Lula: Peace Club To De-Dollarization

 Authored by Andrew Korybko via The Automatic Earth blog,

Brazilian President Lula was successful in reaching an agreement to de-dollarize his country’s trade with China, the significance of which was earlier explained in the context of his country’s grand strategy here, but failed to convince his counterpart to join a so-called “peace club” on Ukraine during their summit. This is no small shortcoming either since it was promoted by his Foreign Minister as one of the reasons behind his trip in an interview that he gave to the Financial Times (FT) late last month.

Lula: Peace Club To De-Dollarization

Globally prominent outlets such as BloombergFrance24, the US Government-run “Radio Free Europe/Radio Liberty” (RFERL), and others all accordingly reported that this issue would be high on the agenda during Lula’s talks with President Xi. His supporters on social media also went wild getting everyone’s expectations up about this as well, even though “Brazil & China Are Poles Apart When It Comes To Their Envisaged End Games In Ukraine” so it was never likely that anything would come of this.

While China, India, and South Africa have consistently abstained from anti-Russian UNGA Resolutions, Brazil bucked the BRICS trend by always voting against Russia except when it came to suspending it from the Human Rights Council. Lula became the first BRICS leader to personally condemn Russia in his joint statement with Biden back in February, after which he ordered his diplomats to vote in support of the latest anti-Russian UNGA Resolution later that same month.

Foreign Minister Vieira was obviously well aware of the sharp differences between Brazil and China’s officially envisaged end games to this conflict yet he still made it seem to FT like there was a chance that the People’s Republic would tacitly support his country’s position via participation in the “peace club”. That was nothing more than wishful thinking, which belied Brazilian diplomats’ refusal to acknowledge China’s principled approach to this conflict since they in hindsight seemed to assume that it was flexible.

Reality slapped them and their supporters in the face upon the publication of the joint Brazilian-Chinese communique on Friday, which can be read in English on the official website of the Brazilian Ministry of Foreign Affairs here. The ninth paragraph of that document will now be shared in full so as to prove Lula’s failure to sway President Xi to his country’s side contrary to the unrealistic expectation that Vieira set for his trip when talking to the FT late last month:

“Both parties stated that dialogue and negotiation are the only viable way out of the crisis in Ukraine and that all efforts leading to a peaceful solution to the crisis must be encouraged and supported. Brazil received in a positive way the proposal by China that offers reflections conducive to the search for a peaceful solution to the crisis. China received in a positive way the efforts by Brazil in favour of peace. The parties made an appeal for more countries to play a constructive role in the promotion of a political solution to the crisis in Ukraine. The parties decided to keep in contact on this matter.”

As can be seen, absolutely nothing of tangible significance came from Lula’s over-hyped “peace club” proposal. This paragraph of their joint statement is purely perfunctory and simply acknowledges their shared interest in peace without touching upon their sharp differences in terms of how this should be achieved. The “positive way” in which China “received” “the efforts by Brazil in favour of peace” is similar in spirit to Russia’s reported support of the optics connected to Lula’s peace rhetoric.

What’s meant by this was explained more in detail here last week but just refers to Russia and China’s interest in showing the world that the international community wants peace as soon as possible instead of indefinitely perpetuating this proxy war. Their soft power interests in no way even remotely imply endorsement of Lula’s envisaged end game as articulated in his joint condemnation of Russia with Biden and the anti-Russian UNGA Resolution that he ordered his country’s diplomats to vote in support of.

China wasn’t ever going to be manipulated into de facto taking the US’ political side in this conflict against Russia by dint of joining Lula’s “peace club” and thus extending credence to his hostile demand that their shared BRICS partner immediately withdraw from all the territory that Kiev claims as its own. Doing so would have discredited President Xi’s signature peace proposal that his diplomats unveiled on the one-year anniversary of the conflict and which he discussed at length with President Putin in March.

Lula therefore failed in his function as Biden’s “Trojan Horse” for tricking the Chinese leader into informally adopting an anti-Russian policy, but this unfriendly gamble didn’t spoil their much larger success in agreeing to de-dollarize bilateral trade. About that, while it’s indisputably a positive development that’ll accelerate the global systemic transition to multipolarity, his Finance Minister Fernando Haddad made it clear that neither this nor the trip in general were aimed against the US.

In his own words, “It doesn’t make sense to get closer to China and move away from the United States. We want the best relations with the United States and the European Union.” This aligns with the insight that was hyperlinked to in the introduction regarding Brazil’s grand strategy, which was elaborated upon in this piece here from Friday that discusses the significance of Lula’s reported plans to launch a global influence platform in joint partnership with the US Democrats.

To summarize, he believes that Brazil can “balance” – however clumsily and imperfectly – between de-dollarizing with China and aggressively propagating liberalglobalism across the world with the US, thus enabling his country to preemptively avert potentially disproportionate dependence on either. Relations with Russia are limited in this paradigm to commodities (including energy investments) and cooperation on BRICS’ new reserve currency, which are important but pale in comparison to China and the US’ roles.

All told, the grand strategic significance of Lula’s de-dollarization success with China far outweighs his failure to trick it into tacitly adopting an anti-Russian policy by joining his proposed “peace club”, but the second-mentioned outcome still deserves to be discussed. Those who expected this to happen must cogently account for the fact that it didn’t occur, though without resorting to the conspiracy theories that have become popular among his supporters, if they want to retain a semblance of credibility.

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