Brazilian President Luiz Inacio Lula da Silva's surprise reelection victory on Sunday dealt a harsh blow to US President Donald Trump’s "Donroe Doctrine," a plan to secure a US "sphere of influence" in the Americas against growing Chinese influence. The question now is just how much Brazil will tilt toward Beijing.
Trump's grand plans at the start of the year to solidify Washington's influence over Latin America were epitomised by US forces' extraordinary capture and extradition of Venezuela's leftist President Nicolas Maduro on Jan 3.
Lula's victory has thrown a spanner in the works. South America's most populous nation will be led for another four years by the veteran leftist and long-standing critic of US influence
Trump said on Monday that he likes Lula and gets along well with him, but it's safe to say he would have had a more cordial relationship with Lula’s right-wing opponent, Flavio Bolsonaro, son of former President Jair Bolsonaro.
What makes Lula's win even more vexing for Washington is that it is likely to strengthen Brazil's ties with China, a process that Lula has long championed. China overtook the US as Brazil's largest trading partner in 2009.
Officially, Lula will avoid aligning himself too closely with either superpower.
"We are no one's backyard!" Lula told thousands of supporters at his victory rally in Sao Paulo on Sunday. That could be interpreted as a warning to the US and China that Brazil will not be bullied into relinquishing control of its vast resources, from energy and minerals to the Amazon rainforest.
But "backyard" clearly sounds like a nod to the US.
Trump's "Donroe Doctrine," a revival of the 200-year-old "Monroe Doctrine" that claimed the US should have a "zone of influence" in the Americas, has not been particularly well received in Latin America.
A victory for Trump's political ally Flavio Bolsonaro on Sunday would likely have strengthened Washington's plans in the region, which may have pushed other countries to trim ties with Beijing. But with Lula's continued tenure, the White House may need to focus more on damage control.
"Lula’s victory certainly reinforces Brazil’s economic relationship with China," says Emanuel Ornelas, a professor at the Sao Paulo School of Economics-FGV.
For a White House intent on expanding US influence at China’s expense, that is worrisome.
China’s Growing Footprint
As the battle between the US and China for global economic supremacy ratchets up amid an escalating AI arms race, securing a reliable supply of energy, resources and materials has become more important than ever. Brazil sits across all of those areas.
Brazil holds around 20 percent of global rare earth reserves and is a major producer of a range of minerals critical to technologies like semiconductors, renewable energy, robotics and defence applications. Its resources are a key part of global supply chains, and the country is also an agricultural powerhouse, supplying the world with around 27 percent of its sugarcane, 25 percent of its soybeans, 9 percent of its cotton, and 6 percent of its beef and corn.
China already has a distinct advantage. Brazil currently exports around three times as much to China as it does to the US, in dollar terms, and imports around twice as much from the Asian superpower as it does from America.
This gap is widening. Trump's tariffs pushed China to increasingly replace US agricultural goods with Brazilian alternatives. The war in the Middle East has also tightened trade ties between Brasilia and Beijing by disrupting normal energy trade patterns. Crude oil now rivals soybeans as Brazil’s largest export and has helped fill the gap created by shuttered Middle East production. China is the largest buyer of both.
While Brazil plays a multifaceted role in US plans to remain the world’s main superpower, China's view of Brazil appears more straightforward. It wants access to the commodities, energy and minerals needed to sustain its industrial base, which increasingly includes high-value manufacturing.
Will Lula have a strong enough hand to secure advantageous terms with the US and China as they seek access to Brazil's resources?
This could prove challenging. He faces many hurdles at home, including a high likelihood of legislative gridlock in Brasilia. Markets don't seem enthused either. While the historic plunge in Brazilian markets on Monday following Lula's win was exaggerated, it was telling nonetheless: investors appear very sceptical about the country's fiscal outlook and economic growth prospects.
What happens matters beyond the country’s borders. Brazil, in UniCredit’s words, is both a "strategic resource power" and a "geopolitical swing state" in the US-China rivalry. Which side will prevail? That remains a toss-up.
[Jamie McGeever is a columnist for Reuters]