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FILE PHOTO: Brazilian president Lula da Silva hugging Ursula von der Leyen the President of the European Commission at the 3rd EU-CELAC Summit in Brussels, Belgium on 17 July 2023.
EU and Mercosur near trade deal (at last)
It has been a long four years since the free trade deal between Brussels and Latin America’s largest trade bloc was agreed in principle, but all sides now, finally, look close to signing on the dotted line.
European Commission President Ursula Von der Leyen and Brazilian President Luiz Inácio Lula da Silva plan to meet on the sidelines of the COP28 summit in Dubai to push through the final hurdles. If all goes well, the European Commission’s vice president for trade may attend the Mercosur summit in Rio de Janeiro on December 7 and bring an early Christmas present home for EU exporters.
The deal would create an integrated market of over 780 million consumers, one of the largest in the world. The European Commission estimates it will save over $4.4 billion in tariffs alone, and give Europe better access to minerals crucial for renewable energy applications. Farmers in Mercosur countries meanwhile – that’s Brazil, Argentina, Paraguay, and Uruguay, with Venezuela suspended, and Bolivia joining soon – are expected to get a nice boost, too, especially for their exports of beef, coffee, and soybeans to the EU.
So what’s the holdup? Environmental concerns, mostly. Some European member states have pushed for stricter external monitoring and protections against Amazon deforestation than Brasilia can stomach.That said, Lula has signaled he is ready to compromise in order to make good on his earlier pledges to revitalize Mercosur as a formidable trade power.
And Brussels has its own reasons to be flexible: after failing to land big potential deals with India and Australia, a third major trade failure could pose problems for the centrist coalition presently in charge as it tries to fend off surging right-wing challengers in upcoming EU parliamentary elections.
The effort could still fall short, but Eurasia Group expert Julia Thomson says all sides are aware the moment of opportunity is ephemeral.
“Even if they can't get everything they're expecting,” she says, “negotiators will try to advance the deal.”
But if they don’t, she warns, “it will probably go back into the fridge and take ages to be rediscussed.”
Television media broadcast commentaries as delegates arrive to the United Nations 76th General Assembly amid protests on September 21, 2021 in New York City, USA.
What’s on deck at the UN for Tuesday, September 19?
Our intrepid Senior Writer Gabrielle Debinski is on the ground with our colleagues from GZERO World for the latest updates. Also, if you missed our rundown of the major items on the agenda on Friday, catch up here.
Please note, leaders are listed in the order in which they are expected to speak, but the schedule sometimes runs ragged. You can find a complete schedule here.
Major Speakers on Tuesday
- Brazilian President Luiz Inácio Lula da Silva: By tradition, the Brazilian president opens every General Assembly debate. Lula has complained about too much focus on Ukraine at the expense of other global issues, watch for his rhetoric here.
- U.S. President Joe Biden: The only leader from a permanent member of the Security Council who is attending the summit in person, expect lots on Ukraine and appeals for development aid and climate action..
- Colombian President Gustavo Petro: The left-wing leader called for an end to the war on drugs in his first UNGA speech last year — and now cocaine exports are booming.
- Turkish President Recep Tayyip Erdogan: Often the belle of the geopolitical ball the past two years, Turkey has played a crucial role in the Black Sea grain deal and is the only NATO member with good ties to Moscow. This one is worth your time.
- Ukrainian President Volodymyr Zelensky: With his counteroffensive making slow progress and whispers of “Ukraine fatigue” spreading across Europe and the US, the actor-turned-president is looking to make a command performance to shore up support.
Major Conferences
- Day 2 of the High-Level Political Forum on Sustainable Development Goals
Brazil's President Luiz Inácio Lula da Silva greets supporters at the Planalto Palace in Brasilia.
Lula and the new Brazil: big plans, short honeymoon
Earlier this week, Luiz Inácio “Lula” da Silva completed his return from the wilderness.
After 12 rocky years out of power – which included the impeachment of his hand-picked successor, jail time for a corruption conviction that was later overturned, and a narrow election win over his nemesis Jair Bolsonaro – the left-wing former union leader was inaugurated for the third time as Brazil’s president.
The last time Lula lived at the Dawn Palace in Brasilia, from 2003-2010, he oversaw a historic transformation of the country, lifting tens of millions of people out of poverty and putting Brazil on the map as an emerging leader of the new Global South. Small wonder that he left office with an approval rating of 80%. US President Barack Obama once called him “the most popular politician on earth.”
Now, at the start of his third presidential term, Lula says he wants to do many of the same things that characterized his first two: lift millions more into the middle class by increasing social spending, raising wages, reducing hunger, and investing in infrastructure.
The timing of his message is spot on. In the wake of the pandemic, local researchers found that more than 30% of Brazilian households experience moderate or severe hunger – three times higher than a decade ago. The World Bank says a fifth of Brazilians are still “chronically poor.”
But Brazil, and the world outside it, have changed dramatically since the early 2000s in ways that could complicate Lula’s plans fast.
“Lula wants to write the last chapter of his own biography,” says Eurasia Group Brazil expert Silvio Cascione. “He wants to go down in history as Brazil's greatest president ever, but he won't have another chance like what he had in the past.”
For one thing, there’s much less money to throw around. In the 2000s, Lula was blessed with a massive commodity boom, as a roaring Chinese economy gobbled up Brazil’s main exports of soybeans, iron ore, and oil. Historically low interest rates in the US, meanwhile, meant that investors were pouring money into fast-growing markets like Brazil. With annual growth figures averaging around 6%, low levels of inflation, and the government awash in cash, o Brasil ‘tava bombando, as they used to say – “Brazil was booming.”
Today, things are bleaker. Brazil’s economy – battered first by mismanagement under Lula’s successors and then by the pandemic – is growing at barely 2% a year. And while commodity prices are high, the IMF warns that as much as a third of the world may slide into recession this year. No one, meanwhile, is quite sure what will come of Xi Jinping’s grand reopening of the Chinese economy, and high interest rates in the US and Europe are choking off investment in Brazil while making its debt burden loom larger.
The politics are no cakewalk either. In both 2002 and 2006, Lula won the presidency by margins of more than 12 points, while his Workers’ Party had a firm grip on Congress. In last year’s election, by contrast, he scraped through with just 51% of the vote and saw his party lose out in Congress to a coalition that backs Bolsonaro.
“Lula’s mandate is much weaker this time around,” says Brian Winter, a long-time Brazil expert who is editor-in-chief of America’s Quarterly. “It's a much more conservative and vastly more polarized country than it was back in 2003 when Lula first took office.”
So times have changed – has Lula? On the one hand, in order to reach out to a broader swathe of the public, he has named a more politically diverse cabinet than ever before, says Cascione.
His vice president, for example, is one-time rival Geraldo Alckmin, a center-right former governor of São Paulo. “For perspective, this would be roughly akin to Obama coming back and appointing Romney as vice president,” says Winter.
He has also become greener with time. Lula has made protecting the Amazon a far more important part of his platform today than it ever was in the 2000s, when his main concern was reducing poverty. With much of the world keenly focused on climate change, Lula is playing one of Brazil’s best cards at the international table.
But at the same time, experts say that since coming out of prison, he is much more insulated and mistrustful than in the past. “This is probably the most important difference between Lula now and 20 years ago,” says Cascione. “Even if his cabinet is more diverse, he’s relying on a smaller group of people to actually make decisions. And that may lead to more inconsistent policies or make him more prone to error.”
An early signpost: the numbers. To better understand how Lula will govern, and what the response will be, all eyes are on how Lula stakes out his spending plans in the next few months. Although the constitution limits what he can spend, Lula has already convinced Congress to allow him to propose new spending rules of his own this year.
In crafting those, Lula and his Finance Minister Fernando Haddad must tread carefully. He has promised a lot to the Brazilian people, but if financial markets get spooked by his spending plans, the currency could falter, driving up inflation and pushing the country into a fresh recession that would anger voters and embolden his opponents in a hurry.
And that is one of the biggest challenges of all, says Cascione.
“The new middle class that emerged during Lula’s first term is now better informed and much more difficult to satisfy,” explains Cascione, “so not only will the opposition to Lula be stronger, his honeymoon period could be shorter too.”
Rishi Sunak vs UK economic crisis
Ian Bremmer shares his insights on global politics this week on World In 60 Seconds.
Can new Prime Minister Rishi Sunak fix the United Kingdom?
No. Fix is aggressive. Right? But can he stabilize it? I think he can move in that direction, certainly not in the next few months because you know the economic crisis is real. The hole is deep. Energy prices are massive, and the UK's not prepared for it. But the orientation of UK fiscal policy is going to be very much more in line with what the markets want. They have been punishing the UK and Liz Truss dramatically from all of these. The giveaways that were being planned, many to the rich, and none of which were going to be funded. A more constrained fiscal environment is what Rishi is going to be putting in place. Of course, the UK population may not be happy about that at all. What he can do for his own future and the Conservative Party is a much bigger hole, frankly, than where the UK is going.
With the DOJ charging Chinese operatives with espionage, what signal is the US sending Xi Jinping?
The signal is that on the technology front, the Americans are going to play hardball, whether it's Huawei or 5G or semiconductors or robotics. Any area that is considered to be contiguous with or overlapping national security, the Americans are going to promote national champions in the US and among allies, and are going to decouple aggressively from the Chinese. We saw some of this under Donald Trump. We're seeing more of it under Joe Biden. On balance, you'd have to say that the Biden foreign policy towards China is a little bit more hawkish than the Trump foreign policy towards China. A lot of people wouldn't have expected that. It is true that Biden has tried to take some of the Trump era tariffs off because they're inflationary, but he's actually failed in getting that done because politically it's seen as inexpedient with the midterms looking tight.
Will the presidential election in Brazil be contested no matter the result?
Well, I wouldn't say no matter the result, because of course Bolsonaro could win and Lula will accept the outcome if Bolsonaro wins the election. He's accepted three losses before. He can accept a fourth. The question is, will Bolsonaro accept if Lula wins? And of course, that's more likely. Lula's ahead by three to four points right now. The answer is probably not, but I don't think it matters very much. You could easily have violence, of course, in some regional capitals. You could have the truckers, you could have bikers and others come out into the streets, and I suspect Bolsonaro will call on some of that. The fact that the judiciary in Brazil is not particularly independent, putting their finger on the scale in favor of Lula doesn't help in this regard. But ultimately, the military, Congress, I mean all the major institutions in Brazil have no interest in moving down an undoing and unwinding of their democracy. So if Bolsonaro goes in that direction, he will have his base, but basically nobody else, and we'll move on to a transition, a Democratic transition in Brazil. Always nice to see those.
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Can ‘Lula,’ the hero of Brazil’s left, unseat Bolsonaro?
The political legend Luiz Inácio Lula da Silva, known to all as "Lula," is the likely challenger to Jair Bolsonaro in Brazil's 2022 presidential elections. Lula is an old acquaintance of Fernando Henrique Cardoso, Brazil's former president and elder statesman, who discussed Lula's political prospects in an interview with Ian Bremmer on GZERO World. "I know Lula very well, for a long time. And Lula, from that time on has been convinced he has a destiny to be the leader of the nation, still," said Cardoso. "I don't know now what will occur in the coming elections. He's convinced he will be he again, the candidate."
Watch the episode: Brazil on the brink
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Brazil on the brink
Latin America's largest economy has endured years of economic hardship, a barrage of political scandals, and one of the worst pandemic death tolls in the world. So where does Brazil go from here and how much longer can its president hold onto power? Former President Fernando Henrique Cardoso, who remains one of the most influential political figures in the country, joins Ian Bremmer to discuss Brazil's increasingly divided society, the potential fate of its current far-right leader, the prospects of his most likely challenger (known to all as "Lula") the climate crisis in the Amazon, and the country's complicated relationship with China.
Brazil's own Godzilla vs Kong
Brazil's economy is a shambles. COVID is still raging. The Amazon is aflame. But despite all that, president Jair Bolsonaro fears only one thing: the coming clash with an old nemesis that'll make King Kong vs Godzilla look like child's play by comparison.
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Lula’s comeback upends Brazilian politics; Senegal's dicey situation
Ian Bremmer shares his perspective on global politics this week:
We'll start in Brazil. Will Lula run for president and seriously challenge Bolsonaro?
And the answer is, it increasingly looks that way. The Supreme Court threw out former President Lula's former conviction, saying they didn't have jurisdiction. And the court that he was actually charged, court members were surprised by this. Lula's own PT party surprised by this. It means a couple of things. One, he's much more likely to run. He's extremely popular on the left. His PT party has about 20% approval in the country. And that means that between Bolsonaro, the president, and Lula on the left, there's very little room in the center. This is going to be an incredibly contentious and polarized election, much more so than in the United States, even this past November.
What is happening in Senegal?
Well, it's one of the more democratic countries in Africa and in West Africa. And you have a former presidential candidate who didn't do very well, but nonetheless, young guy, quite popular, particularly on anti-corruption issues. This guy, Ousmane Sonko, he's all of in his 40s right now and he has been arrested for and charged with rape. I have literally no idea the merit of the charges, but what we know is that previously around presidential elections and opposition candidates, they've often found trumped up charges to get rid of them in contestation of the sitting president. That together with the fact there is a lot of corruption in Senegal right now and the economy's not doing so well, led to big demonstrations and a number of people, it looks like eight so far, that have been killed and that has the potential. He's been released. But this is a dicey situation. Senegal could be in a lot of trouble going forward.
And did I watch the Harry and Meghan interview?
No, no, I did not. Why? Because it's the Royals and because I don't care about the Royals. The Royals are basically a tourist mechanism in the United Kingdom and that's fine. There's nothing wrong with having something that attracts some money and some eyeballs. But we have that in the United States. It's called Disneyland. And I don't watch interviews with Mickey Mouse, either. So, it's okay. Some people will be annoyed that this is my position, but it is my position. I don't care about the Royals, I don't really want to talk about them and we'll move on to other geopolitical issues that matter next week.