Brazil Elections: How the Result Might Affect the Wider Latin American Landscape

Multilateral initiatives, the protection of the Amazon rainforest and changes in Mercosur could be some of the effects of the result of the October 2 presidential elections, depending on who wins

The Brazilian elections will be held on October 2 amid a tense atmosphere that has led Human Rights Watch to describe the elections as "a test of enormous importance for democracy", amid attacks on the electoral process by Bolsonaro and polarization between the two political factions. Photos: Bloomberg, composite by Bloomberg Línea
August 18, 2022 | 08:00 PM

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Bloomberg Línea — This week saw the official start of presidential campaigns in Brazil, between President Jair Bolsonaro, who is seeking reelection, and former president Luiz Inácio Lula da Silva, the latter of which has a 12-point lead in a recent opinion poll, and in a poll published on August 15 by the Ipec Institute that gives Lula 44% of voting intentions, against Bolsonaro’s 32%.

Beyond the effect there could be on domestic politics, analysts are also looking at the change that could occur in relations between Latin America’s largest economy and the rest of the region.

The elections will take place on October 2 amid a tense atmosphere that has led Human Rights Watch to qualify the elections “as a test of enormous importance for democracy”, in the midst of Bolsonaro’s questioning of the electoral process and polarization between both political factions.

The eyes of the region are therefore focused on Brazil.

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Bolsonaro, in the words of professor Alejandro Frenkel, who holds a PhD in social sciences from the University of Buenos Aires, has led a process of “de-Americanization”, after the region has seen leaders who struck out “against essential values of society, such as freedom, free market and family”.

Since coming to power, the Brazilian president has criticized Mercosur, the South American trade bloc of which Brazil is a member, as well as leftist groups and parties in the region.

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A street vendor sells towels depicting Brazil's President Jair Bolsonaro, and former president Luiz Inácio Lula da Silva, fnear Salgueiro, Pernambuco state. Brazil's elections are shaping up to be a contest between opposing poles of the political spectrum to determine the direction of Latin America's largest economy at a time of change.dfd

“So far, Bolsonaro has shown little interest in forging closer ties with leaders with which he does not consider ideologically aligned. There is little reason to believe he would change if re-elected,” says Nick Zimmerman, who served as director of Brazil and southern cone affairs on the White House National Security Council during the Barack Obama administration.

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Throughout Bolsonaro’s presidency, the number of Latin American leaders who could be defined as non-aligned or with contrasting ideologies has only increased. Since the Brazilian president’s investiture on January 1, 2019, Alberto Fernández of Argentina, Peru’s Pedro Castillo , Gabriel Boric in Chile, Xiomara Castro in Honduras and, most recently, Gustavo Petro in Colombia, have been elected as presidents.

Brazil’s political isolation in the region, as described by Fernanda Cimini, senior researcher at the Brazilian Center for International Relations (CEBRI), could come to an end with an eventual third Lula presidency. The former president, who once promoted the creation of Latin American integration mechanisms such as UNASUR, together with Venezuela’s Hugo Chávez (and from which Bolsonaro withdrew), could prioritize Latin American integration.

The isolation highlighted by analysts could also be reflected in Brazil’s foreign trade with Latin America.

According to data from the International Trade Centre (ITC), an organization backed by the United Nations and the World Trade Organization, Lula received a country that at the end of 2002 that exported $11.95 billion in goods to the region, and during Lula’s first year in office the country’s exports swelled by 29.3%.

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Bolsonaro, on the other hand, entered office with exports valued at $45.01 billion, but by the end of the first year of his administration, they had already fallen by 17.8%, to $36.97 billion. The drop in the 2020 export figure is largely explained by the impact of Covid-19, which affected global trade.

In terms of proportion, with Lula in power, exports to Latin America peaked at 26% of total foreign sales. Then would come a decline during the presidencies of Dilma Rousseff and Michel Temer, to account for 15.41% of total exports during the Bolsonaro presidency, although including the impact of the pandemic in 2020.

Throughout this period, China consolidated its prominent role in Brazil’s trade balance. Between 2002 and the present, Brazil’s exports to China increased from $2.61 billion to $87 billion, and by 2009 China had become Brazil’s main trading partner, ahead of the United States.

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Today, Brazil exports more to China than to all of Latin America combined. Despite his criticism of the country during the campaign, analysts agree that Bolsonaro has had a pragmatic economic stance with Beijing. “Brazil has always traditionally sought to take advantage of competition from major powers to promote its own interests,” says Zimmerman.

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The ‘pink tide’

Esther Solano, who holds a PhD in social sciences from the Universidad Complutense in Madrid, considers that Brazil has not shown continuity in its foreign policy, even beyond the differences of the Lula-Bolsonaro rivalry.

“Bolsonaro put an end to the foreign policy of the PT (Lula’s Labor party), and then we have had almost no political relations with Latin American countries. He has tried to have a more intense relationship with the United States, because from his point of view that is the reference point, and not Latin America,” Solano says.

Beyond the continent, Bolsonaro has also tried to strengthen his relations with Israel, to the point that he opened a commercial office in Jerusalem and spoke of intentions to move the Brazilian embassy to that city, mirroring a move by the Trump administration.

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Lula has shown his propensity for greater regional integration, illustrated by proposals to create a single regional currency that would include a central bank for South America, despite of a lack of viability of such a plan, according to analysts. The former president has even spoken of the creation of a South American defense council.

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Brazilian President Jair Bolsonaro speaks during the National Convention to formalize his candidacy for a second term, at the Maracanazinho Gymnasium in Rio de Janeiro, on July 24, 2022. Bolsonaro officially kicked off his re-election campaign by rallying thousands of his supporters in Rio de Janeiro, after stepping up his attempts to discredit Brazil's voting system.dfd

Brian Winter, vice president of the Council of the Americas, says Lula winning the lection would “leave no doubt” that Latin America is moving to the left, considering the election results of recent years in Chile, Peru and Colombia.

“Brazil is the largest country in the region and has great symbolic importance. Lula is also prepared to take on a regional role as a kind of elder statesman should he win, although it is true that times have changed since the 2000s, when he was last president: this time there is no commodities boom, which will make a big difference,” Winter says.

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Cebri’s Cimini says that, should Lula win, Brazil will join what many analysts have called the “second pink tide”, a term that was coined in the region to refer to the succession of victories by leftist rulers at the beginning of the 21st century.

“In this scenario, Brazil could resume its project of building a regional leadership under a renewed social and economic agenda. If Bolsonaro wins however, Brazil could continue on the path of political isolation, which is already underway”, Cimini says.

Luiz Inacio Lula da Silva, former president of Brazil, speaks at a rally during Bahia's Independence Day in Salvador, Bahia state. Leftist former president Lula continues to lead in the polls against incumbent Jair Bolsonaro. Photographer: Maira Erlich/Bloomberg
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Not everyone agrees with this view, however. For Zimmerman, the recent election results in Latin America cannot necessarily be characterized as “some sort of decisive turn” to the left, but more as a reflection of a “growing frustration” with governments in the wake of Covid-19. “

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The low approval ratings of leftist leaders in countries such as Argentina, Chile and Peru tell a more complex story,” he says.

From Mercosur to the Amazon

Another impact of the election on the region would clearly be seen in Mercosur, “a constant puzzle,” as Winter calls it, amid tensions among the bloc over Uruguay’s possible trade agreements outside of the bloc, with China and with the European Union.

Bolsonaro was absent from the Mercosur summit held in July of this year and at last year’s summit he criticized the “archaic visions” of the trade bloc.

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The Council of the Americas vice president does not see a clear future for Mercosur no matter who wins the election.

“Call me cynical, but I don’t think a final agreement between the European Union and Mercosur will ever come into force: there are objections in Europe to Bolsonaro, and if Lula is elected, his representatives have said they will reopen negotiations,” he says.

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Cimini explains that the progress of an agreement between the EU and Mercosur will depend on demands from both sides. The Europeans are demanding additional commitments from Latin American members, especially Brazil on environmental protection of the Amazon.

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Mercosur's HQ in Montevideo, Uruguaydfd

“It is unclear whether Bolsonaro, if re-elected, is willing to commit to these sustainable requirements, or whether the EU will accept Bolsonaro’s commitments should he accept the agreement,” Cimini adds.

However, although there could be a possibility of overcoming the obstacles on environmental protection with Lula in office, Cimini expects that important issues of “domestic content, property rights, industrial policy, agriculture, trade” that could prevent the ratification of the agreement in the short term, will come up for review.

It is precisely in environmental matters that analysts see another difference depending on who wins the elections, especially in the protection of the Amazon, an area shared by nine countries in the region.

As Winter explains, the increase in deforestation rates under the Bolsonaro government, who threatened to pull his country out of the Paris Climate Agreement, has become an impediment to the ratification of the agreement with the EU.

Healthy vegetation stands next to a field scorched by fire in the Amazon rainforest in the state of Rondônia, Brazil. Photographer: Leonardo Carrato/Bloombergdfd
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“The next government of Brazil will face strong opposition from those who have directly benefited from the current state of affairs, such as large-scale commodity farmers, who are also important drivers of the Brazilian economy. Raising environmental standards is always more difficult than relaxing them,” adds Cimini.

For Zimmerman, Lula, who has considered appointing a climate envoy for Brazil, similar to John Kerry’s role in the US government, will face a much more adverse external context if he is elected this time around, “and it is important to remember that this may limit his effectiveness on many issues, including the Amazon”.

Solano adds that Lula will try to promote an environmental agenda because he knows that Brazil can be seen as a giant of green diplomacy in the international sphere.

For Cimini, beyond the discussion between the two factions, what is certain is that Brazil plays “a decisive role in any South American agreement, and should never abstain from regional integration for ideological reasons”.

Translated from the Spanish by Adam Critchley