Harold Trinkunas – The Brookings Institution, 2/5/2015
When President Dilma Rousseff first took office in 2010, Brazil’s future looked exceptionally bright. For nearly a decade, the country had benefited from Asia’s enormous appetite for its commodities. This allowed Brazil to reduce poverty and expand the middle class while at the same time sustaining a remarkable growth rate, becoming the seventh largest economy in the world in 2014.
But by the time Rousseff was sworn in for a second term on January 1, 2015, she faced serious decisions about Brazil’s future. Brazil’s development model based on domestic consumption and commodity exports has reached its limits and the real is significantly overvalued, thus undercutting the competitiveness of its non-commodity-based export sectors. Moreover, the Southern Common Market, Mercosur, which had once showcased Brazil’s leadership in regional integration, now ties Brazil’s flagging economy to two of the most troubled economies in South America—Argentina and Venezuela. At the same time, the two most significant global trade negotiations in a decade, the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership, are nearing completion without Brazil.
Brazil has sought to play the role of a major power on the global stage since the beginning of the twentieth century, but it will not earn this status just by virtue of its size, burgeoning population and impressive economic achievements. Historically, rising powers acquired dreadnoughts or sizeable armies to achieve influence. Today, they also seek to become a permanent member on the United Nations Security Council or lead the World Trade Organization. Brazil under Dilma stands at a crossroads: it can try to parlay its rising economic might and soft power into global influence, or it can remain a regional power, albeit a significant one, with limited influence on the course of world events. To turn its aspirations into reality, Brazil will have to deploy its national capabilities more effectively to shape the rules governing the international order.