil's influence in the region as a whole. With Kirchner showing great interest in allying himself to Venezuela and Brazil's other Mercosur partners profoundly uninterested, there is every chance Chávez will achieve his aim. The prospects for Lula playing a major role in Latin American, let alone global, politics during a second term in office appear remote.