GTBT - Will Brazil finally awaken?

: Tiago Pedreiro De Lima; Created: 14 November 2024

Will he continue to be strangled by the 'cost of Brazil'?

With only the exception of the United States, every single state that has reached a prominent hierarchical position in the international system since the dawn of history has originated in the Eurasian landmass.

In this regard, from a long-range perspective, the creation of Brazil as a national state is fairly recent. Hence, in the global geopolitical chessboard, Brazil is a latecomer. However, the idea that Brazil could become a great power at some point is not new. Brazilian statesmen, diplomats, and generals have contemplated such aspirations since the 19th century, and even realist thinkers such as Henry Kissinger and George Kennan forecasted decades ago that, given its latent potential, the South American Goliath would eventually awaken. Indeed, the efforts undertaken by Brazil to reassert itself as a force to be reckoned with on a global scale is one of the most consequential ongoing geopolitical phenomena in the American hemisphere.

Nevertheless, it would be mistaken to believe that the consolidation of Brazil as a modern national state has been smooth sailing. In fact, the country has experienced coups, military and civilian dictatorships, foreign covert interventions and bitter internal political rivalries. Yet despite the problematic impact of these issues, the country has not fallen apart. Accordingly, Brazil has not only proved to be a resilient national state. Its upward trajectory makes many observers think that this South American state has a promising future. Such views have only grown since the BRIC acronym was first coined by Goldman Sachs economist Jim O’Neil in 2001 to describe a constellation of emerging markets with significant potential, with Brazil constituting its first letter.

And so Brazil’s quest to assume a leading role as an assertive state is no Quixotic crusade out-of-touch with reality. Far from being a backwater, the country has what it takes to pursue such ambitions. The full extent of Brazilian national power provides the critical mass needed to pursue strategies reserved only for superpowers. What are the resources and capabilities that constitute Brazil’s potential? And why don’t we see Brazil fly as high as it could? What is the ‘Brazil cost’? All of that and more in today’s episode.

Officially "discovered" by Pedro Álvares Cabral on April 22, 1500, the country was born as the Land of Vera Cruz, although of course it was already inhabited by natives. Obviously, at that time, we could not speak of any statehood, and the two colonial superpowers of the time - Portugal and Spain - had just divided the world into two by the Treaty of Tordesillas. As a result, the vast majority of the territories of today's Brazil fell to the Castilians, except for the easternmost coast of South America.

But, who will stop the ambitious explorers thousands of nautical miles from the Iberian peninsula from going deeper?

Due to the economic ambitions of groups of Brazilian explorers and the Kingdom of Portugal itself, several expeditions (called Bandeiras and Entradas, respectively) simply did not respect the imaginary line of Tordesilhas and decided to explore the inhospitable interior of the continent. They penetrated it, searching for gold, silver and slaves, which eventually led to Portuguese domination of most of present-day Brazil. For each new territory, a fortress was erected in the name of the Crown. Present-day Brazil was beginning to take shape.

Truth be told, this westward expansion was somewhat favored by the institution of the Iberian Union, when Portugal was under Spanish rule between 1580 and 1640. Years later, the Treaty of Madrid of 1750 resolved the territorial disputes between the two powers and consolidated much of Brazil's current borders. Making it the giant of South America.

Assessing Brazilian national power

And indeed, Brazil is colossal. It is the 5th largest country in the world, with 8.5 million km², more than 2.5 times the size of India. But unlike India, Brazil is far from the Eurasian heartland, the economic engine of the world.

Brazil accounts for almost half of South America's landmass (48%), with nearly 8,000 km of coastline providing excellent access to the World Ocean. Add the Exclusive Economic Zone (EEZ) of 3.6 million km², which the Brazilian Navy has christened the “Blue Amazon”, and you achieve almost all the geographical characteristics of a regional superpower.

Due to its gigantic size, the country borders eleven weaker states, most of which used to belong to Spain. Nevertheless, much of its heartland consists of tropical jungles that are sparsely populated since they are barely suitable for the establishment of permanent human settlements and the accompanying infrastructure that could support them. Hence, the country’s political and economic nerve centers are located in close proximity to its much more habitable coastline.

This condition is a double-edged sword. It represents the opportunity to participate in international trade and to develop substantial naval capabilities. On the other hand, such geopolitical configuration comes with vulnerabilities, such as the persistent problem of national integration and the exposure to potential naval threats. Yet here it seems as though Brazil does not have much to worry about. After all, the country is far stronger than any of the states in its immediate periphery and sea powers which possess significant maritime power projection capabilities have no interest in targeting Brazil, at least for the time being. Moreover, the area covered by the Amazonian rain forests acts as a natural buffer zone that shields Brazil from direct contact with actual or potential sources of chaos, including Venezuela, the Colombian highlands, and several disputed borders between its neighbours. Likewise, Brazil is relatively unaffected by instability in neighboring states such as Argentina, Chile, and Bolivia.

Even though it has little to worry about, Brazil enjoys considerable military strength, having the second-largest armed forces and air force in the American hemisphere (after the United States). Yet truth be told, there is little competition.

Its Air Force comprises the Swedish Gripen 5th-generation fighter jets, which eventually are to number 40. Whereas the navy launched its 3rd diesel-electric submarine, Scropene-class in partnership with France, but built entirely in Brazil.

Indeed, the South American country has developed its own military-industrial complex, which manufactures sophisticated hardware, platforms, and weaponry. The Army acquired dozens of "Astros" Multiple Launch Rocket Systems and new "Guarani" Armored Personnel Carriers, both of national manufacture. The country is also in the process of building its own Tactical Cruise Missile (MTC) with a range of up to 300 km.

The Brazilian navy lacks expeditionary warfare capabilities. Because it does not need them. We need to keep in mind that South America is a region in which the prospect of interstate war is rare and even extra-regional great powers are unlikely to invade Brazil in the near future. Hence, the chief tasks of the Brazilian military are the protection of the country’s vast territory (which includes territorial waters, often known as the ‘Blue Amazon’) so that the state can ensure full control and effective governance; guarantee a regional balance of geopolitical power which favours the pursuit of Brazilian national interests; defend Brazilian natural resources; and suppress unconventional threats related to malicious nonstate actors such as organized crime groups and transnational terrorist networks. Finally, the Brazilian military ‒ as an instrument of hard power ‒ also supports the credibility of the Brazilian state’s foreign policy.

This credibility was also once seek trough the means of mass destruction. We also must be borne in mind that, during the 70s when the rivalry with nearby Argentina was much fiercer, Brazil launched a nuclear weapons program. To this purpose in 1975, Brazil struck a historic agreement with Germany:

“Under the agreement, the Germans would export the technology necessary for Brazil to master an industrial stage that transforms uranium into nuclear fuel (...). The Americans and Argentine neighbours, who were more advanced in mastering nuclear technology (...) feared that the next step for the Brazilians would be the manufacture of the bomb.”

At the time, Argentina and Brazil were living under military dictatorships, refusing to join the Treaty on the Non-Proliferation of Nuclear Weapons and having disagreements in the construction of the Itaipu hydroelectric plant on the border of the two countries. Documents revealed in 2015 show that the United States pressured both countries to make a nuclear cooperation pact, pacifying the issue. And that’s what eventually happened.

Still, Brazil retains the technological resources and the specialized expertise that would be needed to produce nuclear weapons in the future. Experts at the Los Alamos National Laboratory have concluded that in view of its previous nuclear activities, Brazil is in a position to produce nuclear weapons within three years.

The definitive reconciliation between Brazil and Argentina came years later. On November 30, 1985, the democratic civilian governments of Raúl Afonsin and José Sarney signed the Declaration of Iguaçu, which laid the groundwork for the subsequent founding of the Southern Common Market (MERCOSUR), which also includes Uruguay, Paraguay, and more recently, Venezuela – suspended under the democratic clause – and Bolivia.

MERCOSUR, then, is part of a process of integration of all of South America, led by Brazil and Argentina. However, due to the enormous contrasts between the countries of the region and Brazil, in economic, territorial, and demographic terms, this integration is still far from happening, and each country is going basically on its lone path - to the detriment of the whole continent.

This is partially due to the systematic implementation of import-substitution policies by Brazil and, thus, the replacement of goods purchased from abroad with domestic ones. This hampered economic interconnectedness with the neighborhood and delayed the development of the industrial sector, but it also somehow protected its market from infiltration by more powerful economies. Thus Brazil managed to upgrade the profile of its economic structure through the development of several economic sectors, mainly agroindustry and the services sector, but with time also industry. And yet, although it was initially a producer of agricultural goods (sugar, coffee, cotton and cacoa), today Brazil no longer operates primarily as a mere exporter of commodities, a qualitative transition that only a few Latin American states have successfully accomplished.

All this translates into the size of the economy. According to the IMF, with GDP of $2.3 trillion, Brazil is already the 8th biggest global economy, having just surpassed the economies of Italy, Canada, Russia or Mexico. With this size that means Brazil is now looking up only to the heavyweights. Yet moving up the ladder may not yet be finished, as the UK and France may be within reach of Brasilia. Given the overall potential, the country may even catch the economies of Japan or Germany, but that requires effective management and strong growth for many decades to come.

For now Brazilian industries are involved in sectors such as textiles, steelmaking, aerospace (Embraer is the globe’s third-largest aircraft producer), chemicals and car-making. Harvard University’s Atlas of Economic Complexity classifies Brazil as being more economically complex than its neighbours - Argentina, Peru or Bolivia, but being 70th in the world out of 133 countries isn’t a fact to be proud of. Especially since Brazil is in a downward trend, from being 25th most complex economy in the world in 1995. Yet this rank may be due to the selected methodology, as the Observatory of Economic Complexity places Brazilian economy much higher across different fields.

Surprisingly (or not?) China is ‒ followed by the US ‒ Brazil’s top trade partner in both exports and imports. By a huge margin. Brazil trade with China is actually as big as the trade with the next six countries combined (including the US).

This is primarily due to the fact that this South American giant has abundant reservoirs of strategic minerals (bauxite, iron ore, uranium, copper, lithium, or titanium - to name just a few), and gemstones (amethyst, emerald, aquamarine or opal). Furthermore, when it comes to energy, Brazil has the 2nd largest oil reserve in Latin America – second only to Venezuela - yet lacks refining capacity. What’s more it is one of the planet’s leading producers of hydropower and renewable energy. Likewise, its arable land is useful for the production of cash crops (including sugarcane, soybeans, coffee, oranges, corn, cotton, tobacco, and other) and biofuels. Plus, the country has comparative advantages as a producer of beef, chicken, dairy and pork. Finally, Amazonia is a formidable source of fresh water, timber and biodiversity.

With so much to offer, it's no wonder that China is coming out with a full basket. Beijing takes each of everything - yet mostly soybeans, iron ore, crude petroleum and frozen bovine meat. The exports to the US are much more diverse, including Embraer planes, oil, and coffee.

Obviously, the sheer size of Brazil’s economy comes from the country's enormous demographic size with nearly 212 million people. In fact, Brazil is the world’s seventh most populated state and the second in the American hemisphere.

This size and diversity radiates to the world in the form of Brazilian “soft power." In this regard, Brazilian art, cuisine, music, cinema and the impressive accomplishments of Brazilian athletes in internationally competitive sports are elements that strengthen national identity, promote the attractiveness of Brazilian culture, and confer a subtle but prestigious diplomatic influence.

Undoubtedly, this also contributed to the fact that throughout the years the Brazilian state has developed highly professional foreign policy cadres as Itamaraty is regarded as the best Latin American diplomatic service.

As Andrés Rivarola Puntigliano points out, "Brazil is indeed a rare country in the sense that its most relevant historical personality is not a Head of State, a military man, or a national liberation hero: it is a diplomat, known as the Baron of Rio Branco". Indeed Jose Paranhos, or the Baron of Rio Branco, is considered “the father of Brazilian diplomacy”, as during his service he managed to peacefully resolve all Brazil's border disputes with its South American neighbours and incorporate 900 thousand square kilometers (roughly 10% of Brazil's territory) through his diplomacy alone. That's more land than any country in Europe.

Meanwhile, more than 100 years ago, during the Second Peace Conference in 1907, held in The Hague, Brazilian jurist Rui Barbosa, as Alonso Gurmendi writes “rallied in favour of the equal rights of smaller states, much to the frustration of his European counterparts. In fact, at one point, the German delegate, Marschall von Bieberstein, complained: “I have a great respect for power and what it represents in the world. I will never consent that a great personification of power such as Germany can be judged by someone nominated by Guatemala”.

Brazil's struggle to gain respect may have taken some time, but - seen from today’s perspective - it was ultimately successful, as was its desire to create a link between “the small and the big fish in the pond”.

Now, Brazil wants to be one of the leaders of the Global South movement, which aims to shift the balance of power in the world and change the distribution of wealth more to the South.

And so, one can argue, that Brazil possesses the intellectual ‘software’ to mastermind far-reaching geopolitical plans through the holistic management of all the components of its national power.

Therefore, a comprehensive understanding of these realities explains why Brazil is seen as a potential great power. In fact, Brazil’s weight in international high politics is by far heavier than that of Portugal, its former colonial overlord. Now, as a result of this reversal, Lisbon is eager to play a meaningful role in the rise of Brasilia. So, as the legitimate heir of the defunct Portuguese empire, Brazil has become the undisputed leader of the Lussophone world (Portuguese-speaking world), a community that includes nations from Sub-Saharan Africa and the Indo-Pacific region.

In comparison, no Hispanic Latin American country has ever managed to overtake Spain. In order to keep things in perspective, Brazil’s bid to get a seat in the UN Security Council as a permanent member is taken seriously by diplomats and analysts alike. No other Latin American country can even aspire to anything similar. For instance, Argentina (a traditional rival) is behind Brazil in almost every single significant field and Mexico ‒ the other Latin American state that could realistically attain a higher geopolitical status is overshadowed by the might of the United States and its internal problems. Indeed this geographical distance from Washington gives Brasilia a relatively greater margin to maneuver independently.

The first Lula era

After several unsuccessful attempts to run for the country’s highest office, Luis Inázio Lula da Silva served as president of Brazil from 2003 to 2010. His administration was noteworthy for several reasons. As a former trade union leader and a representative of the largest Brazilian left-wing political party, his progressive government had close ties to both the moderate social democrats and hardline militant Latin American groups and leaders (he was a known personal friend of the late Fidel Castro). Nevertheless, Lula was pragmatic enough to maintain the macroeconomic policies of the previous government, collaborate with local business chambers, multilateral institutions, transnational corporations and even the financial community in order to foster economic dynamism.

Nonetheless, the major turning point of the Lula administration was the orientation of its foreign policy. Brazil followed a course of action whose purpose was to advance a multipolar correlation of forces. Called South-South Diplomacy, this configuration was designed to pursue Brazilian national interests, including its bid for regional hegemony and great power status. This ambition was hardly unprecedented.

Arguably, Brazilian strategic culture and national ideology had been nurturing the development of an emerging imperial tradition for many decades. As American thinker Hal Brands has argued, Brasilia’s high strategy in the Lula era included measures that are often helpful for rising middle powers to boost their geopolitical profiles, such as ‘soft balancing,’ the conformation of coalitions, and the advancement of regional integration under their leadership.

In short, thanks to Brazil's size (in various aspects), it seems that the country is destined to lead the region. It is also one of the reasons for Brazil's neighbours' growing distrust of its policy, increasingly perceived as imperial. In 2014, the then president of Uruguay, José Mujica, stated that there is a lingering feeling in Latin America that Brazil is an imperialist country. "Brazil's imperial attitude may have been a consequence of its history," he said."

On the other hand, according to Regiane Nitsch Bressan, professor of University of São Paulo, "if Brazil doesn't lead South America, China and the US will".

Although this leadership is still often questionable. Many investments abroad, carried out in the spirit of South-South diplomacy, are often reduced to the pursuit of vested interests that are shrouded in a fog of corruption accusations.

One example is the ghost airport in Mozambique. In 2004, the Brazilian Development Bank (BNDES) issued a US$125 million loan for the construction of Nacala Airport. The project was only possible because the Lula administration forgave Mozambique's old debts, which totaled US$315 million.

Due to suspicions of corruption in that project, as well as three other airports in Angola, Ghana and Cuba, an investigation was opened by the Federal Court of Accounts (TCU) in Brazil, which identified a US$96.5 million diversion from the total disbursed by BNDES. All the companies involved were later convicted of corruption.

On the other hand, Brazil maintains a sober approach to its big brother to the north. Unlike other Latin American countries eager to antagonize the US at every turn as a result of their strong ideological commitment to leftist ‘anti-imperialist struggle’ (such as Cuba, Nicaragua or Venezuela), Brazil did not assume an openly confrontational stance towards the Americans, or any other great power for that matter.

However, Brasilia actively seeks to dilute American hegemony in a subtle way through active efforts conceived to strengthen multilateral diplomatic frameworks and remake the structural governance of key international institutions. For Brazil, a unipolar world is not convenient in the sense that might it constrain Brazil’s desire to aim higher, and states like Brazil do not want to be treated as junior partners, satellites or worse.

Therefore, Brazil sees the continuance of the “Pax Americana” as a factor subject to change. Indeed, this order has eroded, but its complete passing is by no means guaranteed.

That’s why Brazil sees partnerships with other actors seeking a change in the global balance as force multipliers that increase Brazilian influence and pursue common goals. The most visible manifestation of this is Brazil's active participation in the BRICS bloc, which represents the collective interests of countries that are both emerging economies and revisionist powers favoring a multipolar world order. In this context, of greatest importance, given the size of the economic exchange, is the partnership with the People's Republic of China - a fact that is viewed with great suspicion by Washington.
Yet this assertive and multipolar policy of Lula, in the opinion of the other part of the analytical side, contributes to weakening Brazil internationally.

The Current Lula Era

Since assuming the presidency in 2023, Lula has established foreign policy as one of the priorities of his third term. The Workers' Party leader sought to project himself as a world leader, both through the defence of the environment and the alliance with the so-called Global South. However, his positions are more often than not increasingly considered radical and ideological, compromising his projection as a leader, as well as the image of Brazil itself.

Taking a closer look on Lula’s international allies paints a rather shady squad. In Latin America he’s known for aligning himself with the authoritarian leader of Nicaragua - Daniel Ortega.

Closer to home, the Brazilian president also does not shy away from gestures of support for the Venezuelan dictator Nicolás Maduro, even after the electoral fraud that took place in July. Lula did not recognize the Venezuelan opposition's victory but neither did not rebuke the Maduro government for the serious violations during the elections. Still, the Brazilian president suggested holding new elections, which displeased Maduro.

Moving on to arguably the biggest war currently waged on the planet, Lula’s gestures of indulgence he made to Russia in the context of the imperial war against Ukraine also put Brazil on the opposite side of Western nations and other countries in Latin America. The defenders of his policy towards Ukraine claim that Brazil is trying to act as a middleman, not aligning with either side. Still this explanation lies not far from the position of the Chinese Communist Party. That’s why in June of last year, the French newspaper Libération put the Workers' Party leader on the cover of its issue with the title "Lula, the Disappointment" and stated that the president has been acting as a "false friend of the West."

Yet being ‘in the middle’ vis-a-vis Russo-Ukrainian war, doesn’t prompt Lula to the same position vis-a-vis the war in Gaza, where the Brazilian president strongly sides with the Arabs, comparing Israel's offensive in Gaza to the Holocaust.
Israel's revanchist activities must, of course, be subject to control and possible penalisation by international bodies or states itself.

But Lula’s cabinet went much further than that. On July 30, vice President Geraldo Alckmin was present at the inauguration of the new President of Iran. He sat just next to Hamas leader Ismail Haniyeh, moments before he was assassinated. In the image, we can also see other members of extremist groups: the spokesperson of the Houthis, Mohammed Abdulsalam, the leader of Islamic Jihad, Ziyad Al-Nakhalah, and the deputy leader of Hezbollah, General Naim Assem.

Implementation of international policy surrounded by figures like Maduro, Ortega, Putin or leaders of Hamas, Hezbollah, Houthi or Iran might be described by some observers as ‘pragmatic’, yet the fact is that such strategy is costly for Brasilia. The tarnished image is not just a figure of speech but arguably costs Brazil billions of dollars. It is pushing foreign capital, which is still mostly held in Western banks, away from Brazil. Thus, it hampers the flourishing of the potential Brazil possesses. In this light, Lula’s policy is in stark contrast to the actions of Javier Milei, who is strongly distancing himself from authoritarian rulers and seeking closer ties with fellow democracies - including the possible accession to NATO.

Is this why Brazil can’t fly higher? Big power gameplay always sells in the media, but for the average Brazillian citizen, there are many more pressing issues.

It is a fact that Brazil looks good “imperially-wise”, but “human-development-wise”, which is a much more important indicator for everyday citizens, still looks dismal.

The "Brazil Cost" and its consequences

Brazil may be the 8th largest economy in the world, but this wealth spread across 212 million people ranks it only 76th in the world in GDP per capita terms. Being just above $ 11,000 it places the average Brazilian behind the average Turkmen, Chinese, Turkish, Mexican, and even his biggest nearby “rival” - Argentine.

Why is that? Well, there are many reasons - and that’s the problem. These “many reasons” combined are sometimes called “the Brazil cost”.

For economist Samuel Pessôa, of the Getúlio Vargas Foundation (FGV), the biggest obstacle to Brazil's economic development is the low productivity of the worker. "The Brazilian worker produces in one hour only 20% of what the American worker produces in the same period.." The low level of formal education and the country's structural inefficiencies – called the "Brazil Cost" – are among the causes.

Pessoa goes on to add: “We have a very complex tax legislation that generates enormous litigation and demands an exorbitant number of accountants for companies to pay their obligations”.

And indeed Brazil is the country where the most time is spent calculating and paying taxes, according to the World Bank. Brazilian companies spend 1,958 hours and R$ 60 billion per year overcoming tax bureaucracy. The vice president of Bosch for Latin America, Wolfram Andres said in 2017: "Bosch Spain has sales equivalent to those of Bosch Brazil and there we only have 1 tax specialist. Here there are 35. That is the Brazil cost".

Thus it should not be surprising that among 190 countries, Brazil ranks 124th in the Doing Business ranking, which assesses the ease of entrepreneurship in a given economy. In terms of economic freedom, the country also disappoints, again ranking 124th out of 184 countries in the Heritage Foundation's Index of Economic Freedom.

And it is not only the complexity, but also the sheer scale of taxation. Brazil may actually have the highest value-added tax (VAT) in the world. The tax could reach 27.97%, the highest level in the world. For comparison, neighboring Paraguay has the lowest rate at 10%. Bolivia and China charge 13%. Argentina has the highest rate among its neighbors, at 21%, according to the OECD.

This is true in almost every walk of life. Take aviation. According to the International Air Transport Association (IATA), 98.5% of lawsuits filed in the world are from Brazilian passengers. Estimates point to a total cost of R$ 1 billion in lawsuits, out-of-court settlements, and passenger assistance. This is due to the fact that the Brazilian justice system is overly paternalistic and does not respect contracts between individuals.

The rule of law seems to be a wider problem, but in the case of Brazil, it is not a problem of a ruling party taking over the judiciary, but judiciary seeking too much power for itself. Research conducted by Atlas Intel and released in February shows that 47% of Brazilians believe that Brazil "lives under a dictatorship of the Judiciary”. The actions that the country's highest court – the Supreme Federal Court (STF) – has been taking "in defense of Democracy" are, according to several jurists, actually eroding the democratic pillars.

The various cases of judicial abuse and activism by the STF are being reflected in decisions by lower courts. The pretext is always the same: fake news. The prime example is the recent ban on Twitter, or “X” ruled by the Supreme Federal Court.

The whole thing was neatly captured by the NYT headline: “To combat disinformation, Brazil gave one judge (Alexandre de Moraes) broad power to police the internet. Now, after he blocked X, some are wondering whether that was a good idea.”

The overextension of the judiciary may also be a derivative of the overextension of crime. Brazil, to its misfortune, is well recognised as a leading crime hotbed globally. It is there that the most intentional homicides are taking place - 44,300 in 2022. Two-thirds of Brazilians are still afraid of walking alone at night. Fortunately for Brazil, this trend is falling, and there are 20 countries with higher homicide rates per 1000 people in the world. But there are other insecurity issues like street robbery, or open drug use which also impact the quality of life in a negative way.

In the back of our minds let’s also have the country's responsibility for the Earth's lungs: Amazon. Meanwhile, one of the biggest national failures of Lula's cabinet is the staggering number of fires in the rainforest. 11,000 wildfires in July alone. In the first half of 2024, 7.4 million acres of the Brazilian Amazon burned, up 122% from the previous year. Overall, 2024 is the worst year for wildfires in the Amazon since 2005, the year of Lula's first term.

Last but not least - there are finances. For the last 15 years the Brazilian budget has always been in deficit, mostly due to extensive social programs. This is pushing up the public debt, which has risen from 60% of GDP in 2011 to 85% today and may reach 95% by 2029, according to the IMF. All this worries international investors, hesitating to tie their money with an overburdened economy.

The good thing is that the country runs on a huge trade surplus ever since 2015.

This is among the reasons why The Economist writes: “There is no risk of an immediate financial crisis. The central bank has $360bn in reserves, making it resilient to global shocks. Almost all the public debt is in local currency. Labour, pension and tax reforms approved over the past seven years are providing some boost to growth, which, while modest, has beaten forecasts. For better or for worse, Brazilians are pastmasters at fiscal brinkmanship.”

Conclusion

And that’s how we make a full circle.

Brazil is blessed with an enormous land area with almost infinite resources, great coastline with huge exclusive economic zone to make good use of. There are literally no direct threats in a nearby area, with the USA being over 3000 kilometres away in a straight line, whereas China is literally across the globe. Add to this the democracy being a default operating system, a pretty developed industrial sector, and most importantly, huge human capital in the form of over 212 million people, and a decent (for developed world standards) fertility rate at 1.64.

This mix sounds like a near-perfect recipe for a growth champion in the coming years and a potential heavyweight with a position in the world's top five economies. As it turns out, however, the reality is more complicated, and the devil is in the details.

Overextension of bureaucracy and legislation. Questionable foreign policy and making friends among Earth’s top despots prompted by imperial desires. Financial wastefulness and crimeware. These and more are compounding, making “the Brazil cost” unbearable for many.

The potential of Brazil is thus as colossal as it is land size, but harnessing this potential requires taking a different path. Otherwise, Brazil will not become a leader of “the Global South”, but a leader of those with wasted potential.

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Will Brazil finally awaken?

Assessing Brazilian national power

The first Lula era

The Current Lula Era

The "Brazil Cost" and its consequences

Conclusion

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