Brazil’s Challenge to US Dominance

Exclusive: Brazil’s President Rousseff lashed out at U.S. spying during her UN speech, but there was a deeper message the days when South America was Washington’s compliant “backyard” are over. The U.S. government now has the choice of forging a more equal relationship with the region or facing damaging isolation, writes Andrés Cala.

By Andrés Cala

There were several factors both domestic and geopolitical that moved Brazil’s President Dilma Rousseff to blast American spying during her address to the United Nations General Assembly last week. But Washington is missing the most important message: Brazil, South America’s new economic titan, is assuming a role as regional leader.

Brazil, in effect, has replaced the U.S. as the most influential player on the South American continent and its reach can only be expected to increase. By missing the speech’s larger implication, the White House and Congress are making a miscalculation that undermines U.S. interests in Latin America and the world.

Brazil’s muscle-flexing is the result of an evolution which began over a decade ago as the resource-rich nation began to experience rapid economic development. The entire region now looks to Brazil, not the U.S., as a model for progress and that includes Washington’s allies such as Colombia, Peru and Chile. This new paradigm is being cemented geopolitically and economically.

Consequently, Washington can choose to partner up with Brazil and this newly empowered region as a whole or the U.S. can stick to its old-fashioned and counterproductive policies of paternalism and exploitation, which will only increase its isolation.

In the context of this regional transformation, Brazil’s angry reaction to National Security Agency spying, leaked by former intelligence contractor Edward Snowden, is more understandable. Rousseff unequivocally condemned NSA spying on her government’s internal communications, on Brazil’s permanent mission at the UN and its other diplomatic delegations, on Brazil’s vital corporations including its oil and mining giants Petrobras and Vale, and on private e-mails of thousands of Brazilians.

It is “a breach of international law,” a “serious violation of human rights and civil liberties,” an “affront especially among friendly nations,” and “above all, a disrespect of the sovereignty of my country,” Rousseff told the UN General Assembly. And Washington’s excuse that the spying is meant to protect Americans from terrorist activity is “unsubstantiated,” she said.

That speech was not all Rousseff has done. After the NSA revelations, she demanded a formal apology directly from President Barack Obama, who did personally intercede with her in private to smooth matters over, at least twice during the G-20 summit in Russia and over the phone, but to no avail. On Sept. 17, she cancelled a state visit to the U.S.

It is true that Rousseff, with her protests against NSA spying, was addressing a domestic audience in Brazil and that as a result her popularity spiked as the presidential campaign has started heating up there. The flap over NSA spying has diverted some public attention from a summer of turmoil that triggered massive protests by Brazilians demanding better governance.

However, beyond the political popularity of chastising the United States, Rousseff’s complaints tapped into deep grievances felt by Brazil and most other South American countries, including Colombia, which also protested NSA spying. The damage to U.S. ties in Latin America is serious, and playing it down, as U.S. pundits are doing, is only making it worse.

“Like so many other Latin Americans, I fought against arbitrary power and censorship,” Rousseff told the UN General Assembly. “Without privacy, there is no liberty of opinion. Without respect for sovereignty, there is no basis for relations between nations.”

It’s not new that Latin America feels trampled upon by Washington; what’s new is that the leading countries of the region are increasingly ready to push back. Latin America expects its relations with the U.S. to evolve proportionally to the region’s coming of age economically, as has happened with other global powers, such as China, Russia and Europe.

Bluntly put, a Brazil-led Latin America wants a relationship of equals with Washington, and if the U.S. can’t offer that, the estrangement between North and South will continue to widen, ultimately harming U.S. interests with a region that represents a large and growing economic market.

Latin America’s Ascent

During the Cold War, South America was a mess, partly as a result of U.S. and Soviet meddling with the CIA supporting right-wing military coups whenever Washington sensed the possibility of “another Cuba” in its “backyard” but mostly the fault lay in the fact that many South American leaders were corrupt, incompetent and largely indifferent to the problems of illiteracy and poverty facing many citizens.

This is true not only from a humanitarian reading, but from an orthodox capitalist one. Wealth is conditioned to spending by the many rather than the concentration of riches in the hands of the few. Such extreme privilege is no rival to a model in which millions of middle-class spenders can access healthcare, education and consumer goods.

During the 1990s, a neoliberal generation of reformers came to power and delivered macroeconomic growth based on the U.S. and World Bank imposed “Washington Consensus,” with exports soaring and mass privatizations reducing fiscal uncertainty. But wealth distribution worsened, and poverty and political instability increased proportionally.

In response, a resurgent Left was empowered, first with Hugo Chávez in Venezuela in 1998, Lula da Silva in Brazil in 2002, Kirchner in Argentina in 2003, Tabaré Vázquez in Uruguay in 2004, Rafael Correa in Ecuador in 2007, and others representing left-of-center coalitions promising to undo the “neoliberal excesses” of their predecessors.

The result was a redistribution of wealth that has created “the American dream” with a Latin flavor. Between 2002 and 2008, 60 million Latin Americans moved out of poverty, according to the World Bank. The people of the region began to perceive the opportunity of middle-class upward mobility rather than the stagnation of severely stratified societies.

The global economic crisis that began in 2007  in  the U.S. hit countries like Argentina, Ecuador and Venezuela hard,  but in general the region showed great resilience. The main reason was that the countries had generally pursued sounder economic policies with lower fiscal deficits or higher surpluses, low inflation and flexible exchange rates.

As a result, the balance of payments improved and helped to increase foreign reserves and to reduce foreign borrowing. In addition, the region diversified its exports taking advantage of the new opportunities in Asia, namely China.

By 2012, Latin America and the Caribbean’s gross domestic product was $5.3 trillion, almost tripling in the last decade. Brazil’s economy soared nearly fivefold to $2.3 trillion, now rivaling the UK as the world’s sixth biggest economy. U.S. exports to Latin America are equal to the combined exports to Europe or China.

That is a diametrically different reality from just two decades ago when El Norte treated South America disdainfully as home to a string of “banana republics” to be manipulated as part of Washington’s “sphere of influence” rather than treated as political and economic partners. The infamous phrase “America’s Backyard,” dating back almost two centuries to the days of the Monroe Doctrine, is still used commonly in American policy-making circles.

Obama’s Blunders

When Obama came to power in 2009, he hadn’t even set foot in Latin America and only made it to South America in March 2011 when he visited Brazil and Chile. But Obama’s promise to “reestablish American leadership in the hemisphere” fell on deaf ears. His foreign policy toward the region was just a tweaked version of George W. Bush’s approach, which in turn was a botched extension of the mess that Bill Clinton left behind.

In response to Obama’s patronizing neglect, South American leaders made clear that they were doing all right without U.S. guidance and interference. Brazil had emerged as the region’s dominant economy and South American nations began making political choices within a broad spectrum of right and left.

It’s not that South America suddenly became a bastion of stability and prosperity. Many of the old problems remained, but the countries feel ready to deal with their problems on their own. Meanwhile, U.S. policies toward the region remained stuck in a kind of time warp: embargoing Cuba, confronting Venezuela, prosecuting the “drug war,” creating unrealistic “free trade” zones.

The Obama administration might be better off listening to what the leaders of countries like Brazil, Argentina, Chile, Peru, Colombia and Mexico are saying. Latin Americans have other priorities, and so do most Americans. The economy is and will remain the most pressing problem for all, including Hispanic voters in the United States.

Obama is right to say that most people in the region policymakers and citizens alike are tired of outdated ideological standoffs. But for exactly the same reasons, they are also tired of U.S. preaching about Washington’s concept of “democracy” and the danger posed by Cuba.

Washington might find it more beneficial and profitable to look toward a genuine partnership with the region and particularly Brazil. It is what many of the leaders have been demanding for some time and this strategic shift is rapidly becoming both urgent and unavoidable.

The  benefits  from a “good neighbor” policy that is more than just rhetoric could translate into American  jobs,  American exports and American economic growth. It also could further consolidate the political evolution of Latin America into a truly democratic model with a strong middle class creating both stability and prosperity and with those benefits then spreading to smaller and weaker countries.

U.S. leaders — who have spent more than a decade distracted by Middle East terrorism — will have to acquaint themselves with this new reality that has evolved much closer to home, a proud and assertive Latin America now led by Brazil and unwilling to accept the dictates of Washington.

The United States can adjust to this new reality or find itself ever more isolated.

Andrés Cala is an award-winning Colombian journalist, columnist and analyst specializing in geopolitics and energy. He is the lead author of America’s Blind Spot: Chávez, Energy, and US Security.