Brazil’s post-Lula foreign policy

Earlier this week Treasury Secretary Timothy Geithner went to Brazil as part of a long-running effort to get that country to pressure China on its exchange-rate policy. This effort had yielded some marginal successes in the past, but it had also yielded comments like Brazilian Foreign Minister saying: "I be­lieve that this idea of putting pressure on a country is not the right way for finding solutions. We have good co-ordination with China and we’ve been talking to them. We can’t forget that China is currently our main customer (emphasis added)."

The mild surprise is that Geithner’s plea appeared to find a receptive audience in Brasilia. From the Financial Times’ Joe Leahy:

Any alignment with the US on the issue of China’s currency would mark a fundamental shift for Brazil. Luiz Inácio Lula da Silva, Brazil’s previous president, had pursued a trade policy that was partially dictated by his vision of a grand “south-south” alliance among developing countries.

His pragmatic successor, Dilma Rousseff, is more concerned that Brazil exports primarily commodities to China while its domestic manufacturing industry is being undermined by a strong exchange rate and cheap imports.

Ms Rousseff has also toned down her predecessor’s criticism of US monetary policy, which Mr Lula da Silva’s administration blamed for exacerbating global capital flows….

One person familiar with the government’s stance said Brazil was considering a public declaration on global imbalances and China’s undervalued currency during Mr Obama’s visit.

“The idea is we might issue a communiqué in which maybe we can work in common language to try to stress this matter,” the person said.

What’s going on? A few things. First, it’s probably true that this shift won’t amount to all that much in terms of affecting China’s policies. Second, this is an effective way for Rousseff to distinguish herself from Lula, and she’s backing up the rhetorical shift with action items. Third, Lula’s foreign policy on this point was always based more on old-fashioned third world solidarity than anything approximating Brazil’s national interest. Not that Lula’s foreign policy was all that bad, mind you, but this seems more like a return to Brazil’s equilibrium set of interests.

If the Obama administration was smart, they would capitalize on this newfound friendship with Latin America’s largest country with some big, meaningful and yet highly symbolic foreign policy initiative. If only there was some moribund-yet-highly-useful foreign policy initiative that would cement the relationship. But that’s just crazy talk.…