Will Venezuela’s crisis become Brazil’s opportunity?

Will Venezuela’s crisis become Brazil’s opportunity?

Will the crisis in Venezuela act as an opportunity for Brazil to re-assert regional leadership and work to assuage fears about Venezuela’s direction?

The situation in Venezuela following the election is beginning to look increasingly bleak to many observers. Nicolas Maduro, Chavez’s successor, was elected with the slim margin of less than 1.5 percent of the vote over Henrique Capriles. The post-election situation isn’t looking too pretty either; Capriles is claiming significant voting irregularities and the government, stacked with Chavez appointments, is refusing to do an audit. With Maduro’s wafer thin election into the Presidency and doubts even amongst his supporters that he’ll be able to fill the oversized shoes or evidence the charisma and political skills of Chavez, there is a sizable level of uncertainty in Venezuela.

Recent reports on the developing situation seem to speak to concerns that such uncertainty and growing political divides will make for an increasingly tenuous and potentially explosive atmosphere in a country which in the last few decades has seen its share of political instability, managed at times tenuously, by the charisma of Hugo Chavez.

There is a shortage of basic supplies and the Maduro government’s response has been to resort to conspiratorial notions that condemn the opposition and the media. These events are stirring an outcry and worries by many Venezuelans including the Venezuelan blogger Juan Nagel, who asked if Venezuela is indeed on its way to becoming a failed state. Nagel also stated that the prospect of Venezuela as a failed state should concern the continents leaders. While Nagel may be getting ahead of himself with discussions of a failed state, Venezuela’s current crisis should be viewed as presenting an opportunity for another country in the hemisphere: Brazil.

Brazil itself has been facing considerable challenges as of late. Brazil surged to the forefront of economic superstardom over a decade ago with growth rates as high as 7% and even during the height of the economic recession astounded many observers with average annual growth rates of four percent between 2007 and 2012. During roughly this same period, foreign capital inflows expanded from roughly $5 billion to nearly $70 billion. As a strong democracy, with a considerable manufacturing sector and a significant domestic market, Brazil’s rise was heralded as many predicted it to grow beyond a leader of the subcontinent to a global player of great international significance. However, Brazil benefited enormously from the explosive commodity expansion that had been occurring for the majority of the last decade owing to its considerable stores of oil, iron ore, copper, and other resources.

With the great degree of reliance on commodities and the dramatic decrease in capital flow, many have become rather skeptical of Brazil’s role as an emerging economic power in light of the changing international economic climate. One of the largest issue facing Brazil will be the management of expectations as the Brazilian economy continues to experience a considerable slowing in growth due to what analysts perceive to be an extremely strong tie to commodities and the constriction of capital. Government spending, which is as high as 14% percent in terms of its share of GDP, with only 2% accounting for investments of infrastructure far below the 5% average of emerging markets and with the majority of it devoted to social welfare spending, presents another reason for larger skepticism regarding Brazil’s future and ability to foster a stronger private sector.

While this analysis of Brazil’s rise is often dismissed as overly predicated on commodities, there is little question that widespread skepticism has emerged towards Brazil as a global leader. Further bolstering these economic concerns are views on Brazil’s actions on the international stage and long held questions as to whether Brazil is ready for the rise that so many felt so confident of just a few short years ago.

Chosen to host the 2016 Olympics, Brazil has been confronted with considerable criticism regarding whether it is in fact up to the task. Issues to address Brazil’s crime and drug problems, as the government seeks to clear out slums in preparation for 2016, have seen mixed results while garnering negative international attention that seem to highlight persistent and continual social and economic inequalities. The March closure of the João Havelange Stadium in Rio de Janeiro, where the Olympics are scheduled to take place, also point to infrastructure problems and a growing frustration amongst many in the international community as to Brazil’s management of games preparation. Further compounding these concerns is historical skepticism regarding Brazil’s long standing management of foreign policy by its foreign ministry, which some, notably the U.S., feel is somewhat inconsistent and difficult to work with. The unfolding crisis in Venezuela offers the unique ability for Brazil to disprove these naysayers, improve perceptions and re-establish a leadership role.

Will Brazil act in an assertive manner to address the unfolding situation in Venezuela? There are reasons to think so. Brazil has a solid history of leading on the subcontinent and has, at various times, and to varying degrees encouraged trade stability and settled continental territorial disputes. Additionally, Brazil has evidenced a dramatically expanding role in the international community under the able leadership of former President Luiz Inacio Lula da Silva and his foreign minister, Celso Amorim. Under Lula and Amorim, Brazil showed greater independence in its foreign policy than it had for much of the latter half of the 20th century.  Brazil also adopted the policy of seeking to work with Chavez while carefully and skillfully avoiding larger scale backing and support of the Venezuelan leader. Brazil’s unique relationship with Venezuela and its increasingly assertive foreign policy have continued under current President Dilma Rousseff and her foreign minister, Antonio Patriota.

The relationship between Maduro and Rousseff remains to be seen and will likely hinge on Rousseff’s willingness to invest increasingly precious political capital in an uncertain situation as she faces her own re-election in 2014. While the risk for Rousseff may be large, the need for the much needed boost offers a strong incentive. Indeed, regional politics may force Rousseff to do so.

Despite its slowing growth and ensuing international skepticism, Brazil remains a dominant and persuasive force on the subcontinent with considerable soft power draw and behind-the-scenes negotiating strength. By leveraging its considerable economic and political strengths, Brazil could do much to lessen growing regional and international worries about Venezuela and assuage concerns about its own capabilities going forward. By acting as a mediating force in the increasingly divisive Venezuelan political situation, Brazil has much to gain. It can restore shaken short-term investor confidence and return to the narrative of an emerging power ready to take its rightful place as an economic power, ably managed. This may further assist with more positive impressions of Brazil as it moves towards the 2016 games. If the aforementioned assessment of expectations playing the largest role in Brazil’s future is correct, then the crisis in Venezuela presents an intriguing opportunity to restore perception and quiet the doubters.

Categories: Latin America, Politics

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