Brazil: Agribusiness Before Diplomacy

Brazil had the opportunity 20 years ago to fill that gap, but it made several wrong decisions at the governmental level, which tied the country to fertilizers from Russia and Belarus. Though Canada also exported fertilizers to Brazil, the low cost and large availability of the Eastern fertilizers made the decision easy for Brazil. Of course, those decisions were made before the war but they’ve proven difficult to overcome in this new context.

With the presidential election only a few months away, what is the impact - if any - of this war on domestic politics in Brazil? Is there a consensus on the issue?

A war of this significance generates both political and economic instability, and more precisely, can drive inflation up. None of which bodes well for a Brazilian government heading into an election. As poll results come in, it seems increasingly unlikely that Bolsonaro will win the election. While there are a myriad of reasons to explain such prospects, high rates of inflation have undoubtedly dealt severe blows to his popularity. With 60% of Brazilians earning a minimum wage set at around $200 a month, life in Brazil has become too expensive. Coming out of a sustained inflation increase since the Covid-19 pandemic, Bolsonaro cannot afford to further affect the middle and lower classes he needs at the polls. 

But even if Bolsonaro loses the October 2022 presidential election, any incoming government will also have to maintain a foreign policy designed by this ambiguity. A glance at the Left, and especially the Workers’ Party (Partido dos Trabalhadores, PT), will only show a more pro-Russia stance. Everybody is against the war, the destruction, the massacre, but in general, they also tend to be anti-American. They see the war as a proxy-war between the United States and Russia.

In early May, Lula gave an interview to TIME Magazine which was controversial (to say the least). Some members of the Workers’ Party had to clarify why Lula blamed the war on President Zelensky. In the interview, Lula claims that Ukrainians should also be blamed for the war. Some defend this position, but you have to consider who initiated the war. While the interview was embarrassing, it is unlikely that the war in Ukraine will become a hot issue during the presidential campaign. International relations are becoming increasingly important in Brazilian domestic debates but do not hold much weight at the ballot box: no one has Putin in mind when casting their vote. 

However, global issues can be used to improve Bolsonaro and Lula’s respective statesmen images, to become more legitimate to Brazilians. Bolsonaro decided to take part in the Ninth Summit of the Americas (June 2022), under the condition that US President Joe Biden and him meet in private. Despite a strong anti-Biden sentiment among his supporters back home, Bolsonaro is hoping to use the photos of the meeting in his favor, to nourish his presidential campaign and build his statesman image, boasting that the US President listens to him. The problem remains, however, that he is going against Lula - a candidate with very high international credentials, who holds a double-digit advantage over Bolsonaro, and who was recently received in France by President Macron, and by Olaf Scholz and Pedro Sánchez. If it was a less prestigious candidate than Lula, it would have been easier for Bolsonaro to compete on international issues.

This covers the extent to which the war in Ukraine could affect the presidential elections in Brazil. If the conflict keeps growing, Bolsonaro and his adversary will have to develop a more complex stance but for now, there are enough domestic problems for voters to worry about. The public believes that the government is to blame for rising inflation and is not preoccupied about inflation’s external causes. My sense is that there is a general pro-Ukraine stance in the Brazilian population but it is unclear how that might affect the vote.

What are the current and potential economic impacts of the war on Brazil, in terms of food security and beyond?

If Brazil faces severe food insecurity, the whole world will be affected. The country is a global food supplier with stark inequalities in terms of economic distribution and food access to its own population. If the fertilizer situation worsens overtime, Brazil will not secure its agricultural production.

This goes back to Bolsonaro’s "ambiguity by design" plan to deal with Russia. It is not really clear how Brazil continues to receive fertilizer from Russia because those dealings are not made public. We do not even know if the currency used to pay for shipments is Russian rubles, Brazilian reals or US dollars. Whatever the outcome of the election, the Brazilian President will need to maintain this commercial relationship with Russia and Belarus to continue producing food. As sanctions take their toll, Russia will only become more isolated and therefore dependent on this export relationship too.

The other issue is that rising food prices will have direct domestic consequences. Prices affect both Brazilian production and population. People are eating less and often cheaper, and they do not eat meat anymore (despite Brazil being the world’s largest exporters of beef). On one hand, commodity prices going up should be beneficial to the economy since the country is one the most important food exporters in the world. Brazilian farmers are with their pockets full, but this also means higher inflation, especially for city workers, who happen to weigh more in elections than farmers. 

The next Brazilian president will have to make managing rising inflation a priority, with inflation rates reaching 12% in Brazil according to official sources. Wages are not being adjusted for inflation. But again, Brazilians don’t necessarily see this rising inflation as a direct consequence of the war in Ukraine. They blame the government for not protecting the Brazilian economy against any foreign influence. If the prices continue to rise, then Bolsonaro is for sure going to lose his election bid in October. The deterioration of life standards in Brazil are unbearable at this point. He can blame the war as much as he wants, people will oust him from Palácio do Planalto. 

Copyright: Attila KISBENEDEK / AFP