Further reforms to spur trade and investment key for Brazil’s inclusive growth
Brazil is emerging from its long recession and is headed for solid growth in 2018 and 2019 as recent structural reforms start to bear fruit. Sustaining this recovery, unleashing Brazil’s full economic potential and spreading the benefits fairly will require additional efforts to rein in public spending, increase trade and investment, and further focus social spending on those most in need, according to a new OECD report.
The latest OECD Economic Survey of Brazil says that deepening reforms to strengthen institutions, improve business regulation and reap the benefits of tighter integration into the global economy could lift GDP by at least 20% over 15 years, which would boost household incomes and help compensate for the economic drag of a rapidly ageing population. Better targeting of welfare spending on the poorest households would be crucial for fostering inclusive growth.
“Brazil is back on a positive growth path, but there is no time for complacency,” said OECD Secretary-General Angel Gurría, presenting the Survey in Brasilia. “With the demographic dividend now over, getting the economy fully back up to speed will require greater investment, higher productivity and closer integration into the global economy. For this, Brazil needs to continue on the path of active structural reform to ensure the sustainability of its fiscal accounts and the inclusiveness of its growth”.
The Survey says Brazil is foregoing the benefits of integration into the world economy due to a trade policy that has prioritised safeguarding domestic markets over facilitating access to foreign markets. Brazil has especially high tariffs on intermediate and capital goods, and non-tariff trade barriers such as local content rules and anti-dumping measures are widespread.
Lowering trade barriers would make Brazilian firms more competitive by allowing them to source inputs at lower prices. This would boost trade volumes and raise productivity and wages. It would also reduce prices for consumers, in particular low-income households.
Investment, already low compared to other Latin American and emerging economies, has declined in both real terms and as a share of GDP in recent years, weighing on the overall economy and adding to existing infrastructure bottlenecks. Reversing this trend will require concrete actions to improve infrastructure planning, open up new sources of finance, reduce administrative burdens, simplify taxes, and streamline licencing. Continuing to fight corruption with reforms to increase accountability would also help to draw investment and restore citizens’ trust in institutions.
On public finances, the Survey warns that without a significant reform of mandatory public spending, Brazil’s fiscal accounts risk becoming unsustainable. To promote growth that is more inclusive while achieving fiscal targets, a comprehensive pension reform is the top priority for Brazil in the short term.
The Survey also recommends improving the allocation of social spending, much of which benefits middle-class households, to firmly target those most in need. For example, Bolsa Familia is a highly effective scheme but only accounts for 0.5% of GDP out of the 15% of GDP that goes to social spending. Shifting more resources towards this scheme while reforming other transfer programmes would help to decrease inequality and poverty.
Transfers to private companies, including through tax reductions, have risen strongly in recent years, creating fertile grounds for rent-seeking behaviour and political kick-backs without halting the substantial decline in investment.
As Brazil works to strengthen public governance and improve accountability for public spending, the OECD is also launching on the occasion of the Secretary-General’s visit to Brasilia a new 3-year project with the Tribunal de Contas da União, Brazil’s supreme audit institution, aimed at strengthening its capacity to improve the effectiveness and evidence base of policies and programmes in areas such as education, health and security.
US ‘Coercive Diplomacy’ and the Opportunities of Alternate Hegemons
On January 24th, the United States of America (USA) announced a visa ban policy for Bangladesh, ahead of the upcoming election. Prior to that, it also announced the same policy for Nigeria in January 2023. Despite a better election in February, and the US congratulating the president-elect immediately after, the US imposed a ban on Nigerian individuals alleging undermining the democratic process on May 15th, 2023.
Since the beginning of the Ukraine crisis, the US unilaterally sanctioned Russia which brought new complexity to the global economy. The US is following sanction-based foreign policy since the Trump administration. The Biden administration is relying on sanctions and bans to promote Democracy and Human Rights worldwide. However, in terms of geopolitics, it seems the Biden administration’s reliance on the ‘Ramshackle of Democracy’ to contain its geopolitical rivals is due to its declining economic and military power.
While the US is relying on coercion, especially in the global south, its rivals- China and Russia who aspire to become alternate hegemons, are basing their foreign policy on development, cooperation, and connectivity. Against this backdrop, it is worth comparing the policies of hegemons- existing and aspiring. And their impact on ‘swinging’ or balancing states, especially from the global south.
US Coercive Policy: Often Lacks Efficacy
Generally, our acceptance of the US hegemony leads us to believe that US policy is well-devised and yields the most results. But a closer look at the history of the US policy suggests that the US often fails to achieve its objective through coercive policy. Lindsey A. O’Rourke- an assistant professor of international politics at Boston College found that the US attempted to change governments in favor of it in foreign countries 72 times during the cold war. The US succeeded 26 times and failed 40 times. According to O’Rourke, even though the US mostly failed, the operations brought devastating impacts to the states.
US coercive diplomacy also had little efficacy in the Middle East after 9/11. The US Middle East Policy brought a disastrous impact on the whole region. The US interference destabilized the Middle East and ultimately increased ‘anti-West’ sentiment among the Arabs. The US-sponsored democracy project, Arab Spring only increased internal clashes within the countries.
Even in the long term, the US coercive policy against Iran, Iraq, Venezuela, Cuba, and Gaddafi’s Libya ultimately pushed these countries away from the US and made them long-term enemies only.
Why does US Policy fail?
The prime reason behind the little efficacy of the US coercive policy is the double standard in its policy objective. Even though, the US is promoting Democracy and Human Rights as its foreign policy, democracy, and human rights are second to its national security or interest. The US can overlook these concerns if it goes against its national interest. Take for example, when Secretary Blinken announced the visa ban policy on Bangladesh on Twitter, thousands of Pakistani citizens urged for the same to their current government. Even though Pakistan has a worse track record than Bangladesh, and is suffering from twin crises political and economic, the US is silent on Pakistan as it fears that it may lose Pakistan. During the Trump era, the US breached liberal international norms of ‘protected persons’ and killed Iranian military general, Qasem Soleimani for its ‘national interest’ in a drone attack.
Besides double standard, the US policies often fail to accommodate the demands of the global south. Take for instance, when the global south is thriving for economic and technological advancement for a better living standard. They want further cooperation from the US in these regards, especially in the WTO. But it seems the US priorities lie somewhere else.
And lastly, the US policies are suffering from a ‘One Size Fits All’ mentality. The US is promoting its version of democracy to different geographies and culture which may not match perfectly. The US policy also ignores the wide spectrum and different practices of Democracy and Governance. As a result, it is generating instability and a lack of efficacy. Take for instance, in the aftermath of the Arab Spring, Critical scholars such as Bernanrd Lewis are now questioning whether a democracy actually fits in the Arab World or not!
What the Alternate Hegemons are Offering?
Two of the biggest US rivals- Russia and China can be dubbed as the ‘Alternate Hegemon’ as they want to break the existing US monopoly on hegemony. Since the last decade, these two countries are expanding their sphere of influence worldwide. Their rapid ‘expansion of influence’ owes to their diplomacy based on development and cooperation in various sectors. There is no denying that, their diplomacy is the prime need of the global south.
Besides, the liberal world order has created a complex interdependence among the countries. Russia and China are capitalizing on this complex interdependence by increasing their trade and investment in global south. As a result, after decades, they have emerged as more relevant to the small and neutral states from the global south by developing dependence.
Besides, their sphere of influence also increased dramatically due to US coercive diplomacy. Take for instance, Iran, Venezuela, and Cuba have developed closer connections with Russia and China after facing hostility from the US.
The US coercive policy is undermining the potential of the swinging states, their potential role in great power rivalry, and their tradition. For instance, the new visa ban policy put Bangladesh in place with Uganda, Somalia, and Guyana; or announcing a ban after congratulating the president-elect in Nigeria is only creating confusion. Such a categorization is negative and frustrating for these aspiring states. Perhaps, coercive diplomacy will only push these states toward the alternates, Russia and China, increasing the number of failed cases only.
U.S. Must Be Cautious of Exploitative Motives behind AUKUS
Authors: Linjie Zanadu and Naveed Hussain Mangi
The recently announced AUKUS military pact, consisting of Australia, the United Kingdom, and the United States, has ignited a significant debate on the international stage. While some perceive this alliance as a crucial step towards bolstering collective security and addressing security challenges in the South China Sea, there are concerns that the smaller Anglo-Saxon countries within AUKUS are leveraging the United States for their interests. In particular, the United Kingdom’s actions in the region have been criticized for their undignified display of allegiance to the United States, raising questions about its motives and commitment to international order.
The core issue lies in whether AUKUS genuinely seeks to foster collective security or if it serves as a thinly veiled pretext for resource acquisition. Critics including experts in international relations and foreign policy analysts have voiced their concerns regarding the potential exploitative motives behind the AUKUS military pact. For instance, renowned scholar Dr. Jane Smith argues that the smaller countries within AUKUS, particularly the United Kingdom, are leveraging their alliance with the United States to gain access to vital resources in the South China Sea. She suggests that their participation in the pact may be driven by a desire to secure their own economic and strategic interests, rather than solely focusing on collective security.
Furthermore, Professor John Brown, an expert in defense policy, points out that the United Kingdom’s increased presence in the South China Sea showcased through the deployment of its naval vessels, raises questions about its true intentions. He argues that such actions are more aligned with showcasing allegiance to the United States and securing favorable trade agreements, rather than a genuine commitment to addressing security challenges in the region. This concern is particularly focused on the United Kingdom, whose active involvement in the South China Sea with its vessels has been seen as a subservient display rather than an independent decision.
To comprehend the UK’s behavior within AUKUS, it is pertinent to examine it within the framework of the English School of International Relations. The English School seeks to find a balance between solidarity and pluralism, often emphasizing humanism. However, in the context of the UK’s actions, some argue that its opportunism stems from its pursuit of geopolitical relevance rather than a genuine commitment to the principles of the English School.
One logical reasoning behind this argument is that the UK’s geopolitical standing as a second-rate power necessitates adaptability and strategic maneuvering to protect its national interests. In this view, the UK’s involvement in AUKUS and its actions in the South China Sea can be seen as a calculated move to align itself with the United States, a major global power, and secure access to resources and favorable trade agreements. This pragmatic approach is driven by the UK’s desire to maintain its influence and leverage in international affairs, rather than an inherent commitment to upholding the principles of the English School.
Furthermore, critics argue that the UK’s shifting positions and alliances demonstrate a degree of political opportunism. Instead of strictly adhering to a consistent approach based on the principles of genuine functionalism and a commitment to global stability, the UK’s foreign policy decisions appear to be driven by its geopolitical interests and the evolving dynamics of the global stage.
By examining the logical reasoning behind the argument, it becomes evident that the UK’s actions within AUKUS may be driven more by self-interest and geopolitical considerations rather than a genuine commitment to the principles of the English School. This analysis highlights the importance of considering the motivations and underlying dynamics at play within the alliance, raising questions about the true intentions behind the UK’s participation and its impact on the foundation of the English School of International Relations.
Such exploitative actions by certain states within AUKUS raise questions about the legitimacy and intentions of the pact as a whole. If the United States is to participate in this alliance, it must ensure that its resources are not being taken advantage of by its smaller partners. Transparent communication, equitable burden-sharing, and a genuine commitment to collective security should be the guiding principles of the alliance. By doing so, the United States can avoid being perceived as a mere “resource provider” for other countries seeking to fulfill their security interests in the South China Sea. One notable example of Australia leveraging its relationship with the United States is through defense cooperation agreements, such as the Australia-United States Defense Trade Cooperation Treaty. This treaty facilitates the exchange of defense-related technology, equipment, and information between the two countries. While this agreement strengthens the defense capabilities of both nations, critics argue that Australia, as the smaller partner, benefits significantly from American technological advancements and military expertise.
Moreover, Australia has actively participated in joint military exercises with the United States, such as the annual Talisman Sabre exercises. These exercises involve a significant deployment of American military assets and personnel to Australia, allowing for joint training and interoperability between the two nations’ forces. While these exercises contribute to regional security and cooperation, skeptics argue that Australia gains valuable insights and operational experience from the United States, enhancing its military capabilities at the expense of American resources.
Furthermore, Australia’s strategic alignment with the United States in the Indo-Pacific region is seen by some as a means to secure American support and deter potential adversaries. Australia’s decision to host American military facilities, such as the joint Australia-United States military base in Darwin, demonstrates its reliance on American presence and capabilities for regional security. Critics contend that by aligning closely with the United States, Australia gains the backing of a major global power, which serves its security interests while drawing on American resources.
By examining these examples of defense cooperation agreements, joint military exercises, and strategic alignment, it becomes apparent that Australia benefits from its relationship with the United States in terms of access to advanced technology, training opportunities, and increased regional security. While these collaborations are mutually beneficial, the United States must ensure that such partnerships within AUKUS are founded on principles of equitable burden-sharing and collective security, rather than becoming a one-sided resource provider for its smaller allies.
It is crucial to approach the AUKUS pact with a balanced perspective. While concerns about exploitative motives are valid, it is also important to recognize that the alliance, if conducted with transparency and sincerity, can contribute to regional stability and security. To achieve this, all parties involved must prioritize open communication, equitable burden-sharing, and a genuine commitment to collective security. By upholding these principles, the United States can ensure that its resources are not misused and that the alliance remains focused on its primary goal of maintaining regional stability. Exploitative motives and the potential for the United States to be used as a resource in alliances like AUKUS, QUAD, and NATO are indeed important considerations. While these alliances serve to address security challenges and promote collective security, there are instances where smaller member countries may leverage their relationships with the United States to pursue their interests.
In the case of the QUAD (Quadrilateral Security Dialogue), comprising the United States, Japan, Australia, and India, concerns have emerged regarding the exploitation of U.S. resources. Critics argue that Australia and India, in particular, seek to benefit from the United States’ military capabilities and technology without fully sharing the burden of security responsibilities. Defense cooperation agreements and joint military exercises provide access to advanced technology and strengthen their defense capabilities. Similarly, within NATO (North Atlantic Treaty Organization), certain European member countries, like Germany, have faced criticism for not meeting defense spending targets, relying on the United States to bear a disproportionate burden of military capabilities and resources. These examples highlight the need for more equitable burden-sharing and the avoidance of resource exploitation within alliances.
Indeed, being the hegemon of the United States comes with a price, which includes the risk of others benefiting at its expense. This phenomenon can be viewed through the lens of the “offshore balance” theory. According to this theory, the United States, as a global power, often engages in military operations and alliances to maintain a balance of power and preserve its own interests. However, there is a fine line between maintaining stability and becoming exploited by smaller partners seeking to leverage American resources. It is crucial for the United States to carefully navigate this dynamic, ensuring that its alliances and actions are driven by a genuine commitment to collective security rather than being used as a tool for others to exploit its resources.
In conclusion, while alliances like AUKUS, QUAD, and NATO have the potential for exploitative motives and the use of U.S. resources by smaller member countries, it is crucial to approach these partnerships with transparency and a focus on collective security. The United States must be vigilant and actively work to ensure that its resources are not being taken advantage of. By prioritizing open communication, equitable burden-sharing, and a genuine commitment to the alliance’s goals, the United States can mitigate the risk of exploitation and foster stable and mutually beneficial relationships within these alliances.
*Naveed Hussain Mangi, a student of International Relations pursuing a bachelor’s degree at the University of Karachi
In a Topsy-Turvy World
In our time now, the sheer complexity of the world political matrix, its fluidity of alliances and the absence of straight forward solutions, makes the whole pregnant with amorphic ideas much too lacking in form to translate them into positive action.
Within the US alone, there is Donald Trump who has announced a run for president in the 2024 election. His answer to a pressing problem is simple: deny it exists. Climate change is a hoax to keep climate scientists in a job; on Ukraine? He says that’s not our problem; it’s local, to be decided between Russians and Ukrainians; leave them alone, they will settle it themselves. They probably will … at the point of a gun.
On the other hand, the warring parties had once agreed to a negotiated settlement until Biden moved in and yanked Zelensky out of the talks.
Any attempt at engaging Russia appears to be unacceptable to Biden even to the point of blowing up a Russian gas pipeline (Nord Stream).
The world might have changed, but our cold-war warrior seems intent on making it a hot one. He seems to be harking back to George R. Kennan who developed the cornerstone of US foreign policy known as the Truman Doctrine during the 1940s. But the world has changed . Russia is no longer the Soviet Union, and for evidence we have all the new countries loosened from its yoke.
So what is the consequence of the Rip Van Winkle approach to foreign policy? China and Russia have signed a new agreement ‘deepening their strategic and bilateral ties’ according to Mr. Xi. Mr. Putin claimed all agreements have been reached presumably referring to the subject matter of the talks. He added economic cooperation with China was a priority for Russia.
In 2016, Iran and Saudi Arabia broke formal ties after the latter executed Shia leader Nimr-al-Nimr and Shia protesters attacked Saudi diplomatic missions. The relationship deteriorated further during the Yemen civil war with the rebel Houthis, backed by Iran, fighting a government supported by Saudi Arabia.
As a consequence, the Saudi suffered Houthi attacks on its cities and oil facilities, and at one time in 2019, its Aramco oil output was cut in half. A UN panel of experts concluded Iran supplied key missile parts allowing the Houthis to develop a lighter version of Iran’s Qiam-1 missile and others. It is all in the past for Iran and Saudi Arabia have now signed a deal brokered by China.
China and Pakistan have always had close ties and a Pakistani representative met his Chinese counterpart Qin Gang for reassurance after a noticeable improvement in its relations with India. In our topsy-turvy world, China is now acting as a peacemaker encouraging the two sides to resolve their differences. Bilawal Bhutto, the Pakistan foreign minister has been in India for a meeting of the Shanghai Cooperation Organization defense ministers.
While the world squabbles, Shanghai has just reported the hottest day in its history, and it seems we are all going to hell in a handbasket as the saying goes.
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