Brazil: Trampled

U.S. puts forth a candidate for the IADB presidency, breaking a 60-year tradition.

With its headquarters in Washington, the Inter-American Development Bank was created in 1959. Though the organization has U.S. majority shareholding, it was established that the presidency would always belong to a Latin American nation with the vice presidency for an American. In the last 60 years this unwritten rule, once known as a gentlemen’s agreement, was maintained: The IADB, a successful economic and social development bank of the Americas, has been presided over by Chileans, Mexicans, Uruguayans and Colombians.

It was expected that Brazil or Argentina would put forth candidates to succeed the current president, and, as expected, this was done. Brazil put forth Rodrigo Xavier, of little political weight, for the IADB presidency. Minister of the Economy Paulo Guedes had informed U.S. Secretary of the Treasury Steve Mnuchin of the Brazilian nomination, with the expectation that for the first time Brazil could elect the new president. However, with a phone call, Mnuchin ended Brazil’s aspirations, divulging that Washington had decided to put forward for the IDB presidency Mauricio Claver-Carone, senior advisor on Latin America affairs at the White House National Security Council, breaking a tradition of 60 years. Contrary to the interests of Brazil, in a joint official statement, the Ministry of Economy and Itamaraty [headquarters of the Ministry of Foreign Affairs of Brazil] aligned themselves with the U.S., when they affirmed “having positively received the announcement of the United States government’s firm commitment to the future of the IDB through the North American candidacy for president of the institution.” The statement ended with an alignment to the U.S. government: “Brazil and the United States share fundamental values, like the defense of democracy, economic freedom and the rule of law. Brazil defends a new IADB management with these values.”

The U.S. always preserved its influence in the IADB through its voting power in the bank’s decisions, close to 30%, more than double the largest Latin American shareholder nations. Washington’s announcement has not caused any reactions, due the absence of assertive leaders in the region. The major countries find themselves vulnerable and with no ability to react: Argentina, with its delicate economic-financial and social situation, amid a negotiation process over its foreign debt to avoid yet another default; Mexico with its passive friction with the U.S. in commerce, immigration, and the construction of the border wall; and Brazil, focused on its health, an internal political problem.

The political reaction to Washington’s move came initially from five ex-presidents from Latin America, who released a declaration in which they condemn the appointment of an American for the IABD presidency. “The proposed nomination does not herald good times for the future of the entity, which leads us to express our dismay at this new aggression by the U.S. government to the multilateral system based on rules agreed upon by the member countries,” states the document signed by ex-Presidents Fernando Henrique Cardoso (Brazil), Ricardo Lagos (Chile), Julio Mario Sanguinetti (Uruguay), Juan Manuel Santos (Colombia) and Ernesto Zedillo (Mexico). In addition to the declaration from the presidents, there is another statement signed by all the Brazilian Finance and Planning ex-chancellors and ex-ministers.

The countries’ reactions began timidly, with a request from the Chilean government that the election be postponed by six months, after the U.S. presidential election. Mexico, Peru and the European Union, associated with the IADB, joined in support of the Chilean initiative. Afterward, amplifying the argument against the selection of an American for the IADB presidency, U.S. political figures, including ex-secretaries of the Treasury and of the Office of the U.S. Trade Representative released letters against Trump’s choice and supported the postponement of the election for March 2021, arguing that with the eventual victory of Joe Biden, that choice would be annulled. The following week, in a joint note of the Ministry of Economy and Itamaraty, the Brazilian government aligned itself with a declaration of countries favorable to the maintenance of a virtual election of the original dates (Sept. 12 and 13), as well as urging all member countries to comply with the adopted resolutions. This statement was the result of pressure from Washington, revealing a fear that the postponement of elections is gaining momentum. The result so far is unpredictable.

The growing presence of China in South America is at the root of Washington’s decision to put forth a candidate to the IADB presidency, against a Brazilian representative, and could be a sign of a renewed political interest in countering Beijing through financial pressure over the region’s countries. It would be a return the Monroe Doctrine (America for the Americans) and of the Roosevelt corollary (speak softly and carry a big stick).

It is not in the interest of Brazil to support measures which bring global geopolitical concerns, confrontations between superpowers, and the pressure of absolute alignment –- while leaving aside the interest of the country, itself, and not just those currently in the government.