The US Downgrade, the Brazilan Miracle and the Atlantic in the 21st Century
In 1941, from his final retreat in Petropolis, the Austrian who would become the world’s most widely read German language author wrote an essay entitled “Brazil, a Land of the future”. This essay reflected Stefan Zweig’s very personal intuition and hope that the country would come to incarnate a new form of democracy, dynamic, modern and post-racial, haunted as he was by the shadow of Nazi Germany. For decades, the title of Zweig’s book was the basis of an ongoing joke in Brazil, which ran something like “Zweig was right, ours is indeed the land of the future; unfortunately, it will always remain so”.
In recent years, though, this prophecy seemed to finally become reality. Thirty percent of Brazilians are currently enrolled in a school or a university and another twenty percent have pulled themselves out of the most abject poverty in the past ten years, in no small part thanks to wisely distributed government aid, and joined the ranks of an ever growing middle class, an astounding achievement by all accounts. These new consumers buy TVs, computers, phones, cars for the wealthiest of them and a mortgage market has even developed for the broader Brazilian middle class, something unthinkable only a decade ago. With the downgrade of the United States’ rating and the specter of a double-dip recession looming, with Europe struggling to overcome its own sovereign debt issues, having completely failed to make the euro the refuge that the dollar no longer is and with China suddenly in panic as it sees the value of the debt it is sitting on decline by the day, Brazil might well be on its way to becoming the single coolest kid on the global block.
The country of the comedian Rafinha Bastos, recently named the single most influential person on Twitter, is blessed with a number of crucial assets in these turbulent times. First of all, it has natural resources up the wazoo and a domestic market of sufficient size to continue to sustain solid growth, making it significantly less dependent than others from the fluctuations of global markets. Its exposure to the sovereign debt crises in the US and Europe is also limited as it is not a significant holder of sovereign paper.
The critical size of its economy makes Brazil a key axis of development for any company with global ambitions. This is especially true given the planetary events that will occur there in the coming years (Soccer World Cup in 2014 and Olympics in 2016) and the massive investments and revenues they represent, which ensures the country’s economy will continue to grow at least until that latter date.
These events also constitute an outstanding opportunity to show the world how much Brazil has progressed in recent years, boosting the ego of one of the proudest people on earth — Brazilians make Americans look like modern Germans when it comes to national pride. In terms of its private sector, the country has several national champions to boast for whose names either already prompt worldwide admiration (Petrobras, Ambev) or have it in their reach (Itau, Mafrig).
On the political front, much has changed since its years of dictatorship, as the exemplar democratic transitions from Cardoso to Lula (perhaps the world’s most popular politician of all times) to Dilma Rousseff attest to. It should also be pointed out that Ms. Rousseff has been remarkably wise and prescient in ensuring that inflation, perhaps the country’s only cause for concern, is diligently kept in check since coming to power.
As a result of all this, the World Bank expects Brazil to become the world’s 5th economic power by 2025; many observers believe this will be achieved sooner still. In the meantime, self-absorption on both sides of the North Atlantic coupled with a tendency to procrastination in times of crisis makes the elaboration of a meaningful, integrated transatlantic policy unlikely these days if the US and Europe are left to initiate it: it is increasingly clear the North-Atlantic conversation will not define this century the way it defined the previous one.
The Atlantic’s sole BRIC country is in a unique position to play an increasing role in global affairs in general and to contribute more significantly to this specific architecture in particular. Some fear this influence might already be tested by the the country’s relations with less than savory regimes. Regardless, Europe and the US should welcome these newly-found ambitions. In an increasingly multipolar world, Brazil might well be one of the Atlantic region’s best chances to experience a renaissance, rather than increasing irrelevance, in the coming decades.
Originally published at www.huffingtonpost.com.