Brazilian Foreign Policy after the Cold War

4. The Economic Dimension

4 The Economic Dimension The physics underlying the pyramidal model of hegemony—that each of the sides depends on the support of the others for stability—suggests that the economic dimension of a consensual hegemony must be constructed in a manner that explicitly includes or controls all participating states. The two economic facets of Strange’s structural-power pyramid emphasize the use of production and finance as instruments of control, as sources of power for inducing the cooperation or assent of other actors for a particular structuring of the global system. A similar logic applies to the economic dimension of the consensual hegemony, except here the focus is on the inclusive connotations of consensus. Indeed, by building on discussion of the ideas element in the previous chapter the interdependence of each facet of the pyramid becomes increasingly explicit . In Chapter 3 I argued that the ideational aspect of the hegemonic project advanced by Itamaraty was predicated on a reinterpretation of dependency theory that called for an extension of national economic frontiers to the boundaries of the continent; this larger space was then used as a platform for fashioning a more favorable relationship with the wider international environment . While it would certainly be possible to pursue an Albert Hirschman– style policy of economic penetration to precipitate internal pressure for compliance in nominally subordinate countries (Hirschman 1945), such a course of action would require the expenditure of resources and absorption of costs central to coercive conceptions of hegemony. During the Cardoso era Brazil manifestly lacked these economic resources as the country grappled with a succession of destabilizing crises and sought to entrench sustainable, long-term macroeconomic stability. In this chapter I explore a different approach, arguing that Brazil’s foreign policy during the Cardoso presidency explicitly pursued an inclusive vision for the economic space of South America by using the mechanisms of the “new” regionalism to seek the interdependence implicit in the ideas aspect and es- The Economic Dimension 93 sential for the security dimension of the pyramidal model of hegemony. Rather than overt or covert economic domination the goal was integration anchored on the Brazilian market; policymakers sought a situation where transnationalized production chains might develop by exploiting the respective strengths of each participating country (Cardoso and Lafer 2007). Unlike past attempts at integration, which sought to allocate particular industries to each country, the integration movement advanced in Brazilian foreign policy called on firms and governments to seek new opportunities and partnerships within South America as a launching pad for international competition—in effect an attempt to lead the formation of cohesive regionalism. Here the security aspect of our hegemonic model makes its presence felt, as it provided the stability necessary to allow a reconceptualization of the source of two crucial economic inputs: energy supplies and transportation networks. Although in this chapter I examine Itamaraty’s attempts to lead with a policy that would see South America transformed into an integrated economic space, I will not argue that these efforts were entirely successful. Again, the important points for our purposes are the intent and the dynamics of the attempt , each providing insight into how leadership might be conceptualized and pursued. The discussion begins with a brief review of open regionalism to set a theoretical framework for the economic policies pursued by Itamaraty during the Cardoso era. Significant attention is given to the most profound regional project undertaken by Brazil—Mercosul—with emphasis being placed on the transformations the bloc has precipitated in trade and investment patterns. Indeed, Mercosul provides an instructive example as I discuss the physical and financial construction of a regional bloc and how this process was evolving in the South American context. In this respect the narrative addresses the goal of expanding Mercosul into a continental bloc. I argue that Brazilian foreign policy was one of facilitating the creation of a larger regional space, not enforcing or mandating regional expansion (Amorim 2003a, 12; Franco 1993). Its focus consequently sidestepped political attempts at negotiating interregional agreements, a subject addressed earlier, to take a broader view of Brazil’s foreign economic policy, which encompassed questions of value-added trade flows, physical infrastructure construction, and development financing. Government-led instantaneous integration was sidelined as a primary policy goal, being replaced by a longer-term approach seeking sustained and domestically rooted pressure for the elaboration of South America as an active and viable geoeconomic space. Brazilian Foreign Policy after the...