Why is Brazil’s Lula building Brics?

It’s been more than a year-and-a-half since Brazil’s Luiz Inácio Lula da Silva returned to the country’s president, up from the social dead after his judgment on fraud claims was considerably annulled.

In that time, President Lula’s return has given renewed power to one of the world’s most improbable financial alliances- the Brics, a gathering that unites Brazil with Russia, India, China and South Africa.

Lula played a key role in efforts to transform the Brics into a political force and an emerging counterbalance to the West during his past tenure as president from 2003 to 2010.

Now the bloc has momentum on its side once again. It’s come to be known as Brics Plus, after the original members agreed at a watershed summit in Johannesburg in August last year to admit a handful of new joiners, including Saudi Arabia and Iran.

Not bad for a grouping that was originally willed into being by sheer high-concept financial whimsy, the brainchild of economist Jim O’Neill, who saw it more as an investment opportunity than a new gang of nations.

” When the Brics were invented, it was very much an asset school”, says Monica de Bolle, senior fellow at the Peterson Institute for International Economics in Washington.

” But it caught on in Brazil, because it immediately spoke to Lula’s desires in international plan”.

At the Johannesburg meet, Lula was particularly bullish about the party’s long-term financial prospects.

” We have already surpassed the G7 and account for 32 % of global GDP in purchasing power parity”, he said.

According to estimates, emerging and developing markets will be those with the highest development rates in the foreseeable future, he continued.

This demonstrates that the Brics is the driving force behind the vitality of the market in the world north.

But that is deceptive on Lula’s piece, to say the least. The original creator of the word, who is now jubilant in the subject of Baron O’Neill of Gatley, has pointed out that all of the group’s economic growth has come from Xi Jinping’s China and Narendra Modi’s India.

“None of the other Brics has performed anywhere near as well as those two,” he said in an article written in reaction to the bloc’s expansion.

” Nigeria has surpassed Brazil’s share of the global GDP, while South Africa is not even the largest market in Africa,” according to Wikipedia.

He even points out that, in much the same way that the US dominates the G7, China “dominates the Brics by being twice the size of all the others combined.”

So what does slow-growth Brazil get from being dragged down in China’s financial peloton?

Rodrigo Zeidan, a Brazilian analyst based at China’s New York University Shanghai, tells the BBC that Brazil and China likewise see the Brics as a “hedge” in terms of international partnerships, rather than as a major concern.

” The Brics right then, for Brazil, cost about nothing”, he says. ” So if the rewards are not large, it’s okay. They are either a major benefit nor a deterrent”.

Brazil is pleasant maintaining close ties with Beijing because China is its biggest trading partner, even if the Brics gathering offers it some” strange matching,” as Mr. Zeidan puts it.

Lula has certainly maintained an ambiguous position on Russia’s war in Ukraine, but that is more due to Brazil’s traditional neutrality in foreign policy than to a wish to support a fellow Brics nation.

President Lula committed to the Brics because of his belief in improving relations between the large so-called world southern countries, according to Monica de Bolle at the Peterson Institute, who is herself a Portuguese analyst.

As a result, Brazil has then acquired” a China dominance” that could damage it in other international policy connections, she says.

” If you are in the US, you know that the US attitude on China is not going to change]whoever wins the presidential election in November ]”, she adds.

” In either case, it’s moving in the direction of greater anti-China attitude. At some point, that’s going to make more responses from China, which was placed Brazil in a very difficult place, because it’s perceived as being aligned with China”.

The New Development Bank ( NDB), a multilateral lender established by the Brics and described by Lula as” a milestone in effective collaboration between emerging economies,” is one tangible benefit for Brazil from the alliance.

Former Portuguese President Dilma Rousseff is currently in charge of it. She was President Lula’s social mentor, and succeeded him in 2011. However, her time in office came to an abrupt end when she was impeached in 2016 for breaking fiscal rules.

Since the company’s office are in Shanghai, the NDB has also made her indispensable in maintaining relations between Brazil and China.

” Dilma is undoubtedly great in terms of social image. Having Dilma around in Shanghai is very important for strengthening Brazil-China connections”, says Mr Zeidan.

Brazil has also benefited directly from NDB money. In June, Ms Rousseff and Brazilian Vice-President Geraldo Alckmin signed a loan deal worth more than $1.1bn (£880m) to help pay for reconstruction after widespread floods in the state of Rio Grande do Sul.

Regarding the NDB and Russia, the bank put all transactions involving the land on hold in March 2022, soon after Russia’s invasion of Ukraine. Additionally, Russia has complied with foreign punishment by the NDB.

However, midway through the middle of 2025, Russia is expected to assume the rotating presidency of the banks, and there is some confusion about what will follow.

In the interim, Ms. Rousseff is never hesitant to hold meetings with Russian President Vladimir Putin, who has praised her job at the NDB.

President Lula is a staunch supporter of the Brics as a means of reforming global leadership and giving the developing world a stronger words.

He has criticised the “paralysis” of international organizations, while praising the growth of the Brics as strengthening the struggle for more different ideas.

However, other observers counter that China and India have their own internal conflicts, while Russia is at war in Ukraine and the Rs are themselves paralyzed by their own internal contradictions.

Unfortunately, says Ms de Bolle in Washington, the Rs are” a diverse group of countries that have nothing in common, apart from the point that they are big”.

” The Brics have no clear plan that has any real fat”, agrees Mr Zeidan in Shanghai.

” Right now, China does n’t ask much of Brazil. However, anyone that China asks, Brazil does.

When the bets are low, it’s okay to be a part of the Brics. But what if the margins rise?”

In other words, the result of the Brics, on Brazil and on the planet, may be small for now. However, if China decides to become more confrontational, things could change quickly and Brazil might have to make some miserable judgments.