In 1823, as the Spanish hold on Latin America was quickly dissipating, US President James Monroe declared, in what was later known as the ‘Monroe Doctrine’, that the American continents “should not be considered subject for colonization by any European powers”. This notion of ‘America for Americans’ was the cornerstone of US foreign policy and had guided its international politics ever since; though the doctrine was intended to reflect the US effort to protect its southern neighbors’ newly-gained independence, an inevitable consequence is that Latin America had come under the US ‘sphere of influence’ (Hakim, 2002).

Having established its borders at the beginning of the twentieth century, Brazil has no territorial disputes. In addition, its last major war was fought in the mid-19th century along with Argentina and Uruguay against Paraguay. With the exception of sending troops to fight alongside the allied forces in both world wars, Brazil had not engaged in military conflicts (Armijo& Burges, 2009).

With the sixth largest economy according to GDP and seventh largest economy measured by purchasing power parity, Brazil’s is the largest and most dominant economy in Latin America (World Trade Union, 2013). Nevertheless, Brazil is smaller and less powerful than other global actors such as the United States, Russia and China, to name a few. In an ever-growing global economy, every nation aspires to takes its rightful place among global powers and global policymakers. One of the best ways to achieve prominence in the global sphere is through economical stature. To this extent, Brazilian policymakers have made it their goal to leverage Brazil’s economic growth and potential in order to claim its place as an independent and leading economy (Armijo& Burges, 2009).

In addition, international players view Brazil as the natural potential leader of South America, as it is capable of buffering moves made by Hugo Chávez in Venezuela and further establish stability in the region. Nevertheless, Brazil’s foreign policy, advocating for autonomy in international affairs as well as promoting the country’s independent ability to sustain its economy, prevents it from playing such a role (Hakim, 2002).

These contrasting forces have turned Brazilian foreign policymakers towards Latin America and its potential to form an economic force, under Brazilian leadership.

To this extent, Brazil is part of several Latin American unions; this paper will focus on three major unions; UNSUAR, ALBA and Mercosur. By examining these unions through the eyes of economic policy, I will analyze Brazil’s foreign policy vis-à-vis its economic and regional activities.

Regionalism and Multilateralism

The Great Depression in the first half of the twentieth century had brought forth an ongoing debate between two forces, statism and liberalism. The manner in which each administration settles the conflict between the two shapes its foreign policy and action in the international arena. In Latin America and mainly Brazil, this dichotomy had affected the manner in which autonomy was managed vis-à-vis regional power. Throughout the decades, Brazil had leaned towards autonomy and self-reliance, though this policy had interfered with the equally important aspiration for regional and global power (Riggirozzi, 2012).

Regionalism is a dynamic and an important force in the Americas, a prism through which one can understand the complex interplays of domestic and external influences. Strategic regionalism is a process resulting from an alliance between nation–states and multinational or national companies that have begun the process of internationalization of their economic activities. Its predecessor is strategic trade policy, an approach developed by the new international trade theory to describe the functioning of multinational markets (Briceño?Ruiz, 2010).

The first wave of regionalism in Latin America was a response to the creation of the European Economic Community in 1957, granting its members and former colonies preferential agreements and access. The prevalent sentiment was that this integration scheme, inevitably weakening Latin American countries, must be met with a parallel integration (Briceño?Ruiz, 2010).

Thus, ‘old regionalism’ was based on the premise that economic integration may improve the members’ bargaining position and facilitates industrialization through import substitution. Trade was the core of integration, with little to no socio-political content. The first such trade project was formed in 1960 with the creation of the Latin American Free Trade Association (LAFTA, or ALALC in Spanish). It was established by Mexico and six Latin American countries with the intention of eliminating barriers to trade within the region (Riggirozzi, 2012).

To this extent, economic nationalism served as a prism through which politics, economics and culture were viewed, as regionalism became a reaction to the liberal rule. A similar union was forged in Central America, with a more ambitious goal of creating a free trade area. In 1969 Bolivia, Chile, Ecuador and Peru have split from LAFTA and established a common market project named the Andean Community, with an executive body and ‘supra-national’ authority (Briceño?Ruiz, 2010).

By the end of the 1960s, stagnation and external difficulties challenged this idea of a common economic destiny. Nationalistic development projects were unsustainable, and coupled with years of military oppression and dictatorship; the extension of these unions to other areas of political cooperation was hindered. Not only a failure to promote regional cohesion, this decline had also weakened its sense of cohesion and autonomy, as the countries’ economies were left with no other choice than aligning with the USA. Consequently, it was the US perception of ‘open regionalism’ that had shaped the region-building in the 1990s (Riggirozzi, 2012).

The financial crises throughout Latin America and the consequential loss of trust in orthodox, market-led strategies for development have led to the adoption of more responsive approaches to political economics. Such economies are trans-national in nature, as can be construed in the charters of UNASUR and ALBA, promoting trans-governmental and trans-social cooperation in welfare projects as well as the creation of regional health, education and energy production systems. These, in turn, create a sense of shared identity and belonging (Briceño?Ruiz, 2010).

For Latin America, the twentieth century was governed by two competing sets of ideas, as the tension and, at times, conflict shaped models of economic and political governance; on the one hand, the ‘Monroe Doctrine’ set forth a Pan-American idea of a united region which sees the Americas free from the influence of countries outside the Western hemisphere – yet guarded by the USA. On the other hand, a vision of a united Latin America promoted the idea of integration of culture, language and history. The key to understanding the politics of current regionalism in Latin America is to look at inter-governmental and inter-societal practices leading to a redefinition of regional consensus over social and economic resource sharing, regulations, planning and financial cooperation (Briceño?Ruiz, 2010).

As Brazil is one of the driving forces behind the South American economy, one cannot examine the new South American regionalism without considering the shifts in Brazilian foreign policy paradigms. one of the basic components of foreign policy is the idea of autonomy- not only the rejection of foreign intervention in national decision making processes, but also the decision to promote an economic development model that diversifies the country’s productive structure (Riggirozzi, 2012).

Brazil in the International and Regional Arena

Up to the 1950s, Brazil’s relations with its neighbors were mainly channeled through its participation in Pan-American multilateral forums. As the world saw the rise of nationalism and regionalism in the mid-20th century, in addition to a budding economic collaboration among European countries, a new regional identity began to form in Latin America, and was first instituted through the Economic Commission for Latin America and the Caribbean (ECLAC). This had set the stage for discussions of a regional economic agenda (Hakim, 2002).

In 1961, Brazil had iterated its independent foreign policy, explicitly supporting the emerging integration initiative- the Latin American Free Trade Area (LAFTA), along with forging closer ties with Argentina (Saraiva, 2010).

As Brazilian foreign policy had seen several shifts in its orientation, the most notable shift took place in the second half of the 1980s, as its neighboring countries have begun new democratization processes. Amidst these political changes, Brazil facilitated a more integrative approach to the region; to this extent, the Brazilian government signed the Declaration of Iguaçu and launched the Program for Integration and Economic Cooperation with Argentina. In addition, with the intention of aligning international policies across the region, the Rio Group was created (Briceño?Ruiz, 2010).

At the time, Brazil’s perception of the region was influenced by domestic forces, pushing it towards integration with Argentina and forging congruent economic policies. These factors included attempts to address prevalent economic crises through updating the country’s production sector and consolidating democracy (Riggirozzi, 2012).

Moreover, the political and economic upheavals of the 1990s which were dominated by ideas of economic reform and trade liberalization, did not allow Brazil to continue its autonomous endeavors, namely the facilitation of an autarky. Structural changes in the region and entire hemisphere have forces Brazilian leaders to reinforce its communication and cooperation with other countries, therefore transforming the idea of autonomy into “autonomy be integration”, implying that integration can serve in promoting autonomy (Briceño?Ruiz, 2010).

The ascension of the Itamar Franco administration (1992-1994) hindered the expanding liberalism in Brazil, shifting the focus and energy towards autonomism, or a form of autarky. In regards to its foreign economic policy, the government placed an emphasis on creating a South American Free Trade Area at the expense of facilitating participation in Mercosur. To this extent, the autonomists sought to extend the bloc led by Brazil by including new countries, and pushing the idea of forming a free trade area throughout the continent, whilst using Mercosur as a potential source of regional leverage and possible means to promote the free trade idea. Nevertheless, Mercosur prevailed and the free trade idea was never materialized (Riggirozzi, 2012).

Itamar Franco’s regime had also prepared the grounds for a different perception of the region; no longer was ‘Latin America’, the area conceived as South America, denoting the regional geographical affiliation as well as ousting a potential rival- Mexico (Hakim, 2002).

Thus, under Fernando Henrique Cardoso (1995-2003), Brazilian diplomacy reflected the importance of creating South American partners, strengthening Brazil’s position as a global player and power in multilateral forums, as well as space for extending Brazil’s financial development endeavors. Consequently, the traditional doctrine of non-intervention gave way to striving to establish leadership in the area by balancing integration, regional security, democratic stability as well as infrastructure and development (Briceño?Ruiz, 2010).

Therefore, one can say that gradually, trade barriers were replaced by trade collaboration; the turn of the 1990s saw significant changes in the international arena as well as on the national level within Brazil. This period had proven to be a turning point for Brazil’s foreign policy, following which it had taken forth several regional initiatives including but not limited to Mercosur. In addition, Brazil’s pro-democracy activism during the 1990s paved the way for farther-reaching goals. In 2000, these ambitions crystalized into a new regional concept: South America (Klom, 2003).

Under Lula da Silva (2003-2010), Brazil’s policy for Latin America had shifted once more, with the emergence of a new discourse, emphasizing stronger political and social integration, based on the perceived cohesion between the neigh boring countries’ values and identity, as well as acknowledging the mutual advantages to be gained. Brazil’s international influence could, according to this approach, be expanded through integration with its neighbors, in addition to forming an economic bloc that was strong enough to provide Brazil with more international influence. To this extent, Brazil put an emphasis on leadership building through the cultivation of ‘soft skills’, i.e. cultural and social ties, promoting multilateralism and cohesion in the region (Riggirozzi, 2012).

Thus, we see that financial and foreign policy are intertwined and mutually-dependent; in the age of globalization and multi-national corporations, a country’s economic policy is no longer a matter of national affairs but rather a matter of international affairs. I will now proceed to examine three instances of financial policies that are in fact part of Brazil’s foreign policy, indicating how membership in these unions reflects and promotes Brazil’s foreign policy.

Mercosur

In 1996, Mercosur (Spanish: Mercado Común del Sur, Portuguese: Mercado Comum do Sul) signed into effect the creation of a “free trade zone” between its member countries and Bolivia. This was one of the precursors to the accord signed in Brasilia in December 2002, establishing the Mercosur-Andean Community Free Trade Agreement (Klom, 2003).

Mercosur’s full member countries as of June 2013 are Brazil, Argentina, Paraguay, Venezuela, and Uruguay (WTO, 2013).

This agreement was mainly intended to “promote the development and the utilization of external integration with the goal of permitting the reduction of costs and the generation of competitive advantages in regional commerce and with third countries outside of the region”. It mainly focuses on reducing tariffs and cooperation in regards to infrastructure projects, intended to reduce costs (Klom, 2003).

On the geo-strategic level, one can claim that Brazil uses Mercosur as an economic and political alliance when confronting other powers, including the US and the EU. Thus, Mercosur further established Brazil’s international position while avoiding the strict commitments required for establishing a common market, or otherwise any supra-national traits (Hakim, 2002).

Moreover, Mercosur was useful in extending Brazil’s negotiating power as an added weight in the international sphere. Despite some conflict within the bloc regarding external tariffs, trade negotiations took place with the EU, as well as negotiations intended to instate a Free Trade Area of the Americas (FTAA) in 1994 (Klom, 2003).

UNASUR

The Union of South American Nations (Spanish: Unión de Naciones Suramericanas, UNASUR) was constituted in 2008, aiming to unite two existing regional free trade blocs, Mercusor and the Andean Community, as well as to integrate Chile, Guyana, and Surinam (Hakim, 2002).

Initially, it was established with the objective of extending Brazil’s sphere of influence to the entire South American region. Nevertheless, Venezuelan President Hugo Chávez has gained control of the union, steering it towards serving his agenda rather than the Brazilian. The Venezuelan foreign policy differed greatly from Brazil’s international strategy, considering new goals such as the promotion of a multipolar order, south–south cooperation, and Bolivarian integration (Briceño?Ruiz, 2010).

Established in the last decade of the twentieth century, UNASUR is in essence a regional construct based on open trade agreements. Initially, its aim was to extend the institutional structures to issues other than trade, which are the core of Mercosur, while simultaneously establishing autonomy vis-à-vis external influence such as the US or the EU (Briceño?Ruiz, 2010).

As trade is not an essential component of UNASUR’s charter, it emphasizes democracy, inclusion, physical integration, defense and identity as well as social development. To this extent, UNASUR had created the South American Defense Council, intervening in the territorial conflicts between Ecuador and Colombia, and more recently involving Venezuela and Colombia. By exerting self-governance, the South American region is able to circumvent US interference in the region (Riggirozzi, 2012).

For Brazil, UNASUR serves as grounds for building an area of dialogue and cooperation in South America, mainly on matters of regional security.

It can be argued that these will be the focus of Brazilian diplomacy, and the focus of its resource allocation (Hakim, 2002).

ALBA

The Bolivarian Alliance for the Americas (Spanish: Alianza Bolivariana para los Pueblos de Nuestra América, or ALBA) was initially founded by Cuba and Venezuella in 2004 (Hakim, 2002).

ALBA represents a new approach using intergovernmental agreements, rather than supra-national institutions, supporting supra-national grassroots cooperation in areas of health, education and housing (Briceño?Ruiz, 2010).

Unlike other regionalist projects such as Mercusor and UNASUR, ALBA promotes a social dimension, in its construction of a regional space whose members do not necessarily share any adjoining borders (Armijo& Burges, 2009).

The relationship between Brazil and other Latin American countries is colored by ambiguity. On certain issues, Brazil posits that the countries in the region must have a string and single leader. Traditionally, Brazil has taken this role upon itself, and in certain cases it was indeed successful in fulfilling this mission, mainly in alleviating US pressure on some of the region’s weaker states. For instance, Brazil was able to use the WTO platform in order to settle disputes with the US over cotton and steel, in a manner favorable to Latin American countries. Nevertheless, this protection and advocacy comes at the price of Brazilian dominance in setting regional policies and agendas (Briceño?Ruiz, 2010).

Such dominance can be seen in the case of the Brazilian oil corporation Petrobras; its extraction methods and general actions have exerted a negative effect on neighboring countries, though Brazil has yet to exert its influence on the corporation to change its ways. Since its creation, Petrobras has been associated with increasing the country’s sovereignty and development, even acting as a source of pride for the nation (Armijo& Burges, 2009).

ALBA’s attitude opposes the unlimited exploitation of natural resources, mainly the conversion of natural resources into exportable commodities (Riggirozzi, 2011).

Thus, one can perceive the case of Petrobras as a test for Brazilian foreign policy; will it promote regional development and cohesion by hindering Petrobras, or will its own narrow interests prevail?

Conclusion

Brazil’s foreign policy is dominated by two opposing forces, the balance of which determines the country’s foreign policy. On the one hand, Brazil aspires to strengthen its economy and strives towards self-efficacy and self-reliance, limiting its dependency on import and foreign currency. On the other hand, Brazil wishes to takes its perceived rightful place among the large nations exerting influence on world affairs.

In a world dominated by globalization, multi-national corporations and a steady shift away from ‘classical’ economic approaches promoting self-reliance as means for power and resilience, Brazil’s policymakers have concluded that its role as a dominant force in the world’s economy can only be achieved by becoming the leader of a strong financial bloc that can counterweigh forces such as the USA and the EU.

The most suitable grounds for materializing this idea can be found in Latin America, later defined as South America. this changed term reflects the forces harnessed to reach Brazil’s goal; using similarity in culture, values, history and language, coining the term South America adds a physical aspect to the definition of the region, further facilitating the elimination of trade barriers and other impediments to its goal.

By creating a regional union, Brazil gains dominance as the driving force behind this bloc, though this union comes at a price, which Brazil has yet to decide whether to pay; drawing upon feelings of mutual responsibility and affiliation can prepare the grounds for an economic union such as Mercosur, but at the same time it can inspire unions based on social responsibility and comradery such as UNASUR and ALBA, whose interests may at times conflict with financial agendas, as can be seen in the case of the Brazilian Petrobras corporation.

In addition, though it may advocate the rule of a single country, Brazil cannot guarantee its dominance, as control of these unions can be ‘captured’, as in the case of ALBA.

References

Armijo, L. E., & Burges, S. W. (2009). Brazil, the Entrepreneurial and Democratic BRIC&ast. Polity, 42(1), 14-37.

Briceño?Ruiz, J. (2010). From the South American free trade area to the Union of South American Nations: The transformations of a rising regional process.Latin American Policy, 1(2), 208-229.

Hakim, P. (2002). Two ways to go global. Foreign Affairs, 148-162.

Klom, A. (2003). Mercosur and Brazil: a European perspective. International Affairs, 79(2), 351-368.

Riggirozzi, P. (2012). Region, regionness and regionalism in Latin America: Towards a new synthesis. New Political Economy, 17(4), 421-443.

Saraiva, M. G. (2010). Brazilian foreign policy towards South America during the Lula administration: caught between South America and Mercosur. Revista Brasileira de Política Internacional, 53(SPE), 151-168.

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