Can Brazil and China Really Pull Off an Alternative Peace Club?

The meeting between Brazilian President Luiz Inácio Lula da Silva and his Chinese counterpart Xi Jinping on 28 March will mark a watershed moment for Brazil’s foreign policy, with there being significant potential for a closer alliance with Beijing and the continuation of a move away from the traditional Western powers in North America and Europe.

In what will be his first official visit to China since being elected in January, Lula is expected to try to convince Xi to join the so-called ‘peace club’ of countries with the shared objective of negotiating an end to the war in Ukraine. Brazil and China have remained largely neutral regarding the Russian invasion, with both countries favouring mediation between the two warring states in an attempt to end the conflict peacefully.

The Chinese Ministry of Foreign Affairs released a publication in February, exactly one year since the conflict began, outlining a change in approach towards the Ukraine conflict, which provides the Brazilian leader with the perfect opportunity not only to persuade Xi to join his alternative forum, but also to increase the strategic presence of Brazil on the world stage. While the content of the publication was broadly impartial, appearing to criticise both Russia’s invasion and US-backed sanctions and the actions of NATO, China clearly states that ‘dialogue and negotiation are the only viable solution to the Ukraine crisis’.

Lula has condemned Moscow, with Brazil recently voting to support a UN resolution which rejected ‘the Russian Federation’s brutal invasion of Ukraine’ and demanded an immediate withdrawal of Russian troops from the country. However, Lula has also been vocally critical of the actions of Ukrainian President Volodymyr Zelensky in the past, stating in May of last year that Kyiv was as responsible for the war as Putin. Furthermore, Brazil has refused to participate in economic sanctions against Russia, while also not providing military equipment to Ukraine. This impartiality lends the Brazilian president some credibility in mediating peace talks.

Members Wanted

The idea of a ‘peace club’ was first proposed in Lula’s visit to the US to meet President Joe Biden in February, with the idea of creating a forum consisting of countries that, in the eyes of the Brazilian government, are not directly involved in the Ukrainian conflict, such as India and China. A new league of this kind could provide Lula with an opportunity to bolster foreign relations beyond what China can offer. In recent years, Brazil had seen improved ties with the US due to the ideological similarities between Jair Bolsonaro and Donald Trump. However, with left-leaning Lula in power and Trump gone, Brazil finds itself in a unique position where it can have greater influence in the BRICS grouping and with other developing countries.

For the past decade, the transnational interests and influence of Beijing have expanded among developing countries, and gone are the days of Chinese foreign policy being guided by Deng Xiaoping’s doctrine of ‘hide your strength and bide your time’. Now, under the rule of Xi, China is taking a more direct role and pursuing a global agenda. Strategically, military spending is growing: the People’s Liberation Army’s budget has more than doubled to $293.35 billion since Xi came to power, reaffirming China’s position as the second largest military spender in the world. Economically, the Belt and Road Initiative has seen an estimated $1 trillion of Chinese investments in projects throughout the developing world.

In the diplomatic field, China has recently proven its ability to bring together opposing states, brokering a deal between Saudi Arabia and Iran to reinitiate political ties after seven years of tension. Continuing with such initiatives, it is highly likely that China will want a front seat at any peace talks between Russia and Ukraine, increasing the likelihood that Lula’s ‘peace club’ proposal will be welcomed by Xi if Beijing is able to be at the forefront of such negotiations.

The Renewables Agenda

The conflict in Ukraine will not be the exclusive talking point of Lula’s visit to China. There are expectations that Lula and his Finance Minister Fernando Haddad will be joined by 240 business people on a second stop in Shanghai, indicating that attracting investment will be of great importance to Brazil. This should not come as a surprise, as Beijing is Brazil’s number one trading partner, with exports to China valued at just under double those to the US.

Lula’s new presidency has also brought with it new policies regarding sustainability and tackling climate change, an area which had fallen in priority under the Bolsonaro administration. The greater priority placed on investing in renewable energy will be key in talks with China, as the two countries already have strong ties in this field.

China is the world’s largest producer of renewable energy and a leading investor in renewable energy around the world. In Brazil, China’s investments in renewables constitute 96% of its total investment in the energy sector, with the vast majority of this being in hydropower. This places Brazil in a unique position, as the plurality of China’s overseas energy investments are in coal – at 42% – with hydropower only making up 26%.

Old Friends Reunited

During Lula’s first presidential tenure between 2003 and 2011, Brazil’s economic relationship with China bloomed. The value of Brazil’s exports to China rose from a mere $1.9 billion in 2001 to $44.3 billion in 2011, making China the number one destination for Brazilian exports. This trade spike was aided by China coming out of the 2008 financial crisis largely unscathed, with a GDP growth of 9.4% in 2009, compared to the US economy shrinking 2.6% in the same year. Furthermore, the creation of the BRICS grouping in 2009 under Lula’s presidency marked a key shift in Brazil’s foreign policy in an attempt to ‘change the political and trade geography of the world’, as he stated at the time.

Lula is expected to continue to strive for greater South–South cooperation, with discussions between Brazil and Argentina over a potential common currency having taken place in January – an idea that still needs refinement after receiving early criticism. Moreover, a proposal by Vladimir Putin to collaborate with other BRICS countries in the creation of a new global reserve currency to challenge the US dollar could see the Global South becoming more prominent in global financial affairs. However, Russia’s struggling economy in the face of Western sanctions could set this plan back, as countries would be unlikely to want to tie their economies to Moscow. This could result in the Chinese yuan taking a more leading role in a potential reserve currency, further incentivising Brazil to develop financial relations with Beijing in the future.

The views expressed in this Commentary are the authors’, and do not represent those of RUSI or any other institution.

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