For the first time in decades, Brazil and the United States will find themselves strongly aligned politically. That alignment could be very significant for both countries.
Brazil’s incoming President Jair Bolsonaro has long been an outspoken fan of the United States, and never more so than under the administration of Donald Trump. A recent visit to Washington by his son, Eduardo Bolsonaro, was notable for his wearing of a “Trump 2020” baseball cap around town. Brazil’s new president and Trump are bound to get along; their personalities and policy views will ensure that. But while the personal relationship between two world leaders should not be underestimated in its significance to the overall strength of bilateral ties, the newfound closeness between the U.S. and Brazil will not be purely based on the personality traits of these two heads of state.
The two leaders also share similar policy visions on global topics that matter to both countries. Bolsonaro recently pulled Brazil out of hosting major UN climate talks in 2019, indicating instead that he wants to focus on opening up the Amazon to mining and development. He has also indicated that he will follow Trump’s lead and move the Brazilian Embassy in Israel from Tel Aviv to Jerusalem. And Bolsonaro has already taken a hard stance against Venezuela and Cuba, part of the so-called “troika of tyranny” that Trump is focused on defeating in this hemisphere. In fact, Bolsonaro asked the foreign service to withdraw the invitation made to Cuba and Venezuela to his inauguration.
The personal and policy similarities can pave the way to strong bilateral ties. But economic agreements have the potential to truly elevate the bilateral relationship to new heights. For businesses eager for a boost to Brazil’s faltering economy, a closer relationship with the U.S. represents opportunity and hope. And for the Trump administration, eager to have a strong, vocal ally, the world’s fourth largest democracy and eighth largest economy represents a possible bright spot in foreign policy and trade.
Bolsonaro has appointed Paulo Guedes, a well-respected free market advocate with a Ph.D. from the University of Chicago, as his minister of finance. For Guedes to increase market confidence and boost foreign direct investment in Brazil, U.S. companies and policymakers will look for him to focus on three areas that are sorely needed for the good of Brazil’s economy: tax reform, the privatization of Brazil’s massive state-owned firms and fighting corruption.
Privatization wouldn’t only be good for Brazil’s economy; it would also be good for Brazil’s society. Corruption is one of the largest and most endemic institutional problems facing Brazil. It permeates throughout the government, and most pollsters note Brazilians’ anger toward corruption, which seems to be present in all major political parties, as one of the top reasons for an outsider like Bolsonaro having won the presidency. And as the widely successful “Car Wash” anti-corruption campaign has shown, state-run behemoths are ground zero for corrupt Brazilian officials looking to launder and siphon off money. Privatizations would therefore not just lift Brazil’s economy, but also represent a major victory towards combating corruption within Brazil’s government.
If Bolsonaro and his team make the right moves to foster a closer relationship with the U.S. government, and to bring about more U.S. investment, U.S. policymakers should return the favor by starting negotiations with Brazil for a free trade agreement. Deals between the U.S. and Latin American countries already have a proven track record of success. Be it Mexico, Colombia, Peru, or Chile, U.S. companies have quickly increased investment and trade in countries that have signed agreements with the U.S. In Peru, total trade with the U.S. has nearly doubled, while in Chile it more than tripled, since respective free trade agreements were signed.
In the past, Brazil has been unwilling or unable to negotiate such an agreement due to its commitments to Mercosur, since the South American trade bloc requires trade negotiations be made with the bloc in its entirety. But both Bolsonaro and President Mauricio Macri of Argentina have recently expressed interest in reforming Mercosur rules to allow more flexibility for bilateral agreements. While reaching a final deal with Brazil would be difficult and involve intense negotiations, especially in the area of agriculture, just the announcement of the start of negotiations would be enough to boost both economies and reassure investors of the economic-minded and pro-U.S. nature of Bolsonaro’s administration.
Bolsonaro’s presidency will have many challenges beyond the economy, and a mishandling of things on the human rights front, for example, could be enough to derail a positive market and bilateral environment. Even if Trump chooses not to confront Bolsonaro over potential human rights violations, the U.S. Congress and U.S. businesses surely will.
Bolsonaro would also be wise not to invest all of his political capital in the United States on Trump and the Republican Party alone. There is no additional benefit that will come from loudly touting partisanship. This January, the House will be in Democratic hands and in 2020, when Bolsonaro will still be just halfway through his first term, the next set of U.S. elections will occur. Democrats are unlikely to forget a leader who publicly takes a partisan view against them, and such memories could well lead to less favorable relations between Brazil and the U.S. It is therefore important for Bolsonaro to make use of his positive relationship with Trump, but to also make an effort to be seen as a friend of the United States in a bipartisan fashion.
If Bolsonaro acts as a responsible world leader and as a friend to the U.S., not just to a party, his opportunities to improve Brazil-U.S. relations seem evident. Bolsonaro seems set to inherit a Brazilian economy with newfound hope in the promise that he offers, with an eager U.S. market looking for new investment opportunities. By partnering with the United States politically and economically, making the right reforms domestically, and working with U.S. policymakers to begin talks on a free trade agreement, Bolsonaro could once again make Brazil’s economy, and standing, soar.
—
Cutz is a Senior Associate at The Cohen Group. He previously served as Senior Advisor to National Security Advisor Lt. General H. R. McMaster, as Acting Senior Director for Western Hemisphere Affairs, and as Director for South America at the White House National Security Council.
