In Guatemala, money can’t buy elections—at least not this time. On August 20, Guatemalan voters elected anti-corruption candidate, Bernardo Arévalo, to be Guatemala’s next president. Arévalo won in a landslide, beating his establishment rival, Sandra Torres, by nearly one million votes. Given the backlash against anti-corruption efforts in Guatemala over the past few years, Arévalo’s win was surprising. What was even more remarkable is how little his campaign cost. Guatemalan investigative news outlet, No Ficción, reported that Arévalo registered just half of the campaign cash that Torres received. And for Torres, the total reported was probably just the tip of the iceberg. Before the lead investigator of Guatemala’s Special Unit Against Impunity fled the country in 2021, prosecutors revealed that establishment candidates received far more campaign cash than they officially reported in 2007, 2011, 2015, and 2019. 2023 looked like the same story all over again, only this time, discontent with the political class was too widespread for a well-financed establishment candidate to triumph. Arévalo’s austere campaign is a sign of the times. More and more often, it’s the Latin American presidential candidates that have the most TikTok followers, not the deepest pockets, winning elections. After Ecuador’s August 20 elections, dark horse candidate Daniel Noboa is headed to an October 15 runoff against Luisa González thanks in large part to clips of a single debate performance that went viral on social media. The days of big budget election winners may be numbered.
External factors drive Latin America’s economic upside. The International Monetary Fund’s (IMF’s) latest forecast for the region revised growth up 0.3 percentage points to 1.9 percent. Brazil and Mexico lead the positive trend, the IMF now forecasting their economies to grow 1.2 and 0.8 percentage points more than expected. Yet the upside reflects external shocks, not internal dynamism. The surge in food commodity prices with Russia’s war in Ukraine combined with a record soybean harvest has boosted Brazil’s agriculture exports nearly 40 percent. Argentina would have seen significant upside too but for a catastrophic drought that destroyed over half its soy crop.
United States-China distancing pushed Mexico’s economy further into the black. Foreign direct investment recovered to pre-pandemic levels despite worries over the business friendliness of the current administration of President Andrés Manuel López Obrador. Goods exports to the United States hit a record $450 billion in 2022, led by manufactured vehicles, auto parts, and machinery.
These geopolitical tailwinds provide a respite for a region still struggling to recover from its COVID slump. But these nations won’t see a more permanent and structural economic bump without the internal follow-ups, including fiscal and tax reforms in Brazil and public infrastructure and electricity grid investment in Mexico.
Since the end of World War II, the dollar has been the world’s most important means of exchange. It is the most commonly held reserve currency and the most widely used currency for international trade and other transactions around the world. The centrality of the dollar to the global economy confers some benefits to the United States, including borrowing money abroad more easily and extending the reach of U.S. financial sanctions.
But some experts argue that high foreign demand for dollars comes at a cost to export-heavy U.S. states, resulting in trade deficits and lost jobs. Meanwhile, the dollar’s dominance could be at risk. Many emerging economies have increasingly sought ways to conduct trade in non-dollar currencies, a process known as de-dollarization, especially given the fallout from the Russian invasion of Ukraine and the repercussions of the COVID-19 pandemic. Yet, few serious contenders have emerged, making it unlikely that the greenback will be replaced as the leading reserve currency anytime soon.
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What is a reserve currency?
A reserve currency is a foreign currency that a central bank or treasury holds as part of its country’s formal foreign exchange reserves. Countries hold reserves for a number of reasons, including to weather economic shocks, pay for imports, service debts, and moderate the value of their own currencies. Many countries cannot borrow money or pay for foreign goods in their own currencies—since much of international trade is still done in dollars—and therefore need to hold reserves to ensure a steady supply of imports during a crisis and assure creditors that debt payments denominated in foreign currency can be made.
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By buying and selling currencies on the open market, a central bank can influence the value of its country’s currency, which can provide stability and maintain investor confidence. For instance, if the value of the Brazilian real starts to fall during an economic downturn, the Central Bank of Brazil can step in and use its foreign reserves to bid up its value. Conversely, countries can intervene to stop their currencies from appreciating and make their exports cheaper.
Most countries want to hold their reserves in a currency with large and open financial markets, since they want to be sure that they can access their reserves in a moment of need. Central banks often hold currency in the form of government bonds, such as U.S. treasuries. The U.S. treasury market remains by far the world’s largest and most liquid—the easiest to buy into and sell out of—bond market.
The International Monetary Fund (IMF), the body responsible for monitoring the international monetary system, recognizes eight major reserve currencies: the Australian dollar, the British pound sterling, the Canadian dollar, the Chinese renminbi, the euro, the Japanese yen, the Swiss franc, and the U.S. dollar. The U.S. dollar is the most commonly held, making up 59 percent of global foreign exchange reserves.
As of July 2023, China has by far the most reported foreign currency reserves of any country, with more than $3 trillion. Japan, in second place, has around $1.1 trillion. India, Russia, Saudi Arabia, Switzerland, and Taiwan also have large reserve holdings. The United States currently holds roughly $244 billion worth of assets in its pool of reserves, including $36 billion worth of foreign currencies.
How did the U.S. dollar become the world’s leading reserve currency?
The dollar’s status as the global reserve currency was cemented in the aftermath of World War II by the 1944 Bretton Woods Conference, in which forty-four countries agreed to the creation of the IMF and the World Bank. (Some economists argue that the dollar had overtaken the British pound [PDF] as the leading reserve currency as early as the mid-1920s, while others argue that the dollar is the first true reserve currency.) At Bretton Woods, a system of exchange rates was created wherein each country pegged the value of its currency to the dollar, which itself was convertible to gold at the rate of $35 per ounce. This was designed to provide stability, and prevent the “beggar-thy-neighbor” currency wars of the 1930s—a response to the Great Depression—by which countries abandoned the gold standard and devalued their currencies to try to gain a competitive advantage.
By the 1960s, however, the United States did not have enough gold to cover the dollars in circulation outside the United States, leading to fears of a run that could wipe out U.S. gold reserves. Following failed efforts to save the system, President Richard Nixon suspended the dollar’s convertibility to gold in August 1971, marking the beginning of the end of the Bretton Woods exchange rate system. The Smithsonian Agreement, struck a few months later by ten leading developed countries, attempted to salvage the system by devaluing the dollar and allowing exchange rates to fluctuate more, but it was short-lived. By 1973, the current system of mostly floating exchange rates was in place. Many countries still manage their exchange rates either by allowing them to fluctuate only within a certain range or by pegging the value of their currency to another, such as the dollar.
The Global Role of the U.S. Dollar
The U.S. dollar is still king today, despite recent challenges. In addition to accounting for the majority of global reserves, the dollar remains the currency of choice for international trade. Major commodities such as oil are primarily bought and sold using U.S. dollars, and some major economies, including Saudi Arabia, still peg their currencies to the dollar.
Factors that contribute to the dollar’s dominance include its stable value, the size of the U.S. economy, and the United States’ geopolitical heft. In addition, no other country has a market for its debt akin to the United States’, which totals roughly $22.5 trillion. “It’s more helpful to think of U.S. treasuries as the world’s leading reserve asset,” says CFR’s Brad W. Setser. “It’s hard to compete with the dollar if you don’t have a market analogous to the treasury market.”
The dollar’s status as the leading reserve currency has been called the “exorbitant privilege” of the United States.
What are the benefits for the United States?
The dollar’s status as the leading reserve currency has been called the “exorbitant privilege” of the United States, a phrase coined by former French Finance Minister Valery Giscard d’Estaing in the 1960s. At the time, French officials believed that the world’s appetite for dollars provided cheap financing for U.S. investment abroad. Over time, U.S. trade swung into a sustained deficit, supported in part by global demand for dollar reserves. Such demand helps the United States to issue bonds at a lower cost, since higher demand for a government’s bonds means it doesn’t have to pay as much interest to entice buyers, and helps to keep the cost of the United States’ now substantial external debt down.
Some experts say this benefit is modest, pointing to the fact that other developed countries are able to borrow at similarly low rates. Former Federal Reserve Chair Ben Bernanke has argued that the United States’ declining share of the global economy and the rise of other currencies such as the euro and yen have eroded the U.S. advantage. “The exorbitant privilege is not so exorbitant any more,” Bernanke wrote in 2016.
The dollar’s centrality to the system of global payments also increases the power of U.S. financial sanctions. Almost all trade done in U.S. dollars, even trade among other countries, can be subject to U.S. sanctions, because they are handled by so-called correspondent banks with accounts at the Federal Reserve. By cutting off the ability to transact in dollars, the United States can make it difficult for those it blacklists to do business. For example, in the wake of the Russian invasion of Ukraine in 2022, unprecedented U.S. sanctions cut Russia off from the dollar, freezing $300 billion in Russian central bank assets and triggering a default on the country’s sovereign debt. “There’s no doubt that if the dollar were not so widely used, the reach of sanctions would be reduced,” says Setser.
However, some experts, including U.S. Treasury Secretary Janet Yellen, say that the aggressive use of sanctions could threaten the dollar’s hegemony. (Other economists dispute this). “Sanctions are an effective tool, but we have to be careful,” CFR’s Benn Steil told NPR. “It’s like over-prescribing an effective antibiotic. It encourages the development of new strains of bacteria that are resistant to the antibiotic.” Following Russia’s invasion of Ukraine, an increasing number of countries, including U.S. partners such as India, have explored ways to continue trading with Russia that don’t involve the dollar. Meanwhile, the Chinese renminbi has become the most-traded currency in Russia.
Is de-dollarization happening?
The economic upheaval caused by the pandemic and the war in Ukraine has renewed concerns about the downfall of the dollar as the leading reserve currency. Previous predictions about the dollar’s demise, including after the 2008 financial crisis, have not come to pass, but some economists say that the dollar’s role in the international financial system should not be taken for granted, because there are economic and geopolitical incentives for other countries to de-dollarize.
“China does not have the intention or the capacity to dethrone the dollar.”
Zongyuan Zoe Liu, CFR Expert
Indeed, some countries are increasingly pushing back against the dollar. At an April 2023 summit of BRICS countries (Brazil, Russia, India, China, and South Africa), Brazilian President Luiz Inácio Lula da Silva asked, “Why can’t we do trade based on our own currencies?” However, the most commonly suggested alternatives have their own problems:
BRICS currency. For years, leaders of BRICS countries have discussed a framework for a shared currency, with proponents arguing that it would protect against devaluation when the dollar rises. However, experts point out that structural challenges in BRICS countries, including a lack of robust central banks and monetary policies, make it infeasible.
Euro. The euro is the second most used reserve currency, accounting for roughly 20 percent of global foreign exchange reserves. The European Union rivals the United States in economic size, exports more, and boasts a strong central bank and robust financial markets—factors that make its currency a viable challenger to the dollar. But the lack of a common treasury and a unified European bond market limits its attractiveness as a reserve currency, according to Setser.
Renminbi. China has been trying to boost the global role of the renminbi, also known as the yuan, since the late 2000s. It currently accounts for 3 percent of global reserves, but China has increasingly pushed to use the renminbi in bilateral trade, especially in the wake of the Ukraine war. However, Chinese policymakers are wary of the lessons from previous currencies [PDF] that rapidly internationalized, and they have imposed strict controls on the flow of money that have hamstrung the renminbi’s growth. “China does not have the intention or the capacity to dethrone the dollar,” says CFR’s Zongyuan Zoe Liu.
Special Drawing Rights (SDR). During the Bretton Woods talks, British economist John Maynard Keynes proposed the creation of an international currency, the “bancor,” which would be administered by a global central bank. While Keynes’s plan never came to fruition, there have been calls to use the IMF’s Special Drawing Rights (SDR) —an internal currency that can be exchanged for hard currency reserves—as a global reserve currency. The value of SDR is based on five currencies: the euro, pound sterling, renminbi, U.S. dollar, and yen. Proponents argue that such a system would be more stable than one based on a national currency whose issuer must respond to both domestic and international needs.
But for SDR to be adopted widely, economists say it would need to function more like an actual currency, accepted in private transactions with a market for SDR-denominated debt. The IMF would also need to be empowered to control the supply of SDR, which, given the United States’ de facto veto power within the organization’s voting structure, would be a tall order.
Cryptocurrencies. Tech evangelists dream of a world where cryptocurrencies such as Bitcoin replace government-backed currencies. Such digital currencies are “mined” and transferred via a decentralized network of computers without any issuing authority. Proponents—including El Salvadoran President Nayib Bukele, who has made Bitcoin legal tender—argue that such a system would free countries from the whims of other nations’ monetary policies. But critics say adopting cryptocurrency as legal tender constrains a government’s policy options during a crisis, and that the volatility of cryptocurrency reduces its viability as a means of exchange. However, some countries are experimenting with using blockchain technology to create digital versions of their existing traditional currencies.
Are there costs to dollar dominance?
A highly valued dollar makes U.S. imports cheaper and exports more expensive, which can hurt domestic industries that sell their goods abroad and lead to job losses. This imbalance can worsen during times of financial turmoil, when investors seek the stability inherent to the dollar. Some analysts argue that the cost of the dollar’s dominance for manufacturing-heavy U.S. regions such as the Rust Belt are too high, and that the United States should voluntarily abdicate. Other economists disagree, arguing that there will always be winners and losers with a strong dollar. These experts contend that losses for exporters are countered by gains for importers, and that overall, the situation is a net benefit to the U.S. economy.
“Both the United States and the world at large would benefit from a less dominant U.S. dollar.”
Michael Pettis, Professor of Finance, Peking University
Meanwhile, the dollar’s outsize role in international trade could have negative consequences for the global economy. As a country’s currency weakens, its goods exports should become cheaper and thus more competitive. But because so much trade is conducted in U.S. dollars, other countries do not always see this benefit when their currencies depreciate. “Both the United States and the world at large would benefit from a less dominant U.S. dollar,” writes Michael Pettis, a professor of finance at Peking University.
The United States is also harmed by currency manipulation—when another country holds down the value of its currency to maintain a large trade surplus. If a country keeps the value of its currency artificially low by accumulating dollar reserves, its exports will become more competitive, while U.S. exports will become comparatively more expensive. China has historically been among the worst offenders, though most experts agree that it has not been heavily intervening to hold its currency down in recent years. The COVID-19 pandemic led to a resurgence in currency manipulation, with advanced economies such as Switzerland and Taiwan buying dollars, euros, and other reserve currencies to depreciate their own.
What is in the dollar’s future?
Many experts agree that the dollar will not be overtaken as the world’s leading reserve currency anytime soon. More likely, they say, is a future in which it slowly comes to share influence with other currencies, though this trend could be accelerated by the aggressive use of U.S. sanctions and growing U.S. financial instability.
Some economists say that the dollar playing a smaller global role is nothing to fear, and that it would in fact benefit the United States, as long as the dollar remains the global reserve. Economist C. Fred Bergsten argues that low interest rates resulting from the dollar’s unique status encouraged American profligacy and contributed to the 2008 financial crisis. He advocates for a greater role for the euro and renminbi, as well as for SDR.
However, if the dollar were to lose its reserve status, the United States would feel serious economic and political repercussions, Liu warns. Without dollar dominance, the country would lose the capacity to borrow quickly and cheaply, potentially damaging its ability to fund industrial policy or social welfare programs. De-dollarization would also rewrite the rules of the global financial system, which, under the leadership of the dollar, is guided by U.S. values. Under a non-dollar system, “the rules, the values, would be absolutely different,” Liu says. “We don’t want to do business with child labor or human rights abuses. But in a different system, perhaps some of those values would be more likely to be ignored, rather than preserved.”
In the coming week, Brazil’s President Lula visits China, people around the world take part in Earth Hour, and the second Summit for Democracy is held. It’s March 23rd, 2023 in time for The World Next Week.
I’m Bob McMahon.
And I’m Carla Anne Robbins.
Bob, let’s start in Beijing, where next week, Xi Jinping will host Brazil’s President Lula. This follows Xi’s red carpet tour of Moscow and China’s surprise success brokering a maybe rapprochement between Iran and Saudi Arabia. Xi’s clearly eager to establish his credentials as a diplomatic player, but what’s Lula’s interest in this trip?
Well, Lula is very interested in keeping the ties open with China. Even though he represents a big vibrant democracy in China, an increasingly authoritarian country, he is going to continue to try to keep these ties open. These are the countries, by the way, that are the B and the C in the BRICS movement, which is still a thing. And we should note that Lula has been twice before visited China in an official capacity as president. He’s coming with a delegation of something like 240 business representatives. This is a big trade relationship. 2022, bilateral trade between the two countries was $172 billion. If you compare that to the U.S.-Brazil, which was 88 billion, you see the scale of this, so twice the bilateral trade relationship and volume of the U.S.-Brazil relationship, and he wants to say Brazil and China are back in business.
Bolsonaro had a pretty cagey relationship with China, on the one hand acknowledging the many things that China could deliver, but he was also, in his own way, wary of China as a country that he saw as sort of taking advantage of Brazil. And he was, in his reputation as Trump of the tropics, Bolsonaro was trying to exert a Brazil-first persona, and some of that meant he ran afoul of China. We should also note, under Bolsonaro, Brazil acquire a large number of vaccines that China had made available throughout South America early phases of the pandemic. So it was a complicated relationship to say the least under Bolsonaro. It was definitely warmer under Lula. Lula’s back. Lula again, he presides over a big robust democracy that just had a major test, and he wants to create some signals with China.
I would say another thing beyond the business ties, which again are going to be considerable, that’s going to be a key feature of discussion, these two countries have tried to strike a path of sort of a neutral role as peace brokers, and no place requires that more than Ukraine. Xi Jinping just went to Moscow under the auspices of talking about a Ukraine peace route among other things, although a number of observers had said there’s probably little to anything happened on that front. But to the world, the two leaders would like that to move forward. Potentially, Lula gets into some meaningful discussions in this, we don’t know, but I just think that’s one aspect worth watching amidst all of the many discussions on trade.
What does China want other than trade? Is it thinking about basing? Does it want to sell weapons here? I mean, there’s been a lot of concern throughout Latin America that the Chinese are trying to turn this into some sort of strategic platform. Is there going to be some conversation about that?
Well, they very much have in pre-COVID, and going back to previous Lula period of leadership, China and Brazil had a major relationship, and China and South America writ large has had a booming relationship. South America, obviously, loaded with commodities and valuable commodities. Can you say lithium, among other things? And so China has elevated Brazil to a strategic partner in this respect, wants to do a lot of trade with Brazil, and is not one of these countries that wags its finger at countries that might create problems in human rights or environmentally if they run afoul of those as they are boosting relationships.
So again, Lula is a different type of person than Bolsonaro, especially in those two respects, but China would love to have a growing relationship, especially as tensions mount with the United States, especially as tensions mount with the European Union, it must be said. China is trying to keep its options open. Xi is showing, as he’s newly emerged as third-term president, as leader of the party, as almost leader for life, he is out kind of stepping forth and letting China stride the world stage broadly, and so in this case, he’s got the world coming to him in the form of one of the most populous countries, one of the largest countries in the world. Again, he wants to show China’s back, it’s ready to do business regardless of what sort of form of governance Brazil has, certainly one that contrasts with China.
So is the United States just going to grit its teeth? Because it certainly doesn’t hesitate to complain directly publicly to Europeans when they cozy up to China. It’s working very hard actually to decouple Europe from China. Is it been complaining about this Lula visit or is it just trying to go cool on it?
You know, it’s a really good question. I think we might discuss it a little bit more in this podcast when we talk about democracy issues. I would say that Biden and Lula are off to a strong start. It was one of his earliest visits after he formally took office and after he dealt with his own insurrection in the Brazilian capital. And so they seem to have become a bit simpatico so far, and maybe there’s some sort of side dialogue going on where potentially Lula carries a message to China. Who knows? I don’t know that. That’s just conjecture, Carla. But I haven’t seen a lot of, certainly out in the open statements by the U.S., in any way kind of chastising Brazil for the visit, but I think the U.S. is going to be watching it very closely with a lot of interest.
Carla, I want to take us to Earth Hour. On Saturday, millions of people around the world are expected to take part in what’s being dubbed Earth Hour. This is an initiative, by the way, of the World Wide Fund for Nature. It’s supposed to show symbolic support for the planet. You’re going to have businesses, private homes, I think state, local, national landmarks even switching off lights for an hour, maybe longer. We’ll see. We’ll see if anybody forgets and leaves them off for a while. But-
But not while they’re listening to the podcast.
Not while they’re listening to the podcast. They need to get that out of the way first, although they could listen in other ways, but I digress. You know, we’ve had a half century of Earth Day in the United States, Carla, and certainly other gestures like this before. So do they mean anything, and will this one mean anything?
So it’s March 25th at 8:30 PM local time. It’s local time everywhere. Everybody does it on their own time.
So Earth Hour started in Sydney, Australia in 2007, and their first idea, I was reading up on this, for a name was The Big Flick, but they went for Earth Hour after that. And that first year, more than 2 million people turned off their lights, and it caught on incredibly quickly. By 2009, the World Wildlife Fund, and these are the people with the panda, we know this group, eighty-eight countries and 4,000 cities participated and the lights were turned off dramatically at UN Headquarters, in the Acropolis, in the Colosseum, in St. Peter’s Basilica, the Louvre and Notre-Dame. The Eiffel Tower only did it briefly for safety reasons because there were people up on the Eiffel Tower. The Pyramids of Giza and the Sphinx also turned off their lights. So this really caught on.
That said, this year, with the realities of the climate crisis getting ever more urgent, WWF have… It sounds like it’s wrestling. Okay, World Wildlife Fund have gone through a rebranding exercise in which they’re not only calling on people to switch off their lights, but as their website somewhat plaintive says, “Sixty minutes doing something, anything for our planet.” So they have suggestions on what else to do to learn more about our planet, restore our planet, or reconnect with our planet, and these are pretty simple things, like tips on recycling trash, or making your home lighting more energy-efficient, or meditating outside, and they even have a playlist of sounds to help you reconnect with the planet. And I looked just now, their website has counters with the number of people who have pledged to do one of these things and the countries they come from, and as of this morning, the overall count is pretty meager, 85,086 people in 158 countries, and the number one country is Madagascar, with 23,000 hours pledged, and not surprisingly because they have a terrible environmental crisis going on there right now.
You know, it’s easy to be cynical about all this. It certainly feels like a campaign written by an advertising company. But at the pace at which we are hurdling toward a climate disaster, and the IPCC issued a particularly worrying report this week and we should talk about that, anything, I suppose, that raises awareness and mobilizes the public to demand that their leaders make changes should be a good thing. But the issue, of course, is that people shouldn’t come away from this thinking that this problem is going to be as easy as recycling their trash.
Yeah, I think that lays it out, Carla, and yeah, let’s go to that discussion on the IPCC report. Before that, though, I’ll just say briefly, I think sometimes, these types of exercises have beneficial effects, and part of this is, if you observe what some of the world’s major religions do, whether under Muslims and Ramadan, Catholics and Lent, or on Sabbath for Jews, where they, in various ways, unplug, change their patterns, fast, do other things that get out of the norm and out of the routine and sometimes engender sort of new discipline behavior, it’s like a gut check for the world to try to do this, and it’s enormous, and it’s not going to go too much farther, as you say Carla, but I would think the combination of this, let’s say, gimmicky Madison Avenue event as well as that UN report, which was even more sobering than most UN reports on this, should focus attention. But can you tell us a little bit about what we need to take away from that report?
You know, the IPCC is this intergovernmental panel on climate change, a winner of the Nobel Peace Prize, and this is a UN-sponsored or authorized group of climate experts from around the world, and this is the seventh very grim report on climate change and warned with very high confidence that there is a rapidly closing window of opportunity to secure a livable and sustainable future for all. And it warned with very high confidence that there is a rapidly closing window of opportunity to secure a livable and sustainable future for all, and it warns that the world is currently on track to exceed the 1.5 degrees Celsius, 2.7 degrees Fahrenheit rise in temperatures that was the cutoff number nearly every country signed onto in the Paris climate process by the beginning of the 2030s. We were supposed to be moving toward that and not go beyond it, and it is just around the corner.
I’d also noticed that the average global temperature is already 1.1 degrees Celsius higher than it was, and it was faster than since 1970 than during any 50-year period. We’re just hurtling forward. I’d also noticed how unequal this is, that 10 percent of households are responsible for 34 to 45 percent of greenhouse gas emissions. This is a really, really grim report, and it does go through a list and the list of really hard things that we have to do. We certainly have to quickly expand renewables, like solar and wind power, improve energy efficiency, lower the use of cars, cut back sharply on nitrogen pollution from agriculture, reduce food waste, give up fossil fuels for cars, power plants, and factories. It’s across the economy, and we have to cut, reduce greenhouse gases by half by 2030 and add no more carbon dioxide or reach what is called net-zero by the early 2050s. This is hard.
And as you say, it’s happening at a time when these changes are hurtling forward, which I think is, it sort of gives the lie to the claim that people don’t really care about climate issues when it comes down to it because it’s all sort of a slow burn, pardon the expression, and it’s happening incrementally enough that it’s not becoming part of somebody’s daily concerns. I think that’s starting to change. I mean, again, just a snapshot of things happening over the last couple of weeks and months, you have this combination of bomb cyclones and atmospheric rivers hitting California wave after wave this winter, for example. Or you have what’s happened in Southeastern Africa with this Cyclone Freddy that blew through, went away, regathered strength, and came back in an unprecedented way. Things like that are happening and dealing out major damages to rich and poor countries alike, and I’m just wondering whether we do hit a tipping point on maybe it driving policy change. It’s not looking like it is in the immediate future, though.
It used to be that scientists would say you can’t attribute any one weather event to climate change. And so it was easier for people to say, “Well, this is far off in the future. I’m going to burn my gas right now and let future generations deal with it.” And you’re right, we are seeing it now, and no scientists, no serious meteorologist is going to say this isn’t the result of climate change, this extreme weather that we’re living in.
That said, if you look at the contrast between what’s going on even within our own country, what’s going on in California, which is extraordinary, President Biden last week approved a giant oil drilling project on federal land in Alaska, and this is after this extraordinary legislation for the Inflation Reduction Act, which was enormous bounty of green for green investment. The contrast there is incomprehensible to me. China’s giving permits to dozens of additional coal-fired plants. Countries that say they’re committed to doing what needs to be done to reach net-zero, and okay, China’s hurtling forward, but we’re hurtling forward, too. And we have made great progress in reductions, but not if we’re going to also do these other things. Approving a giant old drilling project on federal land is not the right message for this country and really not the right message for the rest of the world.
It’s not the right message. It’s the politically salvageable message, it seems to be, in terms of the calculations being made, whether in democracies or autocracies, and it’s one of the things that makes this a incredibly frustrating, worrisome issue.
So Bob, maybe this will be more hopeful. Let’s continue this conversation about important challenges and symbolic events that we hope matter by talking about the upcoming Summit for Democracy. Next Wednesday, the United States, Costa Rica, the Netherlands, South Korea, and Zambia will co-host the second Summit for Democracy. When President Biden launched the first iteration in December 2021, there were a lot of skeptics and it looked like a bad wedding. There was a lot of conversation about who made it onto the guest list, Bolsonaro’s Brazil, and who didn’t, Orbán’s Hungary. Did that meeting do anything to strengthen democracies or hold back the rising tide of autocracy? And should we expect that this summit is going to do better?
That’s the awesome question of the moment, and there are some mixed responses, I guess. If you listen to the State Department, which is playing a big role in convening all of this, they will say that if you look at the data, the various metrics that many reputable watchdog groups compile about democracy benchmarks, that in aggregate, the world has gotten better, things have gotten better in the world since the first summit. Even though that summit took place amid COVID and just months prior to the Russian invasion of Ukraine, things have started to move in the right direction. You could certainly, though, find any number of people talking about the way it’s moving in the wrong direction. I would just note in passing two recent blog posts at cfr.org, one from Michelle Gavin on Zimbabwe and one from Josh Kurlantzick on Thailand, talking about huge challenges in both those countries, one a severe dictatorship that’s sort of toying around with the idea of elections, and one that is still a quasi-democracy that is moving further away from it, that being Thailand, show the challenge that’s facing many countries in the world.
I think it’s interesting to look really quickly at the way this one is formatted. First, you have actually a pre-summit event on Tuesday that Ukrainian President Volodymyr Zelensky is due to speak at. I think he’s going to be speaking with U.S. Secretary of State Antony Blinken, and Ukraine will be front and center as an important issue about aspiring democracy, fighting for its life against a superpower autocracy on its border, and I think that will help focus minds certainly. Then it goes into a Wednesday event, which is a virtual event, which is the one that kind of, I think, creates a few yawns, like just what we need to spur democracy is a giant Zoom call for a full day. I’m being cynical. However-
I would add that you and I are on Zoom right now looking at each other.
That’s right. Nothing against Zoom, but it tries the patience sometimes to have long events no matter what the issue. That being said, they have been thoughtful about trying to organize these, and as you said, there’s multiple hosts for an in-person meeting on the following day, which will cap the summit, and again, these countries are the U.S., Costa Rica, Netherlands, South Korea, and Zambia. Different themes are going to be involved. It’s going to be free media, it’s going to be anti-corruption, free and transparent elections. They do have an agenda and they do have a sense of what they’re trying to accomplish. It’s not just countries, by the way. It’s a whole host of civil society actors who are really important in democracies and non-democracies.
So I think it is an opportunity to try to drive this issue forward, and as we were discussing previously with the Lula visit to China, I think an important point to come up during this summit will be the extent to which democracies talk to non-democracies or outright dictatorships as opposed to shaming them and trying to isolate them. I don’t think that works, I don’t think that is a productive approach, and I think it’s certainly something that will be important to watch vis-à-vis China in particular, which has such an outsized influence in the world and has signaled that it’s redoubling efforts to influence things on its own.
One other thing I would note, Carla, is the way China and Russia, increasingly seen as its junior partner, are active at the United Nations. As an old UN correspondent hand, I recall the heady days of the early 21st century where even though China and Russia were in the UN Security Council, they were signing off on UN nation-building missions that involved elections, that involved democracy experts coming into countries, whether it was Iraq or places like Sierra Leone, or East Timor, or whatever. There were UN missions that were involved in bolstering countries that had democracy at their center that were signed off by and resourced by the UN Security Council. That’s not happening too much anymore, and it’s a different vibe going on globally, and so I think this type of summit is going to be important for these countries that are involved to sort of as a gut check on what they value and what they’re going to try to move for.
You know, the Russians certainly look back on those days, Putin certainly looks back on those days as a sign of weakness. They got rolled in the Security Council, got rolled on Iraq, got rolled on lots of other things, and that they’re not going to get rolled again. That’s the first thing. And the Chinese used to just hide behind the Russians, so they did whatever the Russians did. They either voted yes or they abstained. So I’m not sure we’re going to jolly either of those governments back into supporting these exercises.
I think the real challenge is the countries, and you were talking about the BRICS before, the countries like the Brazils, and the Indias, and the South Africas. They’ve been sitting on the fence, were playing a double game here, and have sat on the fence on Ukraine and have played this very disturbing game of whataboutism, and I think that we certainly have to understand where they’re coming from and the reasons why they want to play both sides.
And I think there’s also, we have to understand the role we play in this as well. We have not, and this is the twentieth anniversary of the Iraq invasion, we have not dealt with it at home enough about how much damage we did to our reputation by invading another country. And when the South Africans say, “You did it, they’re doing it,” it’s infuriating to listen to, but I think that one of the conversations we have to deal with is to say, “We have learned our lessons, and we’re not just moving on here, we’re having a serious internal debate, but what’s going on in Ukraine is utterly and completely unacceptable,” and I don’t feel that our government, including the Biden administration, has embraced that conversation fully.
It’s a really good point, and yeah, I think they just have to keep on mentioning, amid some of the mea culpas, if they do issue mea culpas, amid that, just talk about how democracies are self-correcting systems and that you can move forward, correct your mistakes, and have a transparent discussion about it, which is not going to take place in a dictatorship and certainly not in modern day Russia or China, and just offer them up as a better system, too, taking care of their people. I think one of the things you’re hearing in the democracy narrative is trying to make the case, and definitely are hearing it in the U.S. among Democrats and some Republicans, is that democracies can help support economic wellbeing. I think that’s going to be crucial in this country and so many others because people, at the end of the day, are going to just get cynical and like, “Why bother?”
And the format that you did talk about, I think, does actually build some real goodwill because I guess the plenaries, which kick off at 6:00 AM, with respect to global time zones, covered on the second day, or the official first day, but it’s the second day where they’re going to be co-hosted in person. I mean, they’re sending cabinet members to each one of these countries, and I think that does send a good message that we’re going to show up in those countries.
It was smart to have partner countries involved in hosting it and not just being a U.S. fest in DC, but actually, it’s a global issue, it’s of global concern, and this is distributed worldwide on almost every continent. So I do think that is smart. We’ll see how far they go.
Well, Carla, we’ve talked our way into the Audience Figure of the Week portion of the podcast, and this is where listeners can vote on every Tuesday and Wednesday at cfr_org’s Instagram Story. The audience this week selected as its figure, in the form of a person, Putin, as in “ICC Issues Arrest Warrant for Putin.” So Carla, can you tell us the significance of that move?
Well, good on the ICC. The crime Putin has been accused of is particularly horrifying, criminal responsibility for the abduction and deportation of Ukrainian children, and his Presidential Commissioner for Children’s Rights, and very Orwellian role, was also indicted. Now, he’s unlikely to stand any trial anytime soon. The ICC does not try suspects in absentia, and Russia’s not going to surrender Putin. They say they’re never going to do it, even if he loses power. It’s not a member of the court, although there is no reason a Russian government couldn’t turn him over, and I might add, we’re not a member of the court either. But one should never say never. Former Serbian President Slobodan Milošević, who’s the author of incredible crimes as well, he, too, seemed invulnerable, but he eventually lost power and was turned over to The Hague, and he died in custody before a sentence could be meted out in his four-year trial for war crimes, crimes against humanity, and genocide committed in Kosovo, Bosnia, and Croatia. So one can imagine that perhaps someday Putin will show up in The Hague.
In the near term, this indictment means that it has several valuable, I think… I don’t know whether there’s a deterrent value to it for other really incredibly crime-committing autocrats, but the court was created to highlight, and when hopes brings to justice individuals like this, it certainly will make it harder for Putin to travel at least to countries that are members of the court, which would be obligated to turn him over. It’s not going to be the last indictment for Putin and his generals. The ICC investigators have been in Ukraine for months. And it’s also a major move for the court. Putin is the first head of state of a permanent member of the UN Security Council, and the ICC has indicted more than forty individuals up until now, but they’ve all been from African countries, and there’s been a lot of criticism that this is just seen as a court for Africa, so indicting Putin gives a legitimacy to the court as well.
It’s a really good point, and you’re right about the ICC, and it’s hard for countries, especially in African countries, not to be cynical about what this exercise is really all about, that so-called victor’s justice writ large, where it was going after the countries that were too weak to put up a fight. Certainly, the U.S. has put up a fight in moments when it looked like it was under scrutiny from the ICC, and it has responded with virulent language, let’s say, against the ICC.
And sanctions in the Trump administration against the prosecutor.
That’s correct. So at the same time, though, I think there is a move in the international rule of law community, so to speak, to try to set some bars for accountability in Ukraine, and as you say, what Russia has done on multiple levels has been really worthy of closer scrutiny. It certainly dodged scrutiny for some particularly heinous acts in Chechnya, when it conducted that war, or the two Chechen Wars, I should say, especially the second one.
But it doesn’t mean you don’t try, and I think this is going to be worth following. It’s going to be interesting to see how countries that are strong adherents of the ICC, and there are a number who are, whether or not Putin can travel to those countries. He did make an early show of defiance by making his first trip to Russian-occupied Ukraine to Mariupol after the indictment came down. This is a city, by the way, that was bombed into oblivion, and then among the acts Russia did after that was cart away a number of children and send them into Russia, and the understanding at this point is that many of them have been put up for adoption in Russia.
So these kinds of things have to be recorded, they have to be chronicled, and steps have to be taken to try to bring it to justice at some point. So you’re right, it was a good move by the ICC.
Yeah, I don’t think he’s going to be going to Paris anytime soon.
To say the least.
Well, that’s our look at the world next week. Here’s some other stories to keep an eye on. U.S. Vice President Kamala Harris visits Ghana, Tanzania, and Zambia; Cuba hold parliamentary elections; and the Asia-Pacific Forum on Sustainable Development takes place in Thailand.
Please subscribe to The World Next Week on Apple Podcasts, Google Podcasts, Spotify, or wherever you get your podcast. And leave us a review while you’re at it. We really do appreciate your feedback. The publications mentioned in this episode, as well as a transcript of our conversation are listed on the podcast page for The World Next Week on cfr.org. Please note that opinions expressed on The World Next Week are solely those of the hosts, not of CFR, which takes no institutional positions on matters of policy.
Today’s program was produced by Ester Fang, with Director of Podcasting, Gabrielle Sierra. Special thanks to Sinet Adous and Rebecca Rottenberg for their research assistance. Our theme music is provided by Miguel Herrero and licensed under Creative Commons. This is Carla Robbins saying so long.
And this is Bob McMahon saying goodbye and be careful out there.
As Latin America’s largest and most influential country, Brazil has long played a leadership role in the region, throwing its economic and diplomatic might behind hemispheric integration efforts. It has also increasingly sought a bigger voice for developing countries on the world stage. In addition to its active membership in the United Nations and other major multilateral institutions, Brazil has worked closely with countries such as China, India, and Russia to develop alternative forums.
However, a decade marked by economic upheaval and corruption scandals that implicated much of the political establishment has hindered its goals. President Jair Bolsonaro campaigned on a “Brazil above everything” slogan that he argued would help reclaim the country’s sovereignty, but critics say his approach has exacerbated domestic inequalities and led to growing international isolation.
Why does Brazil matter in world affairs?
Brazil is the largest and most influential country in South America, accounting for about half of the continent’s population, landmass, and gross domestic product (GDP). It is the fifth-largest country in the world and the sixth most populous, with an estimated 214 million people. Brazil plays a major role in world trade: it is a leading producer of soybeans, beef, and iron ore. Moreover, the two-thirds of the Amazon Rainforest that fall within its borders make it central to the global fight against climate change. After the United States, Brazil has the largest military force in the Western Hemisphere, though it has historically relied on soft-power strategies, including foreign aid, to exert its influence.
Brazil wields considerable political and economic clout beyond Latin America. China and the United States are its top two trading partners, and the country has forged closer political and military ties with Russia. It has also asserted itself in nuclear talks with Iran despite objections from the United States. Brazilian forces have at times led peacekeeping missions in Haiti and the Democratic Republic of Congo, and the country has hosted international sporting events, including the 2014 World Cup and the 2016 Summer Olympics.
How have Brazil’s foreign policy ambitions evolved?
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Brazil separated from Portugal in what was a relatively peaceful process in 1822, unlike many Latin American colonies that waged wars of independence. It maintained its monarchy until 1889. The foreign relations of its early years were largely preoccupied with regional upheaval, including war with neighbors Argentina and Paraguay. World War I marked the beginnings of Brazil’s role on the world stage, as it was the only Latin American country to participate and the largest South American delegation involved in the negotiations that created the League of Nations in 1920. Brazil’s military contributions to the Allied powers during World War II and its cooperation with the United States during the Cold War drew it closer to the West, even as it advocated for noninterventionism and neutral international institutions.
This tension grew after Brazil’s republic gave way in 1964 to a repressive military dictatorship, which shared Washington’s fears about communist influence in the region. By 1979, an ailing economy drove the regime to begin a slow process of political liberalization that culminated in the transition to a civilian-led democracy in 1989. This political reform was accompanied by an opening of the heavily state-led economy. Between 1995 and 2010 under Presidents Fernando Henrique Cardoso and Luiz Inácio Lula da Silva (commonly known as Lula), Brazil solidified its reputation as an emerging power with one of the world’s fastest-growing economies. It was under Lula that Brazil “had this really ambitious idea that almost through sheer force of will, it would become a major power,” says Dartmouth College’s Andre Pagliarini.
Brazilian foreign policy emphasizes diplomacy and multilateral institutions. To date, Brazil has participated in fifty UN peacekeeping operations, and it has offered expertise, equipment, and scholarship opportunities to postconflict countries [PDF] including Angola, Mozambique, and Timor-Leste. It has pushed to increase the role of lower income countries, often referred to as the Global South, in global governance in other ways, too: it is in the Group of Twenty (G20), a grouping of the world’s largest economies, and it helped found the alternative economic bloc BRICS alongside Russia, India, China, and South Africa. Brazil is also regularly elected as a non-permanent member to the UN Security Council, and it has joined calls to expand permanent council membership to better represent today’s global distribution of power.
What role does Brazil play in regional affairs?
Brazil has long pursued a leadership role, at times butting heads with the United States and navigating tensions with other regional powers. It has largely focused on furthering development and regional stability through economic integration and involvement in multilateral institutions.
It is a founding member of and among the largest donors to the Organization of American States (OAS), the Western Hemisphere’s premier diplomatic forum. It is also the driving force behind the Mercosur trade bloc, in which it seeks to unite its economy with those of Argentina, Paraguay, and Uruguay. With a combined GDP of roughly $2.2 trillion in 2021, the bloc is one of the world’s largest. Yet, Brasília previously led the opposition [PDF] to a failed U.S. proposal for a hemisphere-wide trade bloc, arguing that the United States’ heavily subsidized agriculture would give its exports an unfair advantage.
Meanwhile, Brazil’s stance toward the region’s authoritarian governments has tested its commitment to diplomacy. Under Lula and his successor, Dilma Rousseff, Brazil sought closer trade and energy ties with the socialist government of former Venezuelan President Hugo Chávez. But Bolsonaro has joined most of the region in refusing to recognize the legitimacy of Chávez’s successor, Nicolás Maduro, and tensions have escalated as the Brazil-Venezuela border has become a hotspot for crime and violence.
Relations with Cuba have likewise worsened despite years of Brazilian efforts to expand oil exploration in the Gulf of Mexico and increase aid to the island. In 2019, Bolsonaro became the first Latin American leader in nearly three decades to vote against an annual UN resolution condemning the U.S.-led embargo on Cuba. The following year, Brazil withdrew from the Community of Latin American and Caribbean States (CELAC), citing the growing authoritarian influence of Cuba, Nicaragua, and Venezuela.
How has Bolsonaro governed Brazil?
Bolsonaro, a former army captain who spent twenty-seven years in Brazil’s Congress, won the 2018 presidential election riding a wave of antiestablishment fervor. Campaigning as a right-wing, socially conservative nationalist, he promised to tackle crime and corruption and right the economy in the face of a series of crises, including a presidential impeachment, a deep recession, a historic corruption scandal, and a sharp rise in violent crime. His controversial moves have included abolishing dozens of civil society groups, cutting funding for federal education, relaxing gun ownership laws, and attacking LGBTQ+ and reproductive rights.
In contrast to his predecessors, Bolsonaro has embraced anti-globalist rhetoric and has said that international norms and institutions threaten Brazil’s sovereignty. This has led him to distance Brazil from the United Nations; encourage development in the Amazon Rainforest; downplay the severity of the COVID-19 pandemic; and threaten to withdraw Brazil from the World Health Organization (WHO) and the Paris Agreement on climate, though he hasn’t followed through. Furthermore, his administration’s moves to isolate former partners, such as Venezuela, have been paired with efforts to form closer ties with like-minded right-wing leaders such as former U.S. President Donald Trump, Hungarian Prime Minister Viktor Orbán, and Russian President Vladimir Putin.
What are relations like with the United States?
The relationship dates to 1824, when the United States became the first country to recognize Brazil’s independence. In the twentieth century, Washington wielded a strong influence over Brazil’s development, including by backing the 1964 military coup and later supporting the country’s democratic transition and economic liberalization. Still, Brazil has at times acted as a countervailing force against U.S. interests. In addition to rejecting the U.S. hemispheric trade proposal, Brasília opposed the U.S.-led war in Afghanistan and condemned the U.S. invasion of Iraq in 2003. During the left-wing Lula and Rousseff administrations, Brazil’s pursuit of closer relationships with U.S. adversaries such as China, Cuba, and Iran also became a source of tension.
Bolsonaro’s 2018 election marked a sharp turn toward the right and the beginning of efforts to grow closer with Washington. Bilateral relations were particularly amicable under the Trump administration. In recognition of their partnership, Trump designated Brazil a major non–North Atlantic Treaty Organization (NATO) ally, granting it access to certain U.S. economic and security programs. In 2020, the two leaders signed a limited trade deal.
However, under President Joe Biden, Washington and Brasília have increasingly diverged on major issues, including climate action and Biden’s global effort to combat authoritarianism. Bolsonaro has even made unsubstantiated allegations that Biden committed fraud in the 2020 U.S. presidential election. Still, there is potential to deepen the partnership on several fronts, says Brazil-based journalist Catherine Osborn, including the leaders’ pledge to prevent further deforestation of the Amazon.
What are Brazil’s other major bilateral ties?
China. Beijing elevated its relations with Brasília to a comprehensive strategic partnership—the highest classification that China awards its diplomatic partners—in 2012. China has since become Brazil’s top trading partner, primarily due to exports of soybeans and iron ore; in 2021, bilateral trade reached a record $135 billion. Though not a participant in China’s Belt and Road Initiative, Brazil is one of the largest recipients of Chinese infrastructure funding in South America. Between 2007 and 2020, Brazil received more than $66 billion in Chinese investment. Brazil is also one of a dozen countries in Latin America that have granted Huawei, the controversial Chinese telecommunications giant, access to its 5G network. Bolsonaro campaigned on ending Brazil’s dependence on China, but the COVID-19 pandemic underscored its continued reliance, as Brazil almost exclusively used Chinese-made vaccines in the early months of global vaccination efforts.
European Union. The European Union (EU) is a major destination for Brazilian agricultural goods, especially soybeans, fruit, and coffee; Germany, the Netherlands, and Spain are the largest European importers. Since 1999, Mercosur has been negotiating a free trade agreement with the bloc, which, if accomplished, would be the EU’s largest trade deal. However, ratification efforts have stalled amid opposition from several EU members. They object to illegal logging in the Amazon, though Brazilian officials assert that these environmental concerns mask EU member states’ desires to protect their agricultural sectors from competition.
Russia. Brazil is Russia’s primary trade partner in Latin America. Over the past twenty-five years, Russian exports to Brazil have grown at an annual rate of 11 percent, reaching $2.2 billion in 2020. Russia has invested billions of dollars in Brazil’s oil and gas sector, infrastructure, and electronics industry, and the two countries collaborate in several multilateral forums, such as BRICS and the G20. But Russia’s invasion of Ukraine has complicated relations. Brazil has twice voted in support of UN resolutions condemning Russia’s violation of international law, though Bolsonaro has said Brazil will remain neutral in the conflict. At the same time, leading Brazilian lawmakers have criticized Western sanctions against Russia, which they say are contributing to global shortages.
What is the state of Brazil’s economy?
With a GDP of $1.6 trillion in 2021, Brazil is the largest economy in Latin America and accounts for almost 30 percent of the region’s economic output. In 2016, it overtook Venezuela as the leading producer of crude oil in South America, and it is the world’s top exporter of beef and soybeans; other major exports include iron ore, sugar, and coffee. It is also a major manufacturer, though in recent decades its economy has shifted toward services.
Brazil is considered a mixed economy that has relatively high tariffs and several state-owned enterprises, most notably the oil and gas giant Petrobras. This is the legacy of import substitution industrialization, or ISI, an economic strategy adopted in the 1930s that used protectionist policies to increase domestic manufacturing. But in the wake of economic crises in the 1970s, policymakers introduced reforms to address growing debt and soaring inflation. These included the 1993 Real Plan [PDF], which established a new currency initially pegged to the U.S. dollar to tame inflation, as well as measures to open the economy to trade. Accession to the World Trade Organization (WTO) in 1995 further accelerated Brazil’s integration into the global trading system, though the country retains some aspects of trade protectionism through Mercosur’s common external tariff.
By the 2000s, Brazil had become one of the world’s fastest-growing economies. However, falling commodity prices and the series of high-profile corruption scandals helped bring about Brazil’s worst-ever recession starting in 2014. And more recently with the economic disruptions of the COVID-19 pandemic and the war in Ukraine, the country continues to struggle with limited growth and double-digit inflation. Meanwhile, Brazil remains one of the world’s most unequal countries.
With general elections set for October 2022, the next administration will be constrained by worsening domestic troubles. Bolsonaro’s primary opponent in the elections is former President Lula, who has promised new approaches to the country’s challenges. These include:
Corruption and political polarization. Brazil ranked 96 out of 180 countries on Transparency International’s Corruption Perceptions Index in 2021. Bolsonaro campaigned on rooting out corruption in the wake of the scandals that led to the impeachment of Rousseff and imprisonment of Lula. In 2019, Bolsonaro signed an anti-crime bill that introduced harsher punishments for corruption, but critics say little progress has been made, and his own administration has been beset by corruption allegations. Election watchdogs worry that Bolsonaro, who has often alleged electoral fraud, will dispute the election results in October should he lose.
Climate and the environment. Deforestation of the Amazon, which hit a fifteen-year high in 2021, has sparked international concern. Many scientists criticize Bolsonaro’s environmental policies, which include opening up the rain forest to more commercial development. By contrast, Lula has proposed creating “green jobs” in the Amazon to replant trees, as well as reopening the Amazon Fund, through which countries previously paid Brazil to monitor and combat deforestation. Still, about 35 percent of energy consumed in Brazil comes from low-carbon sources such as hydroelectric, nuclear, and wind.
Crime and violence. At 22 murders per 100,000 people, Brazil has one of the highest homicide rates in South America; the country also suffers from high rates of robbery, kidnapping, and gender-based violence. Many experts attribute Brazil’s crime rate to wealth inequality, a lack of economic opportunity, and arms and drug trafficking. Bolsonaro has kept up the government’s long-standing “tough on crime” approach, which includes harsh drug laws and strict sentencing.
COVID-19 policy. Brazil is still grappling with the effects of the pandemic, including economic contraction, increased poverty, and an education crisis that has primarily affected Black and Indigenous communities. More than 680,000 people in Brazil have died, one of the world’s highest per capita death tolls. Global health authorities have criticized the Bolsonaro administration, which downplayed the severity of the virus and opposed lockdown measures. Also, the government’s immunization campaign stumbled over concerns about the efficacy of China’s Sinovac vaccine. More recently, the government has prioritized U.S.-made vaccines. By late 2022, more than 80 percent of the population was fully vaccinated.