Category Archive: Interviews

1. The Bolivarian Hypothesis

   April 9, 2026 8:30 pm Comments Off on The Bolivarian Hypothesis

   Latin America is a flashpoint for the major conflicts of the twenty-first century: the clash between Great Powers, the struggle over energy resources, the resurgence of reactionary nationalism and the popular resistance to it. The region has also become a testing ground for new forms of imperial intervention, as the Trump administration has radicalized its approach to the so-called western hemisphere, escalating its attacks on both Cuba and Venezuela. Yet Washington’s most dramatic act of aggression, kidnapping President Nicolás Maduro and rendering him to New York, has not led to regime change in Caracas. Three months later the country’s state apparatus remains in place, and one of its foremost cadres, former Vice President Delcy Rodríguez, has now taken the reins—negotiating sanctions relief and new commercial ties with the US from a highly asymmetrical position. 

   For an analysis of the Bolivarian revolution’s onward trajectory—the economic, financial, and military pressures to which the country has been subjected, and how domestic policymaking has tried to cope with them—Phenomenal World spoke to Roy Daza, a deputy for the ruling PSUV in Venezuela’s National Assembly. Daza is vice-chair of the National Assembly’s Foreign Policy Committee and chair of the Parliamentary Friendship Group with Brazil. He is also a member of the newly established Special Committee for Monitoring the Amnesty Law for Democratic Coexistence—a reform which pardons those accused of political violence as a means of restoring social peace. 

   While there is much to criticize in Maduro’s record, and while the nature of the historical relationship between Chavismo and Madurismo remains fiercely contested, most international media coverage of the Venezuelan crisis has impeded our understanding of such issues by systematically excluding Bolivarians like Daza who are aligned with the current administration. Whether or not one agrees with their perspective, one cannot map the prospects for this besieged nation without giving it careful consideration.

   Interview with Roy Daza

   Maria sikorski: Let’s begin by discussing the diplomatic strategy adopted following the capture of Nicolás Maduro and Cilia Flores. What are the main pillars of Venezuela’s foreign policy today? What objectives is it pursuing with allied countries and multilateral organizations?

   Roy Daza: Over two hundred years of republican history, Venezuela had never before been bombed, nor has it ever waged war against another country. Even its most serious conflicts have always been resolved by political means. Peace is a fundamental pillar of the humanist thought of Commander Hugo Chávez and President Nicolás Maduro. The implementation of what Acting President Delcy Rodríguez calls Bolivarian Peace Diplomacy is in this sense the expression of a much longer historical legacy. This policy, as outlined in Rodríguez’s address to the National Assembly on January 15, is based on the recognition of the fundamental clash between the Monroe Doctrine and the doctrine of Simón Bolívar. It defines three major objectives for the Republic at this stage: to demand the immediate release of Nicolás Maduro and Cilia Flores, to maintain peace and stability within the nation, and to continue the development of the government program known as the Plan of the Seven Transformations.

   The Bolivarian government is using all its diplomatic capacity to get the truth out, despite the intensity and persistence of the media campaign that has been waged against Venezuela for years. There needs to be coordinated action by international institutions to put an end to the blockade; we Bolivarians want to see them comply with the principles of the United Nations Charter and the Vienna Conventions. We also maintain that the majority of the world’s nations agree with us in condemning the armed assault and kidnapping of President Maduro. That said, we also know that the Venezuelan people must ultimately rely on their own strength. Hence the relevance of Maduro’s teaching: “In the face of adversity—calm and composure, nerves of steel, and intense popular mobilization.”

   The background to the abominable events of January 3—the kidnapping of the President and First Lady, the deaths of 106 heroes, and the wounding of more than 200, amid the bombing of the city of Caracas and the states of Miranda and La Guaira—is important here. Barack Obama’s decision in 2015 to declare Venezuela an “unusual and extraordinary threat” to the security of the United States served as the basis for adopting unilateral coercive measures whose express purpose, as made clear by US government spokespeople, was to suffocate the Venezuelan economy. This resulted in international financial transactions being blocked, which caused a dramatic drop in imports and affected the domestic market, the investment landscape, and the replenishment of capital for private and state-owned companies. In short, it led to a situation of profound economic paralysis, which was exacerbated by a sharp drop in oil prices.

   On the political front, meanwhile, right-wing forces across the continent imposed a diplomatic siege in 2017 and fascist groups launched a campaign of street violence, resulting in more than a hundred deaths, dozens of injuries, and damage to infrastructure. All this was accompanied by an intense media campaign, driven by the domestic far right, which combined with the sanctions-induced economic crisis to cause mass outward migration—a phenomenon unprecedented in the country’s history. Finally, in 2019, during Donald Trump’s first administration, direct sanctions were placed on the state-owned company Petróleos de Venezuela, further deepening the economic hardship. 

   The far right called for foreign powers to intervene militarily in Venezuela, promoting mercenary operations and supporting invasion attempts, while pushing for the establishment of a spurious “interim government” in 2019. Yet this caused a split within the opposition, as one sector distanced itself from the fascist wing and came to agreements with the Bolivarian government. That made it possible to call for the 2020 legislative elections and reclaim the National Assembly, an institution that had previously been in the hands of extremists. During the pandemic, patriotic forces and the democratic opposition moved forward through dialogue, which ultimately contributed to a certain stabilization of the institutional situation and a gradual economic recovery.

   MS: The Plan of the Seven Transformations is the government’s program for the 2025-31 presidential term. Could you explain its main points?

   RD: The Plan of the Seven Transformations is the product of lengthy discussions within party and government structures, as well as a broad public consultation with different communities and social movements. This deliberative process is not a mere detail; it is a political formula without which one cannot understand what I would call Venezuela’s social cohesion—a concept that transcends mere political agreement. The government could only withstand ten years of economic, commercial, and financial blockade because the Bolivarian Revolution is a historical process that has created a certain degree of social and cultural consensus. It is not simply a conjunctural project but a continuous, long-term one.

   The 7-T initiatives are based on a simple fact: the historical exhaustion of rentier capitalism—the moment when rent ceased to be the driving force of the economy and became a drain on it, an obstacle to development. Rentier capitalism is a model that relies on land rents, and in which imperialist forces seek not only control over hydrocarbon deposits but also dominance over “oil rents” more generally. 

   As I mentioned, by the time the pandemic reached Venezuela we were facing a fall in oil prices, a suspension of foreign debt payments, a drastic reduction in foreign exchange earnings that caused shortages, a campaign to provoke migration, and direct sanctions against PDVSA. By 2025, sound economic policy, plus the efforts of our workers in agriculture and industry, and the active participation of the national business community which stood by Venezuela, had produced a recovery with growth nearing 9 percent. The 7-T is designed to extend these gains. 

   The First Transformation, or 1/T, is aimed at deepening a new productive economic model for small, medium, and large-scale industry, as well as consolidating agricultural sovereignty. The 2/T focuses on public services, infrastructure, and building humane cities. The 3/T centers on citizen security—through the “peace quadrants”—and the defense of the nation.

   The 4/T sets out a comprehensive social protection program linked to the system of social missions and the guarantee of free education and healthcare. The 5/T seeks political transformation, particularly the active participation of citizens in national, state, and municipal government plans through new management methods.

   The 6/T focuses on the development of science and technology in articulation with Bolivarian humanist thought. This is one of the great challenges facing the people, on which we are making vigorous progress—training our attention on the climate crisis, the use of artificial intelligence, and the application of scientific knowledge in production, education, and health. And finally, the 7/T concerns our peace policy, Latin American and Caribbean integration, and humanity’s march toward a multipolar and multicentric world.

   MS: In the wake of the US military intervention, what kinds of alliances—both new and existing ones, such as CELAC and ALBA—are necessary to defend the sovereignty of Venezuela and other Latin American countries? What role can they play given the limitations of the UN system?

   RD: The political landscape in Latin America and the Caribbean has changed in recent years, and the current balance of power is unfavorable to the integration process. Yet we Bolivarians see this as a temporary situation. Latin American and Caribbean unity has solid economic and political foundations and represents a viable alternative for our peoples. In this regard, we hope that CELAC will play a significant role, as will ALBA, and we are convinced that the UNASUR flag will fly freely once again.

   Integration is not a pipedream; it is grounded in a number of concrete factors. First, the global economy remains interdependent and globalized. Humanity’s major problems—climate breakdown, economic crises, migration, widening social inequalities—were not resolved during the unipolar era; on the contrary, they were aggravated. Issues related to international security can only be effectively addressed if different actors make shared commitments. Building a new global consensus is thus a task for all democratic forces. The choice is not between a new order and an old order, but between order and barbarism.

   The world is changing at an unprecedented pace. Multipolarity is a complex and multifaceted process, and understanding the general trends that are giving rise to it—social, economic, cultural, political—requires a continuous and collective effort. Our analysis must be based on the philosophical principles of dialectics and historical materialism, without neglecting the noble craft of diplomacy. It’s essential to reach firm and lasting agreements through dialogue rather than allowing wars to determine relations between states, which is why we need to renew the United Nations Charter, a document that emerged from two world wars with the aim of eradicating armed conflicts and their causes. 

   MS: What is the current internal situation in Venezuela? Can we speak of an anti-interventionist coalition, with some level of cooperation between the PSUV and sectors of the democratic opposition? The passage of the Amnesty Law seems to have been an important step toward stabilization, but what comes next? 

   RD: In Venezuela, there is broad consensus on a key issue: we are now in a new political moment; it is time to overcome polarization. The fascist elements within the opposition—the sectors who only promote violence, which has no place in a democratic Republic—have been weakened and discredited. There is a far-reaching agreement between Chavismo and the democratic opposition. The implementation of the Amnesty Law has been a decisive step toward achieving the kind of democratic coexistence to which we all aspire, while the Presidential Commission for Peace and Coexistence is in full swing throughout the country. Added to this is the successful National Popular Consultation of March 8, which reflects the deepening of our participatory and citizen-led democracy and the creation of a political climate conducive to consensus.

   Anyone who wishes to understand the Venezuelan political process must study its radical, communal democracy and grasp that the massive popular demonstrations—from January 4 to the present—are the foundation of the current political and social stability. The people mobilized in the streets are the social force that is driving democratic coexistence forward. 

   MS: Could you elaborate on the country’s model of communal democracy? How does it differ from other models of indirect representation, and how does it relate to the branches of government? What role do popular referendums play in this framework, especially when it comes to decision-making at the community level and the management of public policies?

   RD: The collapse of the political system that governed Venezuela for forty years, known as the Punto Fijo Pact, had many causes. The most important, in my view, was the marginalization of the vast majority of the people. The two hegemonic parties, Acción Democrática and the Social Christian Party, ended up functioning as one: the political elite joined forces with the economic elite—a power bloc linked to the major media—and shoved most of the population to the sidelines. When the people rose up in the rebellion of February 1989, they revealed the fact that the Punto Fijo Pact was never fully democratic, despite its elections and certain political freedoms. 

   Then, when the economic crisis struck, something happened that was by no means alien to our national history: what Poulantzas called the “hard core” of the system broke apart. What exactly was the hard core? The Armed Forces. The rebellion of the young military officers on February 4, 1992, was a direct consequence of the popular uprising of 1989. The massacre of more than three thousand citizens from working-class neighborhoods shocked the entire society, including the patriotic military as well—and this movement produced a historic leader: Commander Hugo Chávez.

   In other words, the Bolivarian Revolution was a profoundly democratic phenomenon, based on the fundamental principle that sovereignty resides in the people, who exercise it directly or indirectly through universal suffrage. The Revolution broke up the elite power structure and used the 1999 Constitution to define a new political system, which involved communes and the referendums as peculiar features of the Venezuelan process.

   Here Chávez took up the foundational ideas of Simón Rodríguez, a socialist philosopher and teacher of Bolívar, who argued that we should not look to other parts of the world for models of new republics and instead strive for originality. He insisted time and again that to build republics, you have to educate the citizens: “either we invent or we fail.” His theses—which he calls “topoarchy”—include theoretical and practical education, with indigenous languages taught alongside Spanish; equal rights for women and men; and the cultivation of a community that works and educates itself as one. 

   Like any social phenomenon, community councils and communes are a complex and evolving process, with advances and setbacks. The idea gradually took hold despite strong opposition from the right, which—in contrast to the great national poet Aquiles Nazoa, who famously praised the “creative powers of the people”—has an elitist conception of politics in which the idea that popular forces hold political power is unacceptable. 

   As part of this process, communities, organized into various circuits, have the ability to propose projects, use elections to decide which ones are pursued and prioritized, and then oversee their autonomous implementation. Society can thus reclaim functions that it had previously delegated to the state. The resources for these projects are provided by a constitutional body, the Federal Council of Government, with the support of provincial and municipal governments. Each community circuit has a self-governance chamber, a needs assessment, and an action plan for each commune. This is a comprehensive approach that now also incorporates the election of justices of the peace throughout the country and the restructuring of community parliaments.

   President Maduro later contributed to the process of building a new relationship between the state and society by proposing and implementing nationwide consultations, held simultaneously, with the participation of all citizens aged fifteen and older. In this way, universal suffrage was incorporated into the community process, and the consultation, which had been limited to the local level, was scaled up to the nation as a whole. This was a qualitative leap. Since April 2024, seven National Popular Consultations have been held; the last one took place on March 8 of this year and saw the highest turnout, which is no coincidence considering the circumstances. 

   Popular power is also decisively expressed in elections. In 26 years, 32 electoral processes—regional, municipal, and national—have been held. There is a democratic institutional framework both in the five branches of government (executive, legislative, judicial, electoral, and citizen) and in the 335 mayor’s offices and municipal councils, plus the 24 governor’s offices and legislative councils. 

   The fascist faction of the opposition, which has the backing of the international media, never recognizes the election results, except for when it won a majority in the National Assembly in 2015, or when it triumphs in mayoral or gubernatorial races. They reject the 1999 Constitution and state institutions because their central aim is to use force to overthrow the Bolivarian Government, destroy democracy, and establish a dictatorship. The democratic opposition, on the other hand, participates in elections, promotes cross-party agreements, and distances itself from the fascists. We Chavistas affirm, “Everything within the Constitution, nothing outside the Constitution.”

   MS: Let’s talk about the reform of the Hydrocarbons Law approved shortly after Delcy Rodríguez took office. This reform loosens restrictions on private-sector participation—including foreign capital—in oil exploitation in Venezuela, opening the sector to new investments and altering PDVSA’s traditional role. Its approval prompted the United States to suspend some economic sanctions and allow certain transactions in the energy sector. But key restrictions on PDVSA and the Venezuelan financial system remain in place, and so do control mechanisms over international payments.

   What changes can we therefore expect in the Venezuelan economy? What room for maneuver does the country have to revive oil production and accelerate the recovery? And, from a broader perspective, how does Venezuela plan to transition from an oil-based rentier model to a more diversified one?

   RD: The reform of the Hydrocarbons Law is a reaffirmation of key elements of the 2002 Organic Law, adapting the legislation to the new market reality and the global balance of power. It is well known that the Bolivarian Revolution’s oil policy has long been aimed at achieving market stability. It is also well known that oil prices are an essentially political issue, and must be treated as such. Oil production currently exceeds one million barrels per day; the decline we saw in January has been overcome. The partial lifting of some coercive measures against the oil industry confirms what we have long maintained: that sanctions are the primary cause of Venezuela’s economic problems. The recent agreements with Shell, Chevron, ENI, and Repsol, as well as the understandings with Colombia regarding gas, demonstrate that Venezuela is—and will continue to be—an important player in the international energy market.  

   The current phase of the Venezuelan economy is the result of a convergence of internal and external factors. President Maduro moved forward with the formulation of a new economic policy on August 16, 2018, twelve days after the assassination attempt against him. His government laid the foundations for the recovery of the productive apparatus with the support of the working class and the participation of the national business community, particularly in the area of food production. For example, we now produce 29 of the 37 items in our essential food basket; we reduced nutritional vulnerability from 37.5 percent to just 3 percent by the end of 2023, and this year we will reach 2 percent.

   Currently, Venezuela produces more than ninety percent of the food it consumes, a ratio inversely proportional to what existed before the shift in economic policy initiated in 2018. The participation of domestic private capital is fundamental, as is the fact that our working class, with its high level of education and political awareness, has been able to keep the productive engines spinning. Some analysts, who rely not on science but on speculation, fail to grasp how an economy is managed under adverse conditions or how a progressive income distribution policy is implemented. The problem with the Venezuelan economy at this time is not whether it is diversified or not, but the application of coercive measures that stifle its functioning.

   MS: What role did the new economic policy implemented in 2018 play in stabilizing the country during the pandemic? Despite the global economic shock and the tightening of the US economic blockade in 2019, Venezuela managed toreverse a prolonged decline in GDP—which reached -30 percent in 2020—to return to positive territory in 2021, with growth of nearly 1 percent. To what extent did these policies contribute to that turning point and the start of the economic recovery process?

   RD: Economic growth is closely linked to the failure of the plan by the fascist right, which announced an “interim government” in 2019 and tried to foment a coup d’état. The far right thereby exposed itself as anti-national and corrupt, yet the economic damage it inflicted remains incalculable, as it promoted economic sanctions and appropriated resources that Venezuela holds abroad. In September 2019, an agreement was reached between Chavismo and the democratic opposition. Elections for the National Assembly were called in 2020; the democratic forces regained control of parliament, and the fascist right lost its institutional position.

   Oil production also partially recovered with the participation of a US company during Joe Biden’s administration, and this provided resources to restore social programs. However, the most important factor is twofold: on the one hand, the working class in basic industries is unifying and rebuilding production in services and gas and oil extraction; on the other, the national business sector is coming into play, alongside domestic capital and some foreign companies operating across various sectors. Cooperation with allied countries is also becoming highly significant. In 2025, Venezuela closed the year with nearly 9 percent growth, and ECLAC’s predictions for 2026 are that we will continue to lead economic growth in Latin America.

   MS: Despite the partial suspension of some sanctions, the US has maintained explicit restrictions limiting Venezuela’s transactions with countries such as Russia and China. In this context, what is the status of bilateral agreements with these two powers? To what extent can they be sustained under these conditions?

   RD: Venezuela has a very clear stance regarding its relations with all countries. The sudden shifts in the international situation are at the center of our analysis. In this time of uncertainty, the country is advancing its ties with all governments with which it maintains diplomatic, commercial, and political relations, without engaging in zero-sum games. The Bolivarian government has reaffirmed its strategic alliance with the Russian Federation, as well as its “all-weather, all-purpose” relationship with the People’s Republic of China.

   MS: The fact that Trump and the US government negotiated directly with Rodríguez—and subsequently officially recognized her authority as head of state—reflects an acknowledgment of her role in leading the country in the absence of Maduro. But this recognition has occurred in complex political context and initially outside traditional diplomatic channels. What is your interpretation of this strange political situation?

   RD: First of all, it must be said that President Nicolás Maduro is the head of state of the Bolivarian Republic of Venezuela, and as such he has the immunity that belongs to all heads of state. The court trying him has no jurisdiction to do so and must release him immediately.

   President Maduro and Cilia Flores were forcibly removed from their home through a military operation by the US Army in a country with which Venezuela is not at war. President Maduro is a prisoner of war and a decent man, a defender of his people and of the legacy of Commander Hugo Chávez. On March 6, 2026, the US government officially announced its recognition of the Government of the Bolivarian Republic of Venezuela, and diplomatic relations are in the process of being fully restored. It must be remembered that the severing of relations in 2019 was a unilateral decision by the U.S. government. At this time, both the U.S. Embassy in Caracas and the Venezuelan Embassy in Washington are open.

   MS: What are the next steps for the country then? Is Venezuela in a position to regain access to its assets deposited in the US, given the ongoing legal disputes and control mechanisms still in place? 

   RD: Talks with President Trump’s administration are ongoing. The immediate demand of Acting President Rodríguez is the total and definitive lifting of economic sanctions. As long as these remain in place, foreign private investment slows down and transactions are interrupted. Venezuela’s assets—including, among others, the Citgo company—must be returned to our country; they are the property of the Republic.

   MS: Why does the US perceive the Bolivarian Revolution as such a significant threat? 

   RD: At no point in history has Venezuela been a threat to the security of the United States or to any other country. A narrative has been spun about our nation which is false, absurd, and grotesque, with the aim of undermining the achievements of the Bolivarian Revolution. This is because the Venezuelan democratic process represents a challenge to other worn-out and plutocratic political systems. It is also because promoting integration and unity in Latin America and the Caribbean is, in our case, a real and concrete project. We don’t just talk about integration; we have put it into practice.

   Beyond that, it is obvious that the 303 billion barrels of oil beneath our soil are the real reason for the attacks. Everyone knows that our immense natural resources give us enviable economic potential. Our message to other nations is to join forces to restore international law and the United Nations Charter. Overcoming events as grave as those of January 3 demands great moral fortitude. Chavismo is the main political force in Venezuela and the pillar of its democracy; yet the current situation requires the cooperation of all democratic forces on the continent.

   MS: How does the Bolivarian strategy need to be updated or reformulated in light of the so-called Donroe Doctrine?

   RD: The strategy of the Bolivarian Revolution is the unity of Latin America and the Caribbean. It is a constitutional mandate and the most genuine expression of the thought of the liberator Bolívar. Our region possesses natural resources with great strategic importance for the world and also has extensive political experience in integration frameworks such as CARICOM, MERCOSUR, SICA, UNASUR, the Andean Community, ALBA, and CELAC. Its most fundamental asset, however, is peace, without which no project beneficial to humanity would be possible. The contrast with the strategy of the Monroe Doctrine could not be greater. While one promotes sovereignty and regional integration, the other aims to assert US influence and control in the hemisphere. The challenge now lies in the political capacity to manage this contradiction. The people of Venezuela have a historic project and a mandate bequeathed by Commander Hugo Chávez: Unity, Struggle, Battle, and Victory!

2. Superdependence

   March 26, 2026 12:27 pm Comments Off on Superdependence

   Along the northern shore of the Great Lakes, across the water from Rochester, Cleveland, Toledo, and Detroit, the Canadian manufacturing industry has long been part of the greater industrial archipelago of metal-bending communities—out of which American brand name equipment, toolmakers, and vehicle companies grew in the early decades of the twentieth century. 

   Since General Motors consolidated some of these companies under one roof in the era of World War I, the Canadian auto industry has increasingly operated as part of a continentally integrated whole. Since the 1980s, the industry’s geographic center has descended from Detroit and Windsor along the Great Lakes to the hinterlands of the Gulf of Mexico—Tennessee, Georgia, and Alabama to the north, the central Mexican states of San Luis Potosi, Guanajuato, and Puebla to the south, with a large amount of production in the Mexican border states of Sonora, Chihuahua, Coahuila. This reconfiguration of the geography of auto production has stretched out the North American supply chains, within the United States, along two highways—I-65 and I-75—known as “auto alley.” 

   In Canada, the effect of these transformations was long muted by the country’s US trade agreements—a duty-free import quota available to auto makers that agreed to produce in Canada, tying their Canadian sales to their Canadian employment. This type of agreement has been unraveling at a rapid pace since the first Trump administration, when industrial restructuring began to accelerate. From eleven assembly plants in Ontario and one in Quebec during the mid 2000s, employing some 170,000 workers, the industry has shrunk in two decades to 120,000 jobs entirely in Ontario—65,000 in assembly, 36,000 in parts, and 18,000 in bodies and trailers. Over 90 percent of these vehicles, and 60 percent of these parts, are sold in the United States. 

   The majority of the decline has been in assembly. The corporate decisions to relocate this final stage of production reflect a larger transformation of the structure of the industry. Whereas nine of Ontario’s eleven assembly plants were owned by the Detroit Three—GM, Ford, and Chrysler—before the global financial crisis, four of these have since closed. At the same time, Toyota has opened two new plants. Since the tariffs began, two additional Detroit Three plants have closed. Thus, while Canada today has seven assembly plants, for the first time ever a majority are non-union. 

   In February 2026, in response to US tariffs on Canadian vehicles and parts, Canadian Prime Minister Mark Carney announced a new economic program for the auto industry. The program proposes to increase Canadian EV production through deductions and credits on corporate taxes, and a $5,000 credit for consumers—with a goal of selling 850,000 electric vehicles in Canada. The consumer credits will not apply to vehicles from countries without a trade agreement with Canada; the proposal comes as the governments of the United States, Mexico, and Canada renegotiate their continental trade agreement. 

   To analyze the condition of the Canadian auto industry and where it might be headed, Phenomenal World’s Andrew Elrod spoke to Sam Gindin, the former research director for the Canadian Auto Workers, which in 2014 merged with the Communications, Energy and Paperworkers (CEP) to form Unifor. Gindin is the author of many books including The Canadian Auto Workers (1995) and The Making of Global Capitalism (2012), co-written with Leo Panitch.

   An interview with Sam Gindin

   AE: There are roughly 130,000 workers employed in auto production in Canada, concentrated in Ontario. Forty thousand of those are across nine assembly plants, another 70,000 in parts production shops, and a little less than 20,000 in body and trailer plants. How would you describe the economic condition of the industry?

   sG: The industry and its union are in an existential crisis, facing recently imposed tariffs and American pressures to move facilities to the US as well as a transition to EV’s which the North American companies and the American state have botched and which China now completely dominates. 

   The recent closures—General Motors in Ingersoll and Stellantis in Brampton—are reflective of longstanding features of the Canadian auto industry.  Historically, auto manufacturing was not an industry in which Canada could compete on the basis of free markets. The US industry emerged much earlier and also had much greater economies of scale. Canada’s auto industry was from its beginning dependent on a tariff policy.

   By the mid-sixties, which was already the sixth round of post-World War II tariff reductions, Canada’s auto industry had become a major economic and political problem. Even with the tariff wall, Canada was running a very high trade deficit, and increasing tariff rates further would have triggered consumer rebellions and reduced sales. Canada needed a solution to prevent a collapse of its currency and Americans were interested in finding a solution  as well—perhaps because they were concerned about Canada introducing, out of necessity, a more radical alternative, and perhaps because of an interest in greater access to Canadian oil.  

   The solution they found integrated the auto industry across borders. Canadian plants could specialize in certain models which would sell on both sides of the border and the overall industry would be more competitive against imports from overseas. American companies had to commit to a certain amount of production in Canada— Canadian assemblies had to roughly match Canadian sales. 

   Companies that met these conditions could remit their duties on cars brought in from the US. The focus was on protection for assembly plants, with the assumption that if we had the assembly plants, we could get jobs also for the parts plans. This at first worked very much in Canada’s favor. 

   But protectionism for the auto industry was difficult to sustain in the face of growing trade liberalization in both countries. Eventually, pressures to remove the guarantees in this one sector prevailed. Today, there’s an agreement between Canada, the US, and Mexico, which is being renegotiated soon, allowing for duty-free trade across the borders. The agreement applies to all vehicles that have a certain amount of North American content, so foreign-based companies can’t easily step into the free trade agreement without major production commitments on the continent. But in practice, Mexico has gotten a very large share of the investments in the auto industry, and Canada’s surplus has now turned into a small deficit. 

   

   AE: When did the Canadian auto surplus turn into a deficit?

   sG: Canada’s surplus was always uneven—we had a surplus in assembly, but we had a deficit in large components. Research and development took place in the United States, and a disproportionate number of the engines and transmissions and stampings were made in the United States. 

   After NAFTA, Mexico got lower value manufacturing and we became a middle-technology sector. We got some significant engineering that we would do in components, and overall we ran a surplus, because to meet the Canadian production minimum the companies weren’t going to build a fraction of a plant. So we got full-capacity plants that assembled more than the minimum required and sold the surplus into the US market. 

   That surplus shrank over time, and then became a deficit after the 2008 financial crisis. Since then, there hasn’t been much of an economic case to protect the US from Canadian auto production; the most recent Trump tariffs last year came when the US trade balance in the auto industry was in surplus with Canada by the largest amount it’s ever been. Preliminary data for 2026 have our exports to the US very substantially down. One interesting feature of the most recent wave of Trump tariffs is that, while further damaging the Canadian industry, which was in deficit with the US, it avoided attacking the Mexican industry, which does have large surpluses in auto trade with the US. That’s because Trump is looking for US companies to shift production from Canada to the US. This involves some restructuring costs but they are not decisive. Since the industry is already integrated, the supply networks are in place and wage standards are roughly comparable, this would be comparatively easy

   Mexico is, however, a different ballgame. Mexican wages are so much lower than in Canada and the US and the auto companies want the cost advantages of Mexican imports. The magnitude of the wage differential, depending on the exchange rates, is nearly ten to one. As the equivalent of the global South right next door, Mexico gives North American companies like GM, Ford, and Stellantis a way to respond to Asian competition. So despite having an enormous trade surplus with the US, Mexico hasn’t been impacted much by the Trump trade policy, while Canada is getting hammered despite already being in deficit. 

   AE: The way I’ve come to understand the continental situation in the auto industry is that there is, in general, overcapacity. Part of this since the eighties has been the growth of the Japanese, Korean, and European companies you just mentioned. But as the industry’s overall capacity has expanded, the consumer market for new cars has plateaued at around 15 or 16 million annual sales for the past decade.

   How does the experience in Canada fit into this picture? Did Canada adapt to the rise of imports the way the US did, by setting quotas and requiring foreign companies to build production facilities inside the country?

   sG: The simple answer is yes. Competition in the industry leads to the creation of excess capacity, and then as some factories lose out, we get downsizing and job losses. The job losses have been concentrated at GM, Ford, and Chrysler. When I came to work for the Canadian section of the union, for example, General Motors would’ve had about 450,000 unionized autoworkers, both Canadian and American. GM’s UAW/CAW workforce stands today at about 50,000—a decrease of almost 90 percent. 

   Some of that is technology, because with the consumer market relatively flat, productivity increases decrease employment. Two percent or a bit higher per year, for example, adds up quickly over time. Some of the job loss was outsourcing—companies contracting major sections of their work to suppliers offshore. But most critical for the Detroit Three has been the loss of market share to the Koreans, the Germans, and especially to the Japanese auto manufacturers, first via imports and then increasingly due to new non-union facilities in the US south.

   The UAW has just organized Volkswagen in the US, which has one assembly plant in Chattanooga, Tennessee. They hadn’t organized Toyota, except for a joint venture plant with General Motors in California that closed in 2010.1 The NUMMI plant at Fremont, California was bought by Elon Musk as Tesla’s first auto plant. Tesla has repeatedly fired and blacklisted union organizers at the Fremont plant. The overall industry on the North American continent appears to be healthy because it is receiving investment from Japan and Europe. But this obscures the restructuring and its devastating impact on unionized autoworkers. And as the non-unionized plants became more prominent, they began to set standards for the industry more broadly. That’s very significant. Today, Toyota and Honda are the two top assemblers in Canada.  Last year Toyota alone actually assembled more vehicles than GM, Ford, and Chrysler combined. 

   It is difficult to appreciate the extent of these changes and their impact on unionized workers. For most people, the auto industry is identified with GM, Ford and Chrysler (now Stellantis) with foreign-based companies as secondary.  But the growth of the industry in the non-union American south and among companies other than the “Big Three” has transformed the industry in a way that popular consciousnessculture has not quite kept up with. 

   The Japanese-based companies at first went to the US because Reagan had imposed quotas to protect American jobs. These companies didn’t however go to where the job losses were occurring, in Detroit and around the Great Lakes, but to the US South. So in addition to not replacing lost jobs, the new Japanese plants actually competed with the existing industry Reagan claimed to be protecting. This pushed the Canadian government to do much of the same and over the years it put a lot of effort and funds, with occasional border threats, into getting a share of the new Japanese investments. But it’s made union workers, in both the US north and Canada, even more insecure and also threatened their standards. 

   AE: Do you have a recollection of when you came to understand that the non-union parts of the industry were setting the terms for the overall pattern of growth and employment?

   sG: We long knew the US south would be a problem for the continent as a whole, particularly with the growth of the Japanese companies. But there were a few particular moments where this became very significant to the industry as a whole. During the deep crisis in the auto industry of the Obama years, GM and Chrysler asked the US government for subsidies, and part of the agreement that was consequently signed stated that the workers could not get higher wages than those paid by Toyota. That is, they explicitly named Toyota as the new standard-setter. 

   Earlier, in the 1980s, the first time Chrysler declared bankruptcy, Paul Volcker, the Chairman of the US Federal Reserve, was on a board deciding whether Chrysler should receive subsidies to keep it going after its reorganization. Volcker insisted that a condition for subsidies was both wage concessions from the UAW and commitments from Chrysler to outsource more of its work, because Chrysler could get parts cheaper this way both inside and outside of the country. This had an obvious effect in empowering Chrysler and the other automakers in their wage negotiations, as the industry ended up threatening workers with their jobs. This was the US state taking leadership over the auto corporations, sending a message to the employer class as a whole. 

   In the US, the autoworkers union thought that if the Japanese and European companies had to come here, then US autoworkers wouldn’t be competing with lower wages abroad. Forcing the competitors to produce in the US was thought to remove that advantage. This of course implied that the union would organize these new factories. But the union had by then come to focus primarily on wage bargaining, and it was facing a much tougher employer environment more generally. This was the beginning of the long decline and loss of purpose in that union, which culminated in the scandals that brought Shawn Fain to power. Work rules, the pace of work, control over staffing and production were at best secondary union concerns, even though these were critical to why workers joined unions in the first place. This set the stage for the Japanese companies to match union wages and, with the union itself having come to downplay struggles over the work process, this undermined union organizing. 

   AE: How has the transformation of the industry in the US effected Canada?

   sG: The Canadian industry is even more dependent on Asian-based auto assemblers than the US is. For example, GM used to have three assembly plants just in Oshawa, which alongside its component facilities once made it the largest auto complex in North America and perhaps the second largest in the world, after Volkwagen’s complex in Wolfsburg, Germany. It now has one vulnerable assembly plant left in Oshawa. Its Quebec plant is long gone and its CAMI facility, which was assembling electric vans, recently closed. 

   Stellantis had a big operation in Brampton, which they also just closed since Trump’s tariffs. So Stellantis’s assembly operation is now reduced to the plant in Windsor.  Ford closed two of its three assembly plants over the years, leaving it with only the Oakville plant which is in the process of converting into large pickup truck EVs, and seems safe for now. We still have significant engine plants at GM (St Catherine) and at Ford (Windsor). 

   We used to have maybe 80 percent of the parts industry unionized. Today it is perhaps half that. Unifor has had some success in organizing large component plants. Before the financial crisis, for example, in the course of an organizing drive at a Magna seat plant, with the company carrying out a vicious anti-union campaign, we used our strength at the Chrysler assembly plant receiving the seats to tell Chrysler we would not install the seats unless Magna left workers free to choose who would represent them without the company’s interference.  We ultimately got a neutrality letter from Magna stating that it would no longer fight the unionization efforts at that site. Unifor has continued these gains, but not in breaking through at Toyota’s three assembly plants and at Honda’s assembly facility. 

   One of the changes that has been underdiscussed is the strategic power that used to reside in assembly plants has now shifted to parts producers. This is the result of the outsourcing of work from the companies to independent parts suppliers, often in rural areas, supplying both Japanese and American assemblers. Outsourcing components like seating or breaks also outsources potential bargaining power. One seat plant might, for example, supply five different assembly plants. Shutting down that seat plant would significantly impact the industry. 

   The non-union sector obviously weakens the unionized sector, but the problem goes deeper than competition in the product market from non-union producers. . Canada’s unionization rate is nearly 30 percent—three times as large as the US, yet this doesn’t translate into the Canadian labor movement being that much more dynamic than the unions in the States. It’s the quality of unions and not just their density, that is decisive. A union movement that isn’t fighting for working conditions is going to have a problem organizing Japanese plants, because the Japanese companies can easily equal the wages to maintain control of the workforce. If the unions don’t argue over working conditions, health and safety, and so on, they cannot point to these workplace gains that bring leverage against the employers. These are what win over workers in unorganized plants. 

   AE: How do you see these different parts of the industry trying to shape the trade negotiations between the governments in the US, Canada, and Mexico?

   sG: Corporations in Canada will use the uncertainty arising from Trump’s tariffs in collective bargaining with workers. For example, it gives them an excuse to ask workers to open their collective agreements early and agree to concessions in order to save jobs. This is par for the course for employers, and their promise of job guarantees in exchange for concessions on wages, work rules, and benefits are not to be trusted. For one, corporations can’t promise anything in the present context. For another, they will cut jobs no matter the promises if it serves corporate interests. 

   The point is not to fall into the trap of trying to solve large issues like tariffs and economic crises through collective bargaining. These demand political responses—a government ready to mobilize Canadians to forcefully challenge Trump in spite of the risks, since giving in will only encourage him. Since Americans are themselves critical of the tariffs and a significant number of American states are concerned with the tariffs and Canada’s response impacting them negatively, Canadian resistance can reinforce resistance within the US, too. 

   The UAW has an important role to play here. Shawn Fain has been a progressive trade union leader. Fain’s commitment to organizing has put a healthy pressure on Canadian unions. But he supported the tariffs on Canada. Historically, Canadian and American auto workers were always very careful about being played off against each other this way. But Fain got elected on a narrow margin and is wary about the fact that a good number of his membership believe that tariffs protect jobs. In some cases, tariffs can be positive. But to really matter they would have to be combined with far more regulations and serious planning that challenge corporate control over the industry—the failed transition to EV’s is an example. No such regulations or planning is on Trump’s radar. American workers also have the history of the impact of tariffs; it is worth recalling that the end result of Reagan’s quotas, as emphasized earlier, did not help the workers facing job loss (the Japanese companies invested elsewhere) and the new plants ending up undermining standards for all workers. 

   Something that the union and its workers—not just Unifor, but the UAW also—are not confronting is the limits of auto being the job producer it was in the past. Saving existing jobs is of course vital.  But the industry as a whole is not going to expand much. Let’s go back to EVs: The American companies looked at the short term, and tried to delay moving to EVs as long as they possibly could so they could make a fortune off of internal combustion engine vehicles. And the US federal state, because Trump has been completely supportive of expanding the oil industry, has essentially undermined the shift to EVs. China is not just ahead here, but miles and miles ahead. And it’s not just because of lower cost labor. China subsidized research, subsidized consumers buying vehicles that were socially more beneficial, built the recharging infrastructure, and as the industry grew, benefitted from spreading the costs across large volumes—to the point that Chinese EVs are now offered at less than half the price charged for North American-made EVs. 

   Trying to save the American-based companies has failed as a strategy. The crucial focus should be how we save the productive capacities the auto companies are rejecting—the machinery, tool and die, the engineering and skills in the components sector—and apply this potential to addressing private and social need. For example, if we are serious about addressing the environment, this will mean changing everything about how we live, work, travel, enjoy leisure—we will have to reconstruct offices and homes, rebuild and expand mass transit infrastructure, modify equipment, radically expand solar and wind power. If we take all this on, we’ll find that we actually have a labor shortage.   

   AE: Would a former internal-combustion engine auto plant provide a basis for producing this great variety of new energy products and materials that you’re talking about?

   sG: During COVID, General Motors produced masks at a Michigan assembly plant because they didn’t have enough masks for their own employees, not because of some concern about everybody else. The equipment and skills in assembly plants might not be the best place to make mass transit vehicles, but converting a factory making warplanes might. And, if converted to addressing energy systems and the environment, military equipment and technological expertise offer important fits. In auto, the conversion to EVs is one waiting project but the larger question is: what do we need? Can we meet those needs in existing facilities? Can those facilities and their machinery, tooling, engineering, management expertise be adapted as they have been throughout history? And, if not, can we build new facilities that can meet those needs and are located in communities where they can employ workers otherwise threatened by job loss?

   There is a social value to repurposing our existing infrastructure towards new aims. In every community there should be hopes of engineers who can convert infrastructure to suit the changing needs of those communities. There are all kinds of things that people need or that could replace imports or that could be used for the environment. Every municipality has projects that they want to run that are sitting on their shelf. We need to be asking ourselves whether the facilities can be adjusted and people trained to support changing needs. 

   If we don’t seriously take on such questions, restructuring will continue to take place in an undemocratic, unplanned way geared toward profit maximization. 

   AE: You said that this is ultimately a political question, but the kind of politics that would involve converting existing manufacturing facilities into alternative uses seems like a very different kind of politics than where we began this conversation—about what the Canadian government can do vis-a-vis the United States in terms of trade negotiations.

   sG: The kind of politics that has to be developed in the Canadian case is to say: we tied our wagon to the United States because it was the dominant power, but there has been a cost to that. That cost is becoming evident. The problem isn’t tariffs, the problem is that the Americans can do whatever they want to intimidate Canada. Canada has to reduce this dependence. What will its manufacturing industry produce to facilitate this? That question forces us to think about how to restructure our industries to serve other needs and other markets. So the two things are related. 

   But this demands building a social force that can fight to make good ideas a reality. The problem isn’t primarily developing good policies, but an alternative politics. What happens in the absence of that alternative is the politics of Carney. A liberal central banker, Carney has a sense of the importance of responding to this dependence in some way. But his alternative is to go whole hog on exporting our raw materials. His program for independence is to support and build up our oil exports. His position on manufacturing is that we have to subsidize purchases of EVs. But if China’s offering a $22,000 EV and North America is offering $50,000 one, consumers are going to import it if they can.

   This means you need a policy for domestic EV manufacturing. But this gets complicated if you lack the technology. Canada has just agreed to let 50,000 EVs in. It’s nice to have 50,000 EVs as a gesture, but it’s a tiny part of the market and doesn’t address our capacity to make things here. They could demand that the Chinese build in Canada in order to sell to the Canadian market, but even then, we would still not reach those economies of scale. These are difficult questions but ignoring them or being overwhelmed by them is giving up.  

   AE: Presumably the Chinese firms would want to be able to sell into the US consumer market.

   sG: That would be the first thing that China would say. The first thing the Americans would say is if Canada’s making a deal with China to ship cars into the US, we’re gonna put a hundred percent, two-hundred percent tariff on it, or we’ll just ban it. Trump could have come to office and immediately said that: we want TVs, China’s making them, we want them to make them here. If China comes and makes them here, we’re happy. If they don’t, we’ll keep them out.

   AE: Which is what Reagan did.

   sG: Which is what Reagan did with the Japanese. But what kind of a Chinese company would risk coming to the United States and investing a billion dollars? The politics is crucial because, when you’re thinking small, you’re always stuck. You’re defensive. If you don’t actually act at some moment so that you can start changing your options, nothing happens. 

   AE: The last time Trump was president, the orientation of the Canadian government to China seemed to be very different than it is today. How do you interpret Carney’s trip to China and the changes underway?

   sG: What Carney really wants above all is to go back to the old status quo. He is resisting Trump because of obvious economic interest and popular pressures. His nationalism is quite politically appealing, and he is using it to his advantage. He is not, however, truly challenging the politics that Trump stands for, or the structure of the Canadian economy. Ultimately, we do not want to be dependent on the US or China. But Carney is walking a delicate line that doesn’t challenge key aspects of these economic relationships, in part because of how reliant on the US we really are.

   Part of the deal with China getting 50,000 or so EVs to come into Canada was that China would import more agricultural products from Canada. It was a gain for the farmers who were selling those agricultural products. And the Canadian auto workers thought that letting in the 50,000 vehicles was a loss. Those kinds of divisions certainly exist. You are always dealing with competition between farmers in the agricultural sector because there are all kinds of subsidy programs on both sides of the US-Canada border. 

   But everything is more complicated than it appears. Farmers in the US are finding out that some of the components that they need, equipment or components for equipment, is costing more. They’re starting to lose their market. So Trump is having a lot of problems in the rural areas because just protectionism isn’t enough—you have to really think about how you restructure rural life in the US, which has been in crisis for decades. 

   AE: While China can provide a consumer market for Canadian agriculture, it doesn’t seem like it will be a major consumer of Canadian automobiles. 

   sG: Yes, and Canada is still part of NATO. The Cold War mindset is still there, and we would prefer to have an ally next door. So the government is just hoping that Trump goes away and is catering to nationalist sentiments in the meantime. They are also tripling our defense spending. Who is going to pay for that? Down the line, we are headed for a big deficit driven by defense spending that will trigger cuts to other parts of the public budget. Canada can’t just increase its deficits without harming the Canadian dollar and having to increase interest rates to borrow, the way the US can. Ultimately, workers will pay for this. 

   We cannot just be responding moment by moment—we need a broader and more long term vision. What was so striking about the 1960s was that the mood in society generally had a major impact on what was happening in the plants. With the Civil Rights Movement and the events of 1968, there was a sense of a broader political fight that challenged authority. This encouraged people in the auto plants. So the external climate is very important, and at the moment it does not seem to be there. 

   AE: What would you say to someone who argued that, in the upheavals of the sixties and seventies, it was the weakening of company discipline that promoted companies to restructure and outsource labor? 

   sG: I would be impressed that they asked that question, which is a very good one. One of the lessons from the sixties is that popular militancy is necessary, but it is not enough. We need to have a labor movement that asks: why do corporations have the right to move these plants in the first place? Why does democracy stop at the door of corporate property? 

   If you’re not ready to ask those larger questions, the result is the restructuring we saw in the late 70s and 80s. People eventually become exhausted of the militancy, allowing the state to step in under other leadership—in that case, neoliberalism. When Leo Panitch and I worked on The Making of Global Capitalism, we interviewed the head of General Motors North America and asked him why they remained silent when Volcker raised interest rates to 18 percent. The Volcker shock meant that people stopped buying cars, because they couldn’t buy them on credit. It had profoundly injured the industry. He said they didn’t object because they learned it was necessary. 

   What he meant was that there was a crisis which had to be solved. And if breaking the labor movement required a period of pain for the firms, they were ready to take it, because it was a solution in permanently breaking workers’ expectations of constant improvements. So we should admire the militancy of the 1960s—and recognize that it wasn’t enough. If we are not joining with workers around the world to ask who gets to make economic decisions and why, we will always be left on our back feet. The whole point of class politics is to broaden our choices for action. 

   Today, we are in a political moment in which capitalism is facing a deep crisis of legitimation. People don’t trust governments, they don’t trust political parties, they don’t trust political institutions at all. The challenge this poses is first to appreciate that this is a moment of polarized options; the middle ground has failed. Second to channel this into organizing and building a social force up to the task. These are intimidating, but absolutely essential.

3. A World Without Illusions

   March 5, 2026 3:31 pm Comments Off on A World Without Illusions

   The first months of 2026 have seen a dramatic escalation of imperial violence. The United States kidnapped Venezuelan President Nicolás Maduro, threatened to invade Greenland, laid siege to Cuba, gave the green-light to continue the genocide in Palestine, and, as of last week, launched a reckless assault on Iran, bombing its major cities and assassinating its head of state.

   Against this backdrop of deepening turmoil, Phenomenal World spoke to one of Brazil’s leading political figures, Celso Amorim, about the current global conjuncture. Amorim has been a major presence in international relations for more than thirty years. He served as foreign secretary under President Itamar Franco in 1993 and as Brazil’s Permanent Representative to the United Nations later in the decade. He resumed the role of Minister of Foreign Affairs when Lula came to power in 2003 and held it until 2010, before being appointed Minister or Defense by Dilma Rousseff. He is now Chief Advisor to the third Lula government.

   PW’s Maria Sikorski and Hugo Fanton interviewed Amorim on the future of the post-war multilateral institutions, Brazil’s role in Latin America and the wider world, and how developing countries can deal with the increasingly volatile conditions that Washington is creating. 

   Interview with Celso Amorim

   Maria sikorski: What is your assessment of the latest developments in the Middle East?1This interview was conducted shortly before the US and Israel began their bombing campaign. The first two questions were added after an email exchange with Amorim. 

   Celso Amorim: The attacks on Iran, as well as Iran’s response to the US-Israeli offensive, represent a significant aggravation of regional tensions in an international context already marked by major instability. The shrinking space for dialogue and the growing centrality of force are deeply regrettable developments. In just a short period, we have gone from signs of progress in negotiations to a large-scale military operation. At this point the consequences are difficult to measure, but it is unlikely that there will be any quick resolution or a low-cost outcome, considering the demographic, historical, and political dynamics in Iran. The damage will probably not be confined to one country or region, and a scenario in which several conflicts could become interconnected is not out of the question.

   hugo fanton: What is the significance of assassinating a head of state?

   CA: The assassination of a head of state or government is a serious violation of international law, and escalating the conflict to this point tends to increase geopolitical instability. 

   MS: Earlier this year you described the US military intervention in Venezuela as “tragically surreal,” and warned about the dangers of a world that is no longer governed by a predictable set of rules. The international institutions created in the post-war period have not mounted a concrete or coordinated response to Maduro’s kidnapping. Have we now entered a global state of exception, in which diplomacy has been replaced by brute force?

   CA: This is the worst moment for international dialogue since I began to occupy positions of greater responsibility in public life—I am not talking about the beginning of my diplomatic career, when I did not yet follow these processes closely, but about the period when I was directly involved in formulating foreign policy. La Rochefoucauld said that “hypocrisy is the tribute vice pays to virtue.” Now not even that remains. Today certain states act simply because they have the power to act. I consider what happened in Venezuela unjustifiable. I am not defending Nicolás Maduro nor am I saying that he is right; that is another issue. But what we have witnessed here is a violation of international law in its oldest sense: the law of nations.

   Countries have always waged war, but they have not always behaved in this way. The death of a monarch in combat, for example, could occur within a recognizable logic of confrontation between states. What happened in Venezuela, by contrast, is truly surreal. Its only parallel in recent international relations is what we saw in the case of Saddam Hussein. 

   I have learned from my political experience that it is possible to search for loopholes, to push for gradual change, to try to influence events, but that ultimately one cannot ignore reality. And this is the reality today. The question is how to deal with it, and here we do not yet have a clear answer. You rightly mentioned the absence of a stronger reaction from the multilateral system, but we must remember that the multilateral system itself was created by the victorious powers at the end of World War II, and continues to be shaped by this legacy. States act according to their own interests; none is willing, at least for the moment, to risk a direct confrontation with what is still—and will likely continue to be for some time—the world’s greatest military power. This makes the current moment particularly dangerous.

   At one time, when we spoke of multipolarity, we used to imagine a more flexible, more open international order. But we are now seeing the concept of multipolarity transform into something else. It has gradually become conflated with the logic of “spheres of influence.” The other great powers, Russia and China, may have rhetorically condemned the intervention in Venezuela, but they have taken no concrete action. There was not even a resolution presented to the Security Council, which, even if it was defeated, would have at least allowed other states to stake out their positions. 

   There’s no hiding the fact that we live in a very difficult world. Whereas two decades ago I would have said that we lived in a world of opportunities, today we live in a world of difficulties—which have only intensified because of the recent turn in US foreign policy, guided by the worldview associated with Thucydides, in which strength is the only guiding principle.

   HF: How can or should Brazil act in this context? Historically, the country has advocated peaceful solutions to disputes and relied on multilateralism as a central instrument of its foreign policy.

   CA: There is no simple solution. Brazil must continue to work toward a better type of multipolarity. That is why, personally, I have always been cautious about the concept of the “hemisphere.” While the “western hemisphere” might exist geographically, it is curious to use it as a political category when there is no real eastern equivalent. 

   I do not see any determinism in this position. Brazil must maintain good relations with the US—that much is obvious and needs no further explanation. But at the same time, it cannot fail to cultivate relations with China, Russia, and other countries. Not least because, in order to weigh its options, it must maintain dialogue with all sides. When it comes to Russia, in some quarters there was no willingness to engage in dialogue after the outbreak of war in Ukraine. But now I am pleased to see that certain initiatives—such as the visit of French officials to Russia—are pointing in a different direction. It’s not as if Brazil was responsible for effecting this change, but it is nonetheless important for the world at large that there are voices in Brazil that continue to insist on the need for dialogue. 

   We are living through a period when global tensions often arise without mediation. The world today is increasingly raw, so to speak. We may have never experienced such a stark international situation. And although this has increased the risks of international politics, it has also exposed its real workings. This is a world without illusions.

   The consequences for Brazil are profound. Sectors of society that were not previously interested in strategic or defense issues have begun to reflect on these questions. The country needs to develop a serious defense policy, not to confront major powers—we will never have the capacity to confront countries such as the United States, Russia, or China militarily—but to acquire a real deterrence capability. It is essential that external actors know that any aggression would entail significant costs and damage. This is no simple task, as events in Venezuela show. But it is a necessary one.

   At the same time, Brazil must continue to contribute to the construction of a more balanced multipolar international order, in which foreign relations can be rooted in mutual autonomy rather than automatic ideological alignments. Perhaps this is the way forward: combining deterrence with diplomatic action in favor of a more open and cooperative international system. Now, if you ask me whether there are any guarantees of success, the honest answer would be no. There are no certainties. We are dealing with a deeply uncertain historical moment.

   MS: You have always been one of the leading defenders of regional cooperation in Latin America and especially in South America. Yet at this moment of realignment—when the region is once again coming under intense external pressure—Latin America seems deeply fragmented. Its governments have very different orientations. What are the implications of this, given that Brazil’s international defense strategy has historically been designed alongside regional allies, as with the South American Defense Council?

   CA: I have not seen such an unfavorable moment for Latin America as a whole, and for South America in particular, in a long time. Even so, we must continue this vital work. It is not impossible for governments that think differently to engage in dialogue or cooperation. For example, we had a very solid cooperative relationship with Colombian President Álvaro Uribe, who was present when the UNASUR Constitutive Treaty was signed; whereas Uruguay’s Tabaré Vázquez, who was politically close to us, was the only regional head of state who did not attend. Disagreements arose later, especially regarding the creation of the South American Defense Council, because Colombia tended to mix the concepts of external defense and internal security, while we had a different view. Still, it was a solvable disagreement, and in the end it was overcome.

   Once it was created, the Council helped to reduce tensions at delicate moments, such as during the crises between Colombia and Ecuador and between Colombia and Venezuela. Within the broader framework of UNASUR, we were also able to respond to internal crises, such as in Bolivia, although we only ever intervened at the request of the local authorities themselves, never without an invitation. So I would say that dialogue with leaders who have different views is not impossible, as long as there is a willingness to talk. What’s more difficult is sustaining integration processes when worldviews diverge profoundly not only in terms of domestic policy, but also in terms of international alliances and strategic orientations. But even then we must not give up. Politics, as they say, is the art of the possible—and it is also about expanding the space of the possible, bringing it as close as possible to the ideal, while knowing that this ideal will never be fully realized.

   HF: Is the project of Latin American or South American integration decisive for Brazil’s international integration? What is the strategic role of regional integration at a geopolitical moment when regional spheres of influence seem to be regaining centrality, with the US invoking the Monroe Doctrine to threaten Venezuela and Cuba?

   CA: This is something that Brazil cannot accept. I have the perception—although I may be mistaken—that the US treats Brazil with a certain degree of caution, on account of its territorial size, population, and economic and energy potential. We need to be fully aware of this position. Brazil cannot adopt a foreign policy marked, as has been said in the past, by “viralatismo”: a tendency to simply follow the US. That is not, nor will it ever be, the country’s role.

   I believe Brazil should always seek to maintain good relations with its neighbors. The President himself demonstrated this on his recent trip to Panama—an ability to engage in dialogue regardless of ideological affinities. Of course, there are different types of bilateral relationships; personal closeness is one thing, and respectful coexistence between states, based on cordiality and mutual recognition, is another. When the other side does not wish to maintain cordial relations, it is not appropriate to go on insisting; each country must be allowed to pursue its own path. But in general, when this kind of distance opens up it is detrimental for everyone, since Brazil is an important market and a natural partner in the region. Here one must learn to be patient. Patience is an indispensable virtue in international politics—and only leaders with real strategic vision, such as President Lula, fully understand its importance.

   You mentioned Cuba, and on this I do not want to be silent. What is happening there is deeply tragic. It is not simply a matter of pressuring or replacing the government; the sanctions imposed on Cuba do not fall just on a regime, but on an entire people. At the same time, it is not easy to know how to deal with a situation like this. Brazil has few concrete instruments to help, because the degree of interdependence in the international financial system is such that virtually any transaction ends up going through mechanisms subject to US jurisdiction and, therefore, to US sanctions. The same thing happens with oil, with Petrobras. So we are severely limited. But even so, I believe this issue should be the subject of broader international reflection, because it is not about Cuba alone. The precedent set could have serious consequences for the entire region.

   Regardless of one’s sympathies or disagreements, Cuba’s historical trajectory is truly unique: there was a revolution, the invaders were expelled. One can discuss the errors and limitations of the political system that was consolidated thereafter, but nothing about this system will be improved by starving a people with sanctions and isolation. The G77 discussed adopting a resolution on the issue, but a decision like this depends on consensus among its members, and there were even one or two countries in South America that ended up preventing this from happening. This is a shame, because the condemnation of unilateral sanctions has historically been one of the few lasting points of convergence among the countries in the region. Seeing this unity weaken is very worrying.

   HF: Would it be possible to build a regional emergency support mechanism, involving Mexico, for example, to address the situation?

   CA: I can’t say. Mexico itself faces significant challenges. We have great admiration for President Claudia Sheinbaum, but each country has to deal with its own internal priorities, and when its own security is at stake, it is difficult to take on initiatives of this kind.

   In any case, I remember once saying to American lawmakers that, in a sense, the US has already lost the war it started against Cuba more than sixty years ago. The regime has not been overthrown. It is no longer simply a matter of replacing one government with another; it is now about destroying the people. Cuba is a highly specific historical case, in which the perceived political alternatives are extremely limited: either the continuation of the current system or a return to the situation prior to the revolution. I will not quote the various descriptions I have heard of the Batista era, when the country was a mixture between a casino and worse things.

   HF: Under the previous Lula and Dilma governments, you often described Brazilian foreign policy as “proud and active.” More recently, the term “active non-alignment” has emerged. What distinguishes these two concepts, or are they just different ways of expressing the same international outlook? 

   CA: I don’t think there are any major conceptual differences between one formulation and the other. Perhaps the latter is more precise. But I must say that the expression “proud and active” was not born out of any deep theoretical elaboration, but out of a circumstantial necessity. In 2003, when President Lula announced my appointment, there were various other ministers present and I knew I couldn’t give a long speech; I had to say something in four or five minutes at most. So I tried to summarize what the new government’s foreign policy orientation would be. I tried to identify the main difference with the Fernando Henrique Cardoso administration. 

   It was not exactly a radical change, but the fundamental shift was that Brazil would not subordinate itself to externally defined agendas—the FTAA was an obvious example—and, at the same time, it would adopt a more proactive stance in its relations with other developing countries. Our foreign policy would be proud in the sense of preserving decision-making autonomy, and active in the sense of expanding international initiatives and partnerships.

   I was an overseas ambassador during the Fernando Henrique administration and I have no personal complaints—on the contrary, I admire him. But often the instructions I received pointed in the opposite direction: act cautiously, avoid initiatives that could generate unnecessary friction with the US or the European Union. This was the prevailing attitude, even if it wasn’t explicitly stated. The approach we took under the first Lula administration was a little more assertive in this regard. We would now pursue a foreign policy of our own choosing, without fear of taking our own initiatives, though always within the bounds of realism, because everyone knows that there are powerful asymmetries and competing international influences.

   In the first year and a half of the Lula administration, we strengthened Mercosur and advanced the agreement between Mercosur and the Andean Community, which would later give rise to UNASUR; we significantly expanded Brazil’s presence in Africa with numerous presidential visits; and we held the South America-Arab Countries Summit. We were not afraid to get involved in issues that were considered sensitive. There was the crisis in Venezuela marked by the attempted coup in 2002—which, to be fair, had also been condemned by Fernando Henrique—in which Brazil began to play a more direct role of mediation and support for regional stability.

   The expression “active non-alignment” was coined by the former Chilean economy minister Carlos Ominami. I participated in the first meeting he organized on the subject, and I remember remarking at the time that I was very pleased with the choice of the term, because it brought together two traditions of Brazilian foreign policy: in the past, we had a policy of automatic non-alignment, and later we developed the idea of proud and active diplomacy. The idea of active non-alignment combined these orientations, yet without calcifying into a rigid doctrine. 

   It is often said that Brazil is a Western country—and in some respects perhaps it is—but it is also a country of the South. Ultimately, our orientation must be guided by national interests in each specific circumstance. On some issues, we will vote alongside the US; on others, we may converge with China. This is the logic of active non-alignment.

   HF: And does the current international situation still allow for this? 

   CA: Time will tell. Brazil continues to follow this path. In 2024, in the context of the war in Ukraine, when no one was talking about diplomacy, we coordinated with China on a joint document proposing the opening of an international space for political dialogue and the rejection of military escalation. I would even say that this initiative came mostly from Brazil, which was more often asked to play the role of interlocutor, although we found great intellectual and political receptivity in China. We contributed to the creation of a Group of Friends of Peace at the United Nations. And now, as I mentioned, we are finally starting to see European countries recognizing that any lasting solution must take into account basic geopolitical realities, such as the fact that Russia will continue to be part of Europe. 

   I believe there is still room for this type of multilateral activity, although of course the context has changed. This initiative took place before the return of Trump, whose administration has paid little attention to such efforts. For the first time since the end of the Cold War, the international system is beginning to feel the effects of a situation in which the US no longer has the same uncontested position of dominance. This is, without assigning any value judgment to the term, a truly revolutionary moment, in which our ultimate direction is still uncertain. Here Brazil’s strategy also involves strengthening the BRICS, whose origins date back to Lula’s first administration. The BRICS bank remains active, and we continue to seek mechanisms for cooperation that would expand the possibilities for action in our increasingly complex world—a world which is very different from the one I encountered when I was first foreign minister, and which is now undergoing profound changes that are perhaps only comparable to those that occurred in the aftermath of the world wars. 

   MS: To what extent did the formulation of a proud and active foreign policy also represent a redefinition of how Brazil sought to position itself vis-à-vis Washington?

   CA: In 2002, Brazil took the initiative to create the Group of Friends of Venezuela. This proposal from President Lula brought together, on the one hand, countries that were more sympathetic to the Venezuelan government and, on the other, major powers such as the US itself. The goal was to create a space for mediation amid the political crisis the country was experiencing. The person I talked to most about this issue was the then-US Secretary of State Colin Powell. I was very concerned about the need to maintain political dialogue with Venezuela, especially since the recall referendum was beginning to emerge as a possible institutional solution to the crisis. There was also the issue of the presence of international observers—at that time, the OAS still enjoyed a higher degree of credibility than it would later have under Luis Almagro. We wanted to ensure the international legitimacy of the democratic process, and I tried to convince President Chávez of the importance of providing such guarantees. 

   At the same time, I learned that Roger Noriega, a US advisor, would be making statements in the Senate that risked further aggravating the situation. Coincidentally I happened to be in New York, so I called Colin Powell directly and asked him to check the content of the speech, because Chávez was extremely sensitive to any external signal that could be interpreted as interference. At first, Powell did not fully understand the request and replied that he had no control over US senators. I explained that I was not referring to the senators, but to the representative of the government itself who would be making the statement. What happened next was quite unusual in diplomatic practice. Powell forwarded the text of the speech to us in advance so that we could examine it. In my many years of diplomacy I have rarely seen such a gesture, especially in relations between countries of such different weight. This demonstrates the level of dialogue and cooperation that existed at that time.

   I could cite several other examples. In 2007, under the Bush administration, Brazil was invited to participate in the Annapolis Conference, despite internal criticism that we maintained too much dialogue with Arab countries. (I have been to Palestine five times, but I have also visited Israel on several occasions, and President Lula was the first Brazilian head of state to make an official visit to Israel.) Alongside India and South Africa, we were the only non-predominantly Muslim developing country that attended—which reflected the growing international recognition of the balanced role that Brazil sought to play in the dialogue between different regions and actors.

   During the Barack Obama administration, we maintained a normal relationship with the US, despite the revelations that the NSA was routinely engaged in espionage against Brazil. We cooperated on issues such as Haiti, albeit in a limited capacity, and above all on the Iranian question. When I look at current events, I have the impression that history may be repeating itself—although the circumstances are much more serious today. At that time, the US government asked Brazil to intercede with Iran, and so we did. The process took several months, as is natural in negotiations of this kind, but in the end we achieved exactly the terms that the US had previously said would be acceptable. 

   The US later reversed course and chose to bring the issue to a vote in the UN Security Council, which was a difficult moment. But even so, this did not compromise the bilateral relationship. A few months later, during the General Assembly, we still maintained normal contact; Bill and Hillary Clinton were present and invited me to meetings. Despite our differences, lines of communication remained open.

   MS: You have been directly involved in formulating Brazilian foreign policy ever since Clinton was in the White House. What would you say are the main changes in the bilateral relationship between Brazil and the US over the last three decades?

   CA: The biggest change I’ve seen since I first served as foreign minister, during the administrations of Franco in Brazil and Clinton in the US, is a commercial one. In the 1990s, the US was Brazil’s largest trading partner, accounting for about 25 percent of our exports. Today, that share has fallen to about 12 percent. The US remains a very important trading partner for Brazil—still the second largest as an individual state—but there is now a significant gap between it and China, now our main trading partner, which accounts for about 35 percent of exports. This naturally produces a different perception of the bilateral relationship. 

   The US retains enormous cultural influence. Everyone’s happy when a Brazilian film wins an award at Cannes, but there is real national commotion when we win an Oscar. American cultural hegemony remains extremely strong. On the political front, meanwhile, there has been some fluctuation. In ideological terms, the governments in which I have served have generally had a greater affinity with Democratic administrations in the US; but in practice, we had a very positive relationship with President Bush and, despite the many ongoing challenges, we seek to preserve a pragmatic relationship with President Trump. 

   MS: What is the role of BRICS in this context? How do you assess the group’s recent performance and what are the real possibilities for cooperation among its members today, including as a bloc, to support certain international agendas?

   CA: The existence of BRICS is extremely important. Like any international mechanism, the group has imperfections—there will always be debates about which countries should or should not have been included, and about the nature and timing of its expansion. But I believe that the decision to expand BRICS was correct in principle.

   There are various countries, like Indonesia among others, whose participation strengthens the group’s representativeness. Of course, the greater the number of members, the greater the diversity of interests and, consequently, the more complex the decision-making process becomes. In this sense, expanding the BRICS’ representativeness tends to reduce its immediate operational effectiveness. Yet I still believe that the overall balance is positive. The mere fact that the group exists, meets regularly, and maintains permanent lines of contact makes it a significant presence on the international stage. Even when there are cautious positions or occasional absences, the perception remains that this is a real political articulation, capable of acting when necessary. This assessment is not ours alone. Analysts in the US, Europe, and other regions recognize that BRICS has now established itself as a hub for coordination.

   MS: Has the search for alternatives to the dollar become essential for the economic and political security of countries in the Global South? What role does BRICS play in this?

   CA: The issue of de-dollarization may be related to the BRICS but it is not limited to it. I am not an economist, but from what I have seen this is indeed a process that has been gradually taking place. After all, an international currency is essentially a matter of trust. When the perception arises that this currency is being used as a political instrument—to restrict transactions between third parties, for example—countries naturally begin to seek alternatives.

   This does not mean that we will see the end of the dollar’s centrality overnight. I do not believe in abrupt changes of this kind. But we are already seeing China promoting the renminbi as an international reserve currency, something that is now beginning to take shape, at least to a certain extent. The euro has also been partially able to play this role and has recently regained ground. And many countries have begun to increase their gold reserves as a form of diversification in the face of a possible erosion of confidence in traditional reference currencies.

   So this is a real phenomenon, albeit an incremental one. Because any decision to suddenly de-dollarize would be extremely complex, given the density of global financial and trade relations, a gradual process of diversification is more likely. Paradoxically, the erosion of international rules is itself contributing to this movement. It is impossible to selectively weaken the norms of the international system and, at the same time, expect confidence in institutions, including monetary ones, to remain intact. The way sanctions and financial instruments are being used inevitably affects the perception of security associated with the dollar.

   Something similar is occurring in other areas of international politics. In the conflict between Russia and Ukraine, for example, the debate continues over the broader origins of the crisis: was it the expansion of NATO, the 2014 coup, or the progressive deterioration of the European security environment that caused the war? This demonstrates how complex conflicts rarely have single causes and how, ultimately, it is necessary to seek a possible, albeit imperfect, peace. The logic is similar in the economic realm.

   Many previously criticized Brazil’s decision not to join the FTAA. At that time, the US and EU accounted for similar shares of our foreign trade, about a quarter each. If the FTAA had been implemented, Brazil’s dependence on the US could be much greater today. Measures such as tariff increases or trade restrictions could have had a much greater impact. In other words, the diversification strategy, associated with the idea of multipolarity, is not just an abstract political ideal. It is a concrete element of economic resilience and strategic autonomy for Brazil.

   HF: Can the BRICS be understood, in this context, as a space for diversification and strategic coordination among countries seeking a more balanced international order?

   CA: The BRICS does contribute to the strengthening of a more multipolar international order. When we compare forums such as the G7 and the G20, this much becomes clear. The difference lies not only in the presence of the BRICS countries themselves, but in the broader degree of diversity that the G20 embodies. President Bush himself realized, especially in the context of the international financial crisis, that it would be necessary to expand the space for global coordination. The G20 emerged as a more representative institution, capable of bringing together developed and emerging economies around common solutions. 

   Of course, the G20 could still evolve. It would be desirable to expand African representation, for example. A country like Egypt should certainly be present, and the same goes for Nigeria, the most populous country in Africa. Whatever assessment one might make of their governments or levels of stability, their presence would help to make the forum more representative.

   I served for many years at the UN, where I have always advocated—and continue to advocate—for the reform of the Security Council. However, I think it is more likely that this transformation will come from the outside, driven by the evolution of broader multilateral mechanisms, rather than from the will of any single actor. It is in this context that the G20 becomes particularly relevant and, within it, the BRICS countries play an important role in broadening the plurality of discussions and contributing to more balanced international governance.

   HF: At the last meeting of the World Economic Forum, President Trump once again advocated a reorganization of global governance under US leadership, based on the principle of strength. Mark Carney’s response, in which he argued that the old international order has come to an end and that the current moment poses new dilemmas for so-called “middle powers,” resonated around the world. How do you define middle powers, and what are their strategic options today?

   CA: You might say that middle powers are those that do not have atomic bombs. Brazil has established in its constitution that all nuclear activity must be exclusively for peaceful purposes. The possession of nuclear weapons is not part of our national project, nor do I believe it should be—though this does not mean renouncing our defense capabilities. Brazil needs to develop means of deterrence that would make it more difficult to repeat the scenarios we have seen in Venezuela or Cuba, whatever the origin of the threat. 

   International security continues to be governed by the perception of costs and risks. The idea of a unipolar world, which for a certain period seemed predominant, no longer corresponds to reality. Even the US knows this. The great risk, as I mentioned earlier, is that this new multipolarity will become confused with a logic of spheres of influence, which is something that Brazil cannot accept. A country with diversified economic relations—which trades with both China and with the US—cannot be placed in any exclusive sphere of influence. Nor can Brazil be reduced to a single geopolitical identity. We are part of the Global South, yet we are marked by multiple overlapping cultural influences: European, African, indigenous, and Arab, among others. Brazilian foreign policy needs to reflect this plurality and preserve an autonomy of judgment, avoiding the reproduction of imported views that do not align with our historical and social reality.

   MS: When you were Minister of Defense, you often argued that there is a link between national defense strategy and national development strategy. At the end of last year, you advocated increasing defense investments to around 2 percent of GDP. Could you explain what this proposal would mean in military, economic, and political terms for Brazil?

   CA: This is a position I had already advocated when I was Minister of Defense—even though it was not, at that time, a formal government policy, as it would depend on broader institutional decisions. Given the current international situation, it seems natural to me that Brazil should implement this kind of increase. But it is important to make clear that this should be directed primarily toward investment and the maintenance of acquired capabilities, and not simply the expansion of current expenditures (today, a very large portion of the Brazilian defense budget is allocated to payroll and pensions). It is not my place to specify which programs should be given priority; that is the responsibility of the Minister of Defense and the military commands. What I can say is that Brazil has significant deficiencies in several technological and operational areas.

   When I first mentioned the investment target of close to 2 percent of GDP, I was simply trying to establish a reasonable benchmark for international comparison. At the time, I calculated an approximate average between BRICS countries and other relevant economies. Brazil is not involved in any direct conflicts, nor does it face immediate military threats comparable to those in regions such as the Middle East or the Indo-Pacific. Thus, 2 percent seems sufficient to ensure deterrence capability. The logic is essentially defensive. The nuclear-powered submarine is a good example: its main advantage is not as an offensive weapon, but as a deterrent; it has the ability to remain submerged and undetected for long periods, hindering any attempt at military projection against the national territory or its strategic maritime areas.

   What happened recently in Venezuela is still not entirely clear to me. I do not know exactly where the failures occurred, but it is evident that there were various shortcomings. At the same time, it must be recognized that certain powers now have extremely advanced capabilities in the areas of electronic and cyber warfare, and it is natural that other major international actors are developing similar instruments. The central question then becomes: how can a country like Brazil defend itself in this type of scenario? 

   The goal is to prevent Brazil from becoming a structurally vulnerable country. And this becomes even more relevant when we consider our strategic resources. Brazil is estimated to have the world’s second-largest reserves of rare earths and critical minerals—essential inputs for advanced technologies, the energy transition, and modern defense systems. This endowment has sparked great international interest, just as strategic resources have always attracted external attention throughout history. Brazil therefore needs, first and foremost, to develop a clear national policy for critical minerals—something that is already beginning to be discussed within the government—and it also needs to have adequate means to protect these assets.

   In a possible scenario of international tension between third parties, in which access to Brazilian strategic minerals becomes relevant, the country must be able to defend its interests and sovereignty. This is just one example, but it illustrates a broader point: national defense, technological development, and economic security have become inseparable.

   HF: Finally, what is your assessment of President Trump’s so-called Board of Peace?

   CA: I prefer to stick to the positions already expressed by the President of the Republic, who highlighted two important points. First, it does not seem appropriate to conceive of a so-called Board of Peace, with the intention of reforming or replacing UN mechanisms, through a unilateral initiative that has not been previously discussed with the international community. Any initiative of this nature should, at most, have a clearly defined scope—for example, restricted to the situation in Gaza and the Israeli-Palestinian conflict—rather than striving for a broader reconfiguration of international governance. Second, even if limited to this specific context, any peace initiative would need the effective participation of legitimate political representatives of the Palestinian people. It is not enough to rely solely on experts or technicians; it is essential to ensure the Palestinians’ political presence and authority in the process. This is a prerequisite for any arrangement to have legitimacy or a real chance of producing lasting results.

4. Oil Wars

   February 24, 2026 5:04 pm Comments Off on Oil Wars

   On the 3rd of January 2026, Washington launched a military assault on Caracas, capturing Venezuelan President Nicolás Maduro and his wife Cilia Flores. In gross violation of the UN Charter, one hundred and fifty US aircraft bombed essential infrastructure throughout Northern Venezuela as the military raided Maduro’s compound. 

   Perhaps the most surprising aspect of the intervention was just how smoothly it went. In its aftermath, former Venezuelan Vice President Delcy Rodríguez swiftly took the stage and embarked on a historic overhaul of the country’s Organic Hydrocarbons Law, paving the way for the privatization of its vast oil industry. 

   What explains Maduro’s downfall and what does it signal for the rest of Latin America? Phenomenal World editors Maya Adereth and Camilo Garzón discussed these questions with Venezuela’s former Energy Minister, Rafael Ramírez. As Chavez’s longest-serving cabinet member and President of Venezuela’s national oil company, PVDSA, Ramírez presided over the country’s developmental victories and rising global influence. Under Maduro he served as Permanent Representative to the UN before resigning from his post amid disagreements with the government. Here he reflects on the trajectory of Venezuela’s resource economy, its changing geopolitical orientation, and the future of the Bolivarian cause. 

   An interview with Rafael Ramírez

   Maya adereth: Let’s begin with your entry into the Venezuelan energy ministry. What were your strategic priorities when you joined Hugo Chávez’s government in 2000, and how did you cope with the dramatic oil sector strikes of 2002-2003? 

   rafael ramirez:When I became President of Venezuela’s National Gas Entity (ENAGAS), the question of oil was generating profound internal conflict. PVDSA, Venezuela’s oil company, was at that time pursuing the “apertura petrolera”—a policy in which the best oil areas were handed to private and largely American companies. Leaders of PVDSA had hoped that new legislation would legalize those contracts. 

   Of course, we did not pursue this path. As a result, violent conflict rapidly broke out, culminating in the attempted coup d’état of April 2002. My main objective as President of ENAGAS was to prevent Venezuelan gas from being privatized, handed over to US companies like Enron, and extracted from the country. This was critical not only because there was no technical reason to privatize the sector, but also because that gas was essential for our own energy and economic infrastructure. 

   One of the first things President Chávez did in response to the attempted coup was to change the key ministries. I was appointed oil minister in July 2002 with two core aims: bring the oil industry—then in open defiance—under control, and implement the newly enacted Hydrocarbon Law, which reserved oil extraction to the state. 

   In response to these policies, the 2002 oil strike paralyzed production with the demand that Chávez leave the country and resign. As minister, it fell to me to reestablish control of the PDVSA company and oil production. In January 2003, we were producing 23,000 barrels of oil per day. In March of that same year, we increased production to 3 million barrels, becoming the fourth largest oil exporter in the world. We managed to stabilize our production and sustain it until Nicolás Maduro came to power. 

   It must be said that the strike was not an act of sabotage by the workers. The workers were with us the whole time. It was sabotage by senior management, who facilitated a naval blockade of our coasts and halted production. This was a traumatic moment in which we lost 20,000 workers. With the 20,000 who stayed, we managed to revive production and recover full operational capacity. That was my baptism by fire in the oil industry and in government.

   Camilo Garzon: What role did companies such as ExxonMobil and ConocoPhillips play in the political disputes of the period? What happened to these companies after you left the ministry during the Maduro era?

   RR: Immediately after we gained control of PDVSA, which was the main obstacle to the Hydrocarbons Law, we began to redevelop a legal framework for the sector. The first thing we did was to shift from operating agreements to joint ventures. Operating agreements were a mechanism through which previous administrations had handed over the management of oil production to the private sector. We reversed that, and invited them to create joint ventures with PDVSA instead. 

   In 2006, we proposed to the large international companies, namely ConocoPhillips, Exxon, Chevron, Total, Equinox, Eni, and Repsol, that they embrace the new law. We got 31 of the 33 international companies to agree, and a nationalization decree signed by Chávez was issued. Overall, this was a successful process that ensured most companies would migrate to the new scheme and we could retain them as partners.

   ConocoPhillips and Exxon, however, did not accept our terms. They were unwilling to work under Venezuelan law, despite the advantages of the proposals. We took control of their areas, and they resorted to international arbitration courts. ExxonMobil sued Venezuela for $16 billion before the International Chamber of Commerce (ICC) in Paris. We went, defended ourselves, and won, and the ICC said we only had to pay $907 million. Then they sued again for $10 billion, this time before the Tribunal of the International Centre for Settlement of Investment Disputes (ICSID) in Washington. We defended ourselves again and won once more, ultimately paying $1.6 billion minus the $900 million already paid. 

   One year after I left the ministry in 2014, ConocoPhillips also sued Venezuela before the ICC. That time, the Maduro government did not defend the cases adequately. We lost as a result and the ICC ordered Venezuela to pay $2 billion. Then Conoco sued us again before the ICSID, and once more we were charged with paying $8.3 billion total. Of that money, the Maduro government paid nothing to ConocoPhillips and left much of the debt to Exxon unpaid. 

   From then on, the companies began to file claims abroad. ConocoPhillips succeeded in getting a Delaware court to confiscate the assets of Citgo, a refinery we had in the United States, which was valued at $14 billion in 2014 and ended up being seized. It would have been enough to pay the companies what we owed them, but now it is being auctioned off for $5 billion to the United States. 

   MA: In 2000, OPEC leaders came together for the first time since 1975 and relaunched the organization with the aim of advancing a shared political vision. In 2016, OPEC+ emerged—a more politically powerful organization, but with a looser political purpose. What has been Venezuela’s position within OPEC’s internal debates?

   RR: The Caracas summit in 2000 was a very important meeting, during which Chávez took over as OPEC leader and managed to convene the member states despite the recent invasion of Kuwait by Iraq and the war between Iraq and Iran. There were two important groups within OPEC at the time. One consisted of the Gulf monarchies, such as Saudi Arabia, the United Arab Emirates, Kuwait, and Qatar, which were more aligned with the United States. The other consisted of countries like Venezuela, Iran, Algeria, and Libya, which were more forceful about defending geopolitical and resource sovereignty. With a renewed production rate of 3 million barrels, Venezuela gained an important position in the organization’s political decisions. 

   The Venezuelan government had already advocated for the creation of a broader OPEC that would include Russia, but at the time, Saudi Arabia opposed this for fear of losing its relative strength. When Chávez died, Maduro neglected the organization and Venezuela’s domestic oil production, which fell to 1.9 million barrels in 2017. From this point on, Venezuela’s oil production would continue to fall, compounded by the impact of US sanctions. From the fourth largest oil producing country in the world, we plummeted to number 18.    

   The loss of political influence in OPEC was inevitable. With the military intervention in Libya, a weakened Venezuela, and sanctions on Iran, the Saudi monarchy no longer feared Russia’s participation in the broader OPEC framework. Russia’s invitation to OPEC+ remains a great initiative, however, because someone still has to defend oil prices. It is very telling that when Covid-19 caused oil prices to plummet worldwide, it was Donald Trump himself who called on OPEC to cut oil production and protect prices. This alone confirms the importance of the organization.

   MA: PDVSA opened its first office in China in 2005. Today, China’s National Petroleum Corporation has producing assets in Venezuela, and there have been recent reports that Trump’s intervention has caused problems for Venezuela in servicing its debt to China. How has Venezuela’s relationship with China evolved and what stakes does China have in the current crisis?

   RR: For a hundred years, Venezuela was a satellite of the US economy. All our oil production was sold to the United States, and it was sold at discounts of up to 40 percent—$4 per barrel when the price was $11. We were an oil enclave for US transnational corporations. 

   When the Chávez government stabilized the industry, it sought to diversify oil supplies. It began within the region itself, with the creation of Petrocaribe in 2005, a cooperation agreement among the poor island countries. Chávez then pursued an agreement with Argentina and later expanded to the European market, where we made agreements with Portugal, Spain, Italy, and France. During that process of expansion, we formed relations with China with the idea of helping to build a multipolar world. In 2005, Venezuela was not selling a single barrel of oil to China, so these relations were absolutely fresh. 

   Opening up to China involved logistical changes, such as finding tankers with a capacity of 2 million barrels and formally inviting Chinese companies to produce Venezuelan oil. Chinese companies had access to areas that allowed them to produce up to 1 million barrels of oil per day. When I left the ministry in 2014, Venezuela was selling 600 barrels of oil a day to China directly to the China National Petroleum Company (CNPC). This was out of 2.5 million total exports—24 percent of total production. The great advantage of the arrangement was that, unlike our agreements with the United States, all payments from China were at market price. Yet throughout this period, we continued to send 1.2 million barrels, almost half of our exports, to the US. 

   The relationship with China also opened up other areas of cooperation. The Joint China-Venezuela Fund of 2007 offered domestic financing payable in oil. Another part of the agreement included the supply of technology and equipment. Including India, to whom we supplied 400,000 barrels, we had a market of 1 million barrels in Asia with two of the world’s largest oil importers. This was a win-win relationship.

   When Maduro came to power, these plans and programs fell apart. Petrocaribe collapsed, and oil was no longer supplied through this alliance. The agreement with Argentina was blocked after right-wing President Mauricio Macri took office. The supply agreements with India were no longer fulfilled, nor were those with Europe. And with China, supplies were greatly reduced. Maduro also incurred enormous debt with China, estimated at up to $70 billion in loans, though official figures are unavailable. Our commercial relationship with China has therefore weakened significantly. 

   CG: What did Maduro’s intervention in PDVSA consist of, and what effects did it have on the country’s oil production? What are the main differences between Chavismo and Madurismo when it comes to the management of the oil industry?

   RR: Maduro sought direct control of all the country’s institutions. He started with the economy, taking control of the Ministry of Finance, the central bank, and, of course, PDVSA, where he appointed people loyal to him. I opposed that, and that is why they pushed me out of the country. 

   The government then began to imprison workers from the organization. More than 150 managers and directors were sent to prison, many of whom have been there for more than eight years. Former oil minister Nelson Martínez died there. It was undoubtedly a violent intervention, crowned by the appointment of a general from the National Guard, Manuel José Quevedo. Quevedo took charge of PDVSA and persecuted more than 30,000 employees in the industry. 

   So, the first thing that was lost as a result of the new government was human capacity. Maduro’s administration made the mistake of trying to control the company’s operating budget, something Chávez never did. This left the company without any money, and PDVSA came to a standstill. From a production of 3 million barrels in 2013, we fell to 500,000 in 2020, and today it stands at 965,000.  

   Since Maduro rose to power, we have lost almost 75 percent of our oil production capacity. That had never happened in any oil-producing country in the world, unless it was involved in an internal war. But in Venezuela, what happened was an internal war by the government against the oil industry. Much of the current production is sustained by Chevron, which pays no royalties or taxes. 

   In an oil-producing country with a rentier model imposed by transnational corporations, the collapse of the oil industry often means the collapse of the country itself. The Venezuelan economy contracted by 80 percent. The minimum wage fell from $450 per month to $2 per month. And 8 million people left the country because it became impossible to live there.   

   The fundamental difference between Chávez and Maduro is that the former leveraged oil in service of the population. Maduro, on the other hand, privatized oil and placed it in the hands of his political operators. All our social programs were dismantled. We went from a country that had a national developmental and redistributive project to one that was decimated, internationally isolated, without institutional legitimacy, and lacking strategic leverage. 

   MA: During the 1950s, Venezuela was the largest destination for US foreign investments and one of its largest sources of revenue. Is Trump trying to restore the 1950s model, and if so, should we understand this as pure resource control, price-setting control, or something else?

   RR: The first thing to say is that any military intervention in Venezuela must be firmly opposed. The capital city, Caracas, was bombed for the first time since we became a republic. The new US national security policy talks about reviving the Monroe Doctrine. This is a clear regression by the United States to the 1950s: the time when Latin America was dominated by military dictatorships in the context of the Cold War. Today it is Venezuela. Tomorrow it could be Colombia. After that it could be Mexico, or any other country. 

   Trump’s attempt to control the oil industry is especially concerning for Venezuela, because we would return to the concession period. Transnational corporations began to exploit oil in the country from 1920 until 1976, when it was nationalized. During those years, the United States did whatever it wanted with Venezuela. It took more than 50 billion barrels of oil without paying royalties or taxes. That changed with the nationalization of oil and, later, with Chávez, the nationalization of the oil belts of Orinoco. 

   The US claim—which the interim government has allowed—that profits from Venezuelan oil exports should go to a fund managed by the US Secretary of State, is an intervention that has not happened in any country since World War II. It has no political or legal basis. This will not be sustainable over time, but in order to resist it effectively Venezuela must have the capacity to increase production. 

   CG: Venezuelan oil production is already committed to domestic consumption and bilateral contracts primarily with China, Iran, Russia, and Cuba. What are the prospects now for fulfilling these contracts under US supervision, and how is OPEC’s role being reconfigured in light of this new situation?

   RR: If the United States were to control oil production in Venezuela, OPEC would be hugely weakened because of the model it represents for producing countries. The nationalization of oil in Venezuela had an international significance—it represented a vindication for all oil-producing countries who, thanks to their control over production and exports, were able to implement OPEC policies. If a country as important as Venezuela backs down from this model, any other country could follow in the face of a military confrontation: Libya, Iraq, or Iran. This would be disastrous for OPEC. 

   A number of US transnational companies have already told the White House that they will not return to Venezuela. Companies have to respond to their direct bonds and make decisions that make practical sense. So it will not be easy for Trump to get companies to invest in Venezuela as he wants. The current oil market is marked by abundant production, and there are many opportunities for Exxon and Chevron to seize, Guyana being just one example. There, the companies have guaranteed production of 1 million barrels of oil by 2027, with only 1 percent royalties. They are not desperately looking for oil fields.

   But, in any case, Venezuela remains very important due to the simple fact that we can certify the largest oil reserves on the planet. The United States has about 32 billion barrels in reserves, which at the current rate of consumption will last for seven or eight years. This is a strategic problem for them, especially since they have discarded the energy substitution policies of the Biden agenda. They need oil.

   Venezuela’s current production agreements are with China and Russia, each of which could produce up to 1 million barrels. But since Chávez’s death they have halted their investments. The Chinese only produce 100,000 barrels through the joint venture of Petrosinovensa. They could produce 1 million, but they did not invest under Maduro. The details of the other agreements with Iran and Cuba, which are not for production but for supply, are secret. Obviously, the United States is seeking to undermine these agreements so that oil no longer reaches Cuba. 

   Russia and China have said, albeit very timidly, that their projects in the country are still legally in force. But I think everyone is waiting and probably negotiating with the Americans. Neither Russia nor China is going to go to war to maintain their production in Venezuela, which is already at very low levels. 

   CG: What do you think should be the guidelines for a plan to rebuild Venezuela’s oil industry? What efforts are necessary to ensure that its profits can be used for economic reconstruction rather than being syphoned out of the country?

   RR: The problem we face with oil is not a technical one, it is a political one. In Venezuela, we need a return to the rule of law and to some degree of normality. Only then will our oil industry be able to undergo some kind of reconstruction, because the damage done to it has been very great. We must release all political prisoners, call back all the managers and workers who left the company out of fear, and make a national agreement to rebuild oil production. We need to create the political and economic conditions, within the boundaries of a sovereign and unified nation, that will allow us to focus on this issue. 

   The Orinoco oil belt is the country’s newest large oil-producing area. The capacity is there but it is currently unexploited. This area should be prioritized and its oil dividends should be used to meet human needs, flowing into wages and food; and then we can move on to the most problematic and oldest areas, such as Lake Maracaibo. Trump, of course, wants to seize the monetary gains from Venezuelan oil. But even before his intervention, Maduro’s allies were reselling oil to a ghost fleet of buyers who received it at a 25 percent discount and paid for it in cryptocurrency. Oil must be sold again at market prices and that money must go to the Central Bank of Venezuela so that it can be injected into the national economy, as the law requires. 

   A government of national unity is necessary to enshrine the reconstruction of the oil industry as a national priority. Then the political battle can be fought over what we should do with these revenues, whether they should go to the national bourgeoisie or to the people. But this conversation can only take place once we have rescued the management of oil. 

   Although Venezuela is an oil-producing country, it does not actually depend on domestic oil consumption. Almost all of its energy comes from water sources. But in the short and medium term, at the global level, there is no technology or energy source capable of replacing oil. The best proof of this was when Covid shut down the economy of the developed world. When they tried to restart it, wind energy and electric cars did not come to the rescue. What countries asked for was oil, and more of it than before. This indicates that oil, and Venezuela, will continue to play an important role in global energy demand. 

   The essential transition for Venezuela will be out of the oil rentier model. We made a great effort in that regard during the last year of President Chávez’s life and prepared something called the Plan de la Patria, with the help of the China Development Bank. When Chávez died this all came to a standstill. But that is a task that new generations of Venezuelans from now into the future will have to complete. 

5. Brazil and the World System

   November 28, 2025 9:19 pm Comments Off on Brazil and the World System

   As the world’s seventh largest economy, poised between Western and Eastern power blocs, Brazil is at the forefront of contemporary debates on geopolitics, development, and the green transition. Its political landscape remains dominated by the clash between the left-pragmatism of the ruling Workers’ Party (PT) and the right-populism of bolsonarismo: the former attempting to establish a more equitable growth model under constrained conditions, the latter reactivating some of the darkest elements of the country’s authoritarian past. 

   Among the partisans of the PT who are grappling with this fraught situation, Fernando Haddad has a unique ability to move between theory and practice, combining his academic background in philosophy with his experience in government—having served as Minister of Education from 2005 to 2012 and Mayor of São Paulo from 2013 to 2017. When Lula was prevented from running for president in 2018, Haddad stood in his place, winning 47 million votes yet losing to Bolsonaro by a significant margin. Upon Lula’s return to office three years ago he was appointed Minister of Finance, and he has since tried to balance the party’s progressive program with the demand to shrink the deficit in the wake of the pandemic. 

   Here, Haddad talks to Daniel Denvir about the rise of the far right, the implications of Great Power rivalry, the necessity of multilateralism, and the prospects for a country like Brazil in the current global conjuncture, as well as his latest book The Excluded Third (2024). This is an edited transcript of an interview that first appeared on Denvir’s podcast, The Dig. 

   An interview with Fernando Haddad

   Daniel Denvir: What is it about the crisis of neoliberalism—and the broader crises of the US-led liberal international order—that has fueled an explosion of far-right populism in so many countries throughout the Americas and Europe? And within this panorama, what makes the rise of bolsonarismo distinctive?

   Fernando Haddad: The rise of the far right is a global phenomenon because the crisis of neoliberalism is a global phenomenon. When the structures of the 20th century that mitigated the effects of capitalism or promoted some form of emancipation—the Soviet system, national developmentalism, social democracy, the welfare state—began to come apart, neoliberalism imposed itself as the final alternative. 

   Witnessing the collapse of these structures, the global left offered nothing new. And now, as neoliberalism has fallen into crisis, the left has again failed to reposition itself or advance its program. That’s because, in a way, we are still mourning the past rather than building the future. Instead of imagining new structures, we are stuck at the funeral of the old ones. In this political vacuum, the far right has seen an extraordinary opportunity to ascend. It thrives in these conditions because it finds strawmen to blame—which is the most cunning way to win hearts and minds for a project that is fundamentally destructive. 

   How exactly this played out was contingent upon local circumstances. In Brazil, it took the form of a deeply unqualified ex-army captain who had emerged from the shadows of the military dictatorship and had spent his entire career advocating a return to authoritarianism. It was Bolsonaro who, because of certain unique factors—including the assassination attempt during his election campaign—was able to rise to power with the help of far-right populist discourse. On a global scale, I believe such victories are a result of this crisis of neoliberalism and the failure of the left to respond. 

   dd: Let’s look at some of the left’s responses in recent years. In Europe, we’ve seen populist methods used by parties like La France Insoumise and Podemos with varying levels of success; in the US we had a similar experience with Bernie, although we have never had our own party vehicle for reasons that are particular to this national context. In Brazil, the PT was the mass party of the late-20th-century left, which led the struggle against the dictatorship and is now leading the resistance against the far right. At this dangerous political moment, during what is generally thought to be a post-mass-party era, how should the left think through the strategic problems of party organization and form? 

   FH: Before Lula was elected in 2022, we spent seven years out of power, which was a consequence of two factors. The first was a parliamentary coup against President Dilma in 2016. Up to then, Latin America had a long history of violent military assaults on democratic institutions; but this coup was of a completely different order, since it took place entirely within democratic institutions, and its only objective was to remove the PT from power. 

   The second factor was the decision to bar Lula from running in the 2018 presidential election, which he certainly would have won, because of the “Operation Car Wash” allegations. This is a well-known story. Operation Car Wash began as an anti-corruption investigation but soon became a political weapon used to stop Lula from winning the presidency. So I ended up running as the presidential candidate instead. It was crucial for the PT to put up a fight in that election to show that we were still able to compete in the political arena. Even in defeat, we made it to the second round and won about 45 percent of the vote. 

   The Bolsonaro government was an utter disaster, and once Lula was exonerated he was finally allowed to run again in 2022. Yet it was very difficult to compete against the far right when they held state power and were willing to use every possible means to retain it. So we were compelled to form an alliance with Brazil’s democratic center-right. Before Bolsonaro came onto the scene, our main electoral opponents were the PSDB, the center-right party that was central to the country’s democratization process. Unlike Bolsonaro, the former PSDB president Fernando Henrique Cardoso was a very civil and cultured person with a basic commitment to democratic values. So we built an alliance with such forces that allowed us to defeat the far right and return to government. As a result of forging that coalition, our present program has some elements that could be described as centrist, but at the same time its aim is to recover the social rights that had been suppressed by bolsonarismo: increasing the minimum wage, fighting hunger, protecting the autonomy of universities, guaranteeing freedom of expression, and so on. The current PT government is moving towards social demands that were not on the agenda of our previous ones, such as taxing the super-rich to redistribute income.

   dd: How does left populism in the US and Europe compare to the example of the PT? The PT is obviously the dominant force on the Brazilian left, but there are also other parties like PSOL, with whom the PT has had both a cooperative and a conflictual relationship. 

   FH: I believe that the left must return to the discussion of social classes, and in this regard the PT has a very important characteristic: it is not a dogmatic party. The PT is a pragmatic party that seeks to interpret our historical reality and act in accordance with it. Its roots are in the trade union movement in the ABC region of the state of São Paulo, which is the most industrialized part of Brazil. But more recently it has opened up to other social groups. Today we have many people who, to use the traditional jargon, simply cannot sell their labor power to capital, and must find other ways to survive since capitalism no longer provides them with such opportunities. The PT has tried to establish a bond with this new “precariat.” They are not the same as blue-collar workers; in many cases they are people who want to get blue-collar jobs but are prevented from doing so by these historical constraints. We have also tried to build links with another emerging group, namely the creative class. There is a vast literature on this category that Italian theorists call the “cognitariat,” whose labor power is more of a creative force than a productive one. In my view we should not give up on a class analysis of such actors, who are as significant as the industrial proletariat even though their character is distinct. 

   I often read writers like Hardt and Negri and who refer to “the multitude.” But when you speak of the multitude you tend to lose sight of the specificities of these groups who have a particular class perspective, even if it is not a homogeneous one. The emancipatory struggle today depends on developing this understanding that the non-property classes are far from homogeneous. They have different political, aesthetic, cultural standpoints—and the role of politics is to give them a common project. This won’t emerge mechanically from economic conditions; it will only come about through the activities of a party like the PT. 

   dd: So, in other words, a particular party form is the expression of a particular composition of the working class at a particular conjuncture. That’s where you would start your analysis of the different political forces on the Brazilian left?

   FH: Yes. I think we must escape the dogmatism of traditional class theory. The idea that there is one unified class that represents the interests of humanity cannot withstand historical scrutiny. Under capitalism, only the propertied classes are homogeneous. They can coordinate with one another almost through telepathy. They spontaneously know which interests to defend. It is as if they could do without politics. For us it is different. Non-propertied classes must face up to various dilemmas that cannot be resolved by the intervention of any single, universal class subject. To advance the shared interests of humanity we need more politics, not less: more ingenuity, more inventiveness, more socialist imagination than we had a century ago.

   dd: How did your experience over the past decade, first seeing Lula sent to prison and then losing the presidential race to a far-right extremist, lead you to write The Excluded Third: Contribution to a Dialectical Anthropology? The book explores the basis of social and cultural antagonisms and how they might be overcome through emancipatory struggle. You’re a Minister of Finance, of course, but you’re also a trained philosopher. What sort of philosophical inquiry did you feel was required at this particular moment?

   FH: My political experience allowed me to think through the issue of sociability, which I brought together with my academic research to produce The Excluded Third. Its basic argument is that the reason anthropology seems to be a conservative discipline is that most anthropologists do not accept contradiction as a central element in thinking about human sociability, whereas we can arrive at a different view if we use the Hegelian categories of identity, difference, and contradiction. Applying these terms to the natural or biological sciences is a big mistake. But if you view them as dimensions of human intersubjectivity, you realize that they capture the way people choose to live with each other. Were it not for the concepts of identity and difference, for example, injustices like slavery would be a logical impossibility. If human beings saw themselves as equals, they would simply dominate nature without dominating each other. 

   This problem of human sociability is one of the issues that separates liberals from socialists. For socialists, economic inequality is a fact of contradiction rather than simply a mark of difference. When you conceive of an emancipatory project, you have to recognize that there is a contradiction in capitalism between owners and non-owners, while at the same time accepting that among non-owners there are differences that can only be overcome by politics—that there won’t be any natural alignment between non-owners due to the simple fact that they are the dominated rather than the dominating class.

   An emancipated society would also involve a different kind of relationship to nature, one that places more emphasis on the ecological and less on the economic. It would require forms of organization, forms of production, which respect both the differences between people and between humanity and the environment. This new society can only be forged when politics creates the conditions for overcoming our present set of contradictions. So the starting point is to return to social classes, to go back to discussing what produces contradiction and what produces difference. This is an invitation to put dialectics back on the agenda. To think dialectically is to think that human sociability is founded on these premises, which are not the premises of reflective thought but of intersubjective relations. 

   dd: José Dirceu, one of the founders of the PT, recently referred to the current Lula administration as a “center-right government.” What do you make of that assessment and the broader contradiction to which it speaks? On the one hand, it seems clear that a broad front is needed to resist the far right, especially given that Congress is controlled by your political adversaries, which in various ways reflects the deeper balance of power within Brazilian society. On the other hand, there is still an urgent need for a left-wing program to fundamentally transform Brazil and, in doing so, address the root causes of far-right reaction.

   FH: I disagree with Dirceu’s statement. Of our five governments, I would say that this is the most left wing. I have absolutely no doubt about this. We have set in motion a profound shift in this country’s economic agenda. 

   Let me cite some examples. This is the first time that, in making a fiscal adjustment, the government has demanded that the rich contribute. On every previous occasion, those who paid for these adjustments were people earning the minimum wage, people reliant on social welfare. Now, while we have accepted the need to deal with the budget deficit after the pandemic, we have insisted that it should be financed by the rich. Never before have we put so much stress on the issue of inequality. The PT has always been a champion in the struggle against poverty, and our previous administrations have been praised for this. But on the issue of inequality we have evolved, so that it is now at the center of our political agenda. 

   From an environmental point of view, this is also the most progressive Brazilian government to date. We are leading the global debate on financing the preservation of tropical rainforests, on creating a coalition around a fair carbon market, on taxing the super rich during our presidency of the G20—proposals that were never on the table until now. We have also fought hard on the question of multilateralism and the need for regional integration, to prevent the world from returning to a bipolar situation. So in my view, President Lula’s third term will be recognized as his most progressive, and I hope the fourth one will be even more so. 

   dd: How do you see the geopolitical and geo-economic power that the BRICS wield, or might potentially wield in the future? Do you think the BRICS could create alignment among countries of the Global South on the need for an alternative global political and economic order that would confront the deeply entrenched inequalities of the US-dominated world system? 

   I’m thinking back 70 years to the Bandung Conference in Indonesia, the inauguration of a Third Worldist politics that was able to transcend differences between monarchies, democracies, and socialist states. Then as now, neo-colonial power imposed unequal relations of exchange and dependency upon formerly colonized nations. So could the BRICS echo or learn from that experiment? Could we see a new, coherent project emerging between Brazil, Russia, India, China, and South Africa? 

   FH: I think we need to be realistic about what the BRICS can accomplish, although I also understand that we have to explore all the bloc’s possibilities. First of all, the BRICS have the primary function of strengthening the G20. Were it not for them, the G7 would dominate all the geopolitical debates of our time. So the BRICS are able to prevent the G7 from pretending to speak for all of humanity, as if there were no other relevant players. Their mission in that respect is to demonstrate that the world has changed and that there are new political actors who need to be respected. If there is any hope of reforming international organizations into ones that reflect these changes which have taken place over the past 40 years, the BRICS will be a vital part of that task. 

   Another dimension is the BRICS’ relationship to the Third World. Here it remains unclear what role China will play. It is a country in transition, and there are two paths that it could take. The more optimistic one would be a kind of socialism for the 21st century, while the less optimistic view, in the progressive camp at least, is that China has already become a traditional capitalist country.

   It may be the case that China represents merely another ordinary national project, like that of so many other countries which have risen to become the global hegemon, from Spain to the Netherlands to England to the United States. If China simply intends to take the place of the current hegemonic power, I think the Third World will be undercut, and we will have a situation where the traditional international division of labor continues to dictate the rules. 

   But if China embarks on a more ambitious, more generous project, involving technology transfers and a new approach to the global industrial geography which offers greater opportunities for developing countries—a more democratized alternative to the current division of labor—then there could be a different outcome. So whether China is a proto-capitalist or proto-socialist country is a question that history has not yet answered, and the answer will depend not only on the Chinese Communist Party, but also on the emerging classes in China and the kind of relations they want their country to cultivate with other states.  There is a lot of speculation about this, but I would say that the future of China is central to most of the significant political issues that remain unresolved today.

   dd: In terms of China’s relationship with the rest of the world, and whether it takes up the crisis-ridden role of the US as global hegemon, you mentioned the importance of technology transfers. I was looking at some reporting in Phenomenal World which showed how Chinese firms have committed over $227 billion across 461 Green manufacturing projects in 54 countries since 2011, with 88 percent of investment occurring just since 2022. In inflation-adjusted dollars, this sum is larger than the $200 billion Marshall Plan. So is there a real possibility here that China could relate to other countries in a way that the West never has, allowing them to create their own development models by making green tech transfers and opening factories—EV factories, for instance—overseas?

   FH: Again, this is a question that history will have to answer. The possibility exists for countries to be integrated in totally unprecedented ways. But the export of capital from a rich country to a developing or even an underdeveloped one is not an original feature of our time. It has been happening since the end of the 19th century. The industrial revolution—especially the second industrial revolution, with the arrival of the steam engine and the railways—involved an enormous export of capital that drew even very backward regions into the orbit of capitalism. Brazil underwent significant industrialization as a result, funded by the income from exporting coffee to Europe and the United States. It was one of the countries with the most economic growth between 1930 and 1980. So there is nothing novel about foreign investment starting these cycles of development in semi-peripheral or peripheral countries. 

   Today, we could start to see something qualitatively new, not just a reproduction of the growth cycles of the past, but this will depend on how China intends to engage with its economic partners: whether there is a more egalitarian development process across the planet or whether national prerogatives win out. This, in turn, will hinge on the geopolitical developments that take place as China’s economy continues its ascent on the global stage. 

   dd: We don’t yet know where China’s green development model is heading and what that will mean for the future of the world system, but we do know that Brazil’s economic relationship with China has played a fundamental role in remaking its economy since the turn of the millenium. Lula took office in 2003 amid an unprecedented global commodities boom: a super cycle driven by rapid Chinese development that demanded vast quantities of raw materials from countries like Brazil. That commodities boom gave the PT government the fiscal space to redistribute wealth to poor Brazilians while registering impressive levels of GDP growth, which was a historic achievement. But at the same time, this process contributed to Brazil’s deindustrialization and reprimarization, meaning that primary good exports and agribusiness rather than manufacturing exports came to dominate the economy.

   What is your assessment of that contradictory trajectory and how to deal with the dominance of agribusiness in Brazil today? Economically, the present order seems to militate against a more sustainable and equitable development model, while politically it seems to provide the material basis for some of the most reactionary and anti-democratic forces in Brazilian politics. None of this is easy to change, however, because the government is highly constrained and the economy needs export revenue in foreign currency.

   FH: At the center of your question is the international division of labor. In this division, the higher order activities with greater value added are based in a few regions of the world—the core of capitalism—where you have a concentration of the creative forces I mentioned earlier. In these places, in addition to regular profits, capital can earn a super profit—whose character is similar to rent—which is extracted from activities that add knowledge to production. This dynamic generates a permanent flow of profits from less developed regions to more developed ones. Just as wealth is concentrated among a few social classes, it is also concentrated in a few countries. 

   I think the issue that needs to be debated here is whether the Chinese project of development is compatible with this historical pattern. The nature of the Chinese economic system, its social character, not only bears on domestic relations between Chinese workers and elites, whether there is a relationship of domination between them; it also has implications for China’s relations with the rest of the world. It is possible that China will simply reproduce the asymmetry between core and periphery, and the world economy will remain stratified. 

   In this context, Brazil needs to advance a national development plan—one that prevents this process of reprimarization of our economy and tries to assert our competitive advantages, especially around clean energy and critical minerals, so that we can think again about re-industrializing the country. But in my view this is not possible without partnerships in areas such as technology, which can allow us to re-industrialize while fulfilling our goals of adding greater value to what we produce domestically. 

   dd: Your ministry has been developing a new green industrialization plan. Here in the United States, Biden’s Democratic Party rolled out a green industrial policy of its own, which was in many ways an important break with neoliberal orthodoxy, but it was also woefully insufficient. It was excessively indirect in terms of financing, relying on tax credits rather than direct expenditures, let alone public ownership, and it was fundamentally bound up with the new Cold War with China. Under Trump, significant parts of this program are being dismantled. What can we learn from this experience? How do Brazil’s current efforts compare to those of Biden in the US? 

   FH: Right now Brazil is thinking in terms of global finance. We are hoping to create global instruments for financing the ecological transition which could enable new forms of development that are not restricted to specific regions. When Brazil talks about taxing the super rich, we do not simply mean that each nation state should place additional taxes on its wealthiest citizens, for today their fortunes are no longer national but global. We have 3,000 families who have accumulated wealth of R$15 trillion, or around US$3 trillion. So we must find financial mechanisms to place even a fraction of this wealth in the service of a global project of ecological transformation, to fight back against deprivation, against misery, against a lack of opportunities. 

   If we don’t take this step, if we don’t start building some kind of architecture of international governance, with a budget of its own as well as a vision of the future, I think we will make the mistake of believing that inter-state and inter-capitalist competition are capable of meeting today’s vast humanitarian challenges. 

   dd: Tech companies are the most powerful on earth, and their CEOs are the richest people who have ever lived. In the United States it’s become frighteningly clear that the tech oligarchy finds its political expression an authoritarian fascism. 

   The role of AI in the US economy is particularly astounding. AI investments, according to the FT, account for 40 percent of US GDP growth this year and 80 percent of US stock gains. What do you make of the role of US tech in the global economy? What sort of challenges does it pose for a left political project like that of the PT in Brazil? And lastly, to zoom out a little, some Marxists make the argument that the tech companies have ended capitalism as we know it and replaced it with a new domain of “technofeudalism,” driven by rents rather than profits. Others like Evgeni Morozov reject this view. I’m curious what your position is.

   FH: Nation-states must have the courage to regulate the tech sector in their own territories, which is what Brazil has done by sending a bill to the National Congress to regulate digital competition. It would introduce minimum levels of competition to ensure that Brazilian companies and capital do not become easy prey for these multinationals. 

   What’s most intriguing about the tech giants is that they insist on rules that are absolutely incompatible with the principles they claim to uphold. They praise liberalism and free competition, while at the same time challenging the type of bill we’ve drafted and demanding preferential treatment, as if their enormous power weren’t enough of a privilege in itself.

   Since knowledge has become a factor of production—a development of the post-war period, which intensified from the 1980s onwards—we have seen new enclosures to protect the monopolies of the digital economy. This allows the tech companies to attain super profits in the form of rent, yet it bears no resemblance to the feudal world, none at all. It is rather the quintessence of capitalism: its most advanced stage. Capitalism has commodified land, labor, and money—Polanyi’s three “fictitious commodities”—and has now entered a phase where it is commodifying knowledge itself. In my academic work I describe this phase as “super industrial.” This is not a feudal world but one of total commodification, where capitalism has been raised to the level of paroxysm. While I understand the rhetorical appeal of the “technofeudalism” thesis, I think this term confuses more than it illuminates the present situation.

   dd: Let’s turn back to geopolitics and geo-economics. If the US and China can’t work together to rebalance the global economy, foster geopolitical stability and disarmament, and support a just energy transition—if the US instead continues to wage a New Cold War—then we’re obviously heading in the wrong direction. Amid the broader crisis of the liberal international order, the genocide in Gaza, Trump’s tariff wars, the US attacks on boats off Latin America’s coastline, the proxy war between the West and Russia, and so on, what is your vision for a new global order? How might we begin to build it? 

   FH: In the Cold War era, the Soviet Union posed a military threat to the United States but not an economic one; it was never a global player in the struggle for control of markets. Then, when an economic rival finally emerged, it was the unarmed nation of Japan, which could threaten American hegemony economically but not militarily. China, by contrast, is a much bigger challenge for the US because it combines military power with economic might. A repolarization of the world around these two powers could have even more disastrous effects for humanity than previous conflicts, which were ultimately solved without a resort to hot war.

   The conflict that the Trump administration seems to want to ignite would be a clash without historical precedent. This is why the civilizing forces of the world are betting so much on multilateralism as a possible antidote. In Brazil the government has fought hard for an agreement between the European Union and Mercosur to create alternative trade routes. I believe it is essential to create such alternative poles which can prevent repolarization from taking place.

   We’ve seen how the United States has dealt with the rise of China’s economic and military power, but how China itself responds will also have implications for the entire planet. If there is merely a struggle for hegemony, a struggle for power, I think many difficulties will lie ahead; but if China is open to a different approach—a geopolitical rebalancing that implies concessions even for those who have no power, a spirit of compromise that involves international solidarity and generosity—then perhaps we can face some of the problems presented by national borders, problems that are impossible to solve as long as borders are seen as insurmountable barriers. There is clear a role here, both political and pedagogical, for global progressive forces.

   dd: I want to conclude with a big picture question. How do you navigate all the inevitable contradictions and compromises of being finance minister of a BRICS country that must pursue a reformist program hemmed in by structural constraints at both the domestic and global levels, while also remaining a Marxist and a socialist, with a vision of a post-capitalist horizon that can sometimes feel very, very far away?

   FH: If you dream of a better world, if you imagine that humanity will not stop at its current stage, that it will seek alternative forms of social organization that allow people to develop as global citizens, then you cannot prevent yourself from confronting the practicalities of the present. I always keep in mind that as well as being accountable to others, I have to be accountable to myself when I leave the offices I hold. In none of my previous positions, whether as Minister of Education, as Mayor of São Paulo, or now as Minister of Finance, have I found myself in a situation where 20 years later I’ll look back and feel ashamed of the decisions I made in light of the principles and values that I defend. So I’ll continue to push the wagon where I think it should go. It may go faster or slower, but I know I’m pushing in the right direction.

6. The Belt and Road 2.0

   September 19, 2025 6:16 pm Comments Off on The Belt and Road 2.0

   Chinese firms are going out.

   As the US withdraws from green tech industries and pressures its allies to follow suit, Chinese firms are stepping in to power the developing world’s green transition. A new report from the Net Zero Industrial Policy Lab at Johns Hopkins University, co-authored by NZIPL Fellow Xiaokang (Harold) Xue and Senior Policy Fellow at LSE’s Grantham Research Institute on Climate Change & the Environment Mathias Larsen, previews the insights from a comprehensive database on Chinese overseas investments in clean tech manufacturing. The scale is staggering. Chinese firms have committed over $227 billion across 461 green manufacturing projects in 54 countries since 2011—with 88 percent of investment occurring just since 2022. In inflation-adjusted dollars, this sum is larger than the $200 billion Marshall Plan.

   At the moment when climate action is most urgent, and clean energy is becoming the cheapest source of power globally, the US is walking away from the ambition to lead or even participate in that transition. Meanwhile, China has surged green investment domestically and built end-to-end control of green supply chains: solar, batteries, EVs, wind turbines, green hydrogen. And its firms are bringing this capacity to the developing world, with over 75 percent of these projects located in global South countries eager for industrial capacity.

   In a report based on Xue and Larsen’s research, Bloomberg’s David Fickling contrasted the two trends: “Right now, Beijing is offering cheap, clean power, employment, trade and a route to prosperity. Washington is offering tariffs, policy chaos, White nationalist memes and South Korean workers in shackles after a raid on an EV battery factory. This is no way to win the grand strategic contest of the 21st century.”
   
   Tim Sahay, the Co-director of NZIPL and co-author of the Polycrisis newsletter spoke with Mathias Larsen about the new research and what it tells us about the developing shape of the global green transition and this pivotal moment in global economic history.

   An interview with Mathias Larsen

   TIM SAHAY: China’s total dominance in green technologies has provoked anxiety in many countries among policymakers, analysts, and captains of industry—overcapacity and dumping are the watchwords of the moment. One prescription in response has been that China should set up green factories abroad, rather than send out ships laden with green goods. So is that happening?

   ML: What our research demonstrates is, in summary, a massive increase of Chinese outward investments in the manufacturing of clean technologies. This both supports the host countries’ development and supports a global green transition.

   There are five key takeaways. The first is the scale of investments: more than $200 billion, toward $250 billion, with a rapid increase since 2022. It’s nearing $100 billion a year, which is around the same amount that China gave in infrastructure loans when that peaked in 2018. In comparison, the Marshall Plan by the US after the Second World War was around $200 billion in total. The Marshall Plan locked Europe into US technologies and standards, so when we see sums of this size, we can ask whether it will potentially have a similar effect in the future. 

   To put this in perspective, China’s domestic investments in green manufacturing were $340 billion in 2024. Compared to $70 billion in outwards green FDI, that’s a fifth. It’s the same ratio in terms of stock, where there’s about a trillion of investments in green manufacturing domestically. Now this stock here is getting past $200 billion, also a fifth.

   The second crucial point is the speed of the increase. The Belt And Road Initiative was primarily infrastructure loans, which peaked in 2018 at around $100 billion per year. That figure fell off a cliff, and there was a valley from 2020 to 2022, with basically no outbound Chinese investments or loans at all. And from 2022, we see a rapid increase in the FDI that we are tracking. While numbers for 2025 suggest a stagnation, the pattern may end up near this prior level, around $100 billion a year. So we can clearly call this BRI 2.0.

   

   The third point is the status of the projects. Most of the projects we’ve identified here are not actually operational yet, meaning actual production capacity will come online within a year or two. That is the point at which we should see the actual impacts of the projects, both on the host country’s development and in terms of the global dissemination of these technologies.

   The fourth point is around the technologies themselves. These investments cover most green technologies, with over half being solar and battery technologies. That means that China’s total dominance of green tech, which we are all increasingly familiar with, is globalizing. (There’s a little bit less wind in the mix, but it’s still part of the picture.)

   The fifth point is the breadth of that globalization: These investments are taking place across all continents.

   

   

   And just a couple of words on the scope of this new database. It covers Chinese companies investing in foreign countries, meaning it does not include other countries’ firms nor Chinese domestic investments. And it counts investments and not loans, which were the previous type of foreign engagements we know as the Belt and Road Initiative. We also focus on manufacturing, not power generation, and specifically we focus on clean technology manufacturing. Prior work tracking these kinds of investments has been less comprehensive—it gave us a hunch that China was doing this kind of foreign direct investment, but didn’t give any clear indication of the action scale and ramifications of that investment.

   TS: What are the motivations of private Chinese firms “going out” and internationalizing their supply chains? To what extent is it a private capitalist firm-driven strategy versus a host-country developmentalist strategy?

   ML: There are certain countries that get a lot out of these investments, which are clearly part of their own development strategy. But what we see most clearly from this data is that there are basically three motives for the Chinese companies at play.

   The first is access to the host country market. Many countries realize that green tech is becoming a large share of their economies, and that simply importing clean tech will have negative consequences on industries and employment and so on, and therefore they put in tariffs and local content requirements to ensure that some parts of the value chains are inside the countries. That’s the case in Brazil, for example.

   The second reason is access to third-party markets. As big markets like the US and the EU put up high tariffs on direct imports from China, Chinese cleantech firms invest in manufacturing in places that have access to these markets. Morocco is an important example here, because it has free trade agreements with the US and the EU.

   The third is access to raw material inputs. As this manufacturing scale grows, so does the need for the raw materials for it—nickel, cobalt, lithium, and so on. Mining is one part of that, but processing also increasingly takes place in host countries. Indonesia is the major example, where a country bargains with China to capture a larger share of the value of the manufacturing supply chain.

   TS: How should we interpret what this overseas green manufacturing push means for China’s role in the global green transition?

   ML: These overseas Chinese investments are straightforwardly good for climate. They can play a key role in advancing the global dissemination of clean technologies driving down prices, and increasing the pace at which these clean technologies are deployed. Whether these manufacturing investments create overcapacity is essentially a question of whether there are profits to be made from the investments—not a concern about whether these technologies are needed, because obviously we need to scale up the pace of deployment to meet the goals of the Paris Agreement.

   

   The impact on host country development and decarbonization will be heavily dependent on those countries’ domestic political economy and policymaking space. These investments create a window of opportunity for host countries to conduct industrial policy to advance domestic developmental goals—some have done a good job at that, some have done a less good job.

   Another dynamic to consider is what this means regarding China’s role in finance for the global South. As mentioned, BRI lending decreased dramatically, and was replaced by the “Small and Beautiful” strategy—shifting away from financing for large infrastructure projects, and toward smaller scale and more lucrative projects and sectors. (It was basically more Small than Beautiful.) So the scale we are witnessing is meaningful, and arguably a good thing for the pace of development and the green transition—as many global South countries are in near debt distress or fearful of getting there. Over-indebtedness is, of course, not a problem with foreign direct investment, as any loans related to these projects sit on the balance sheets of the Chinese firms and not the host country.

   Then there is global trade. China currently has a $1 trillion current account surplus. If manufacturing moves abroad, this might, to some degree, reduce this surplus. Right now, cleantech only represents 5 percent of Chinese exports, but it’s a growing figure. The trend of “going out” might limit direct exports from China, and reduce some of these imbalances in the Chinese economy.

   TS: What has been the role of the Chinese state in supporting this private sector BRI 2.0 ? Is there a lot of planning, funding, coordination, and implementation?

   ML: BRI 1.0 was entirely state-driven. Projects were organized by the Chinese government and the given host country. They were then operationalized by financing from Chinese policy banks, Chinese state-owned commercial banks, Chinese state-owned insurance companies like Sinosure, and then largely constructed by Chinese state-owned construction companies. It was all hands of the state on both sides. The loans would be sovereign-backed or tied to revenue sources from commodity sales, and so on.

   By contrast, this BRI 2.0 phenomenon is all private. It’s the private companies that raise the capital themselves to do investments. Projects are certainly encouraged by host countries because they want this type of FDI, but typically they aren’t being subsidized in any way by the host countries or the Chinese state.

   Given the vast and widely studied state support for the BRI, this is kind of surprising! In all the talks I’ve had with Chinese banks doing this type of lending and principal, they do not appear to have, at any meaningful scale, given loans to Chinese private companies to make these kinds of overseas green manufacturing investments. We can take the example of Build Your Dreams (BYD), which did a partial listing in Hong Kong to finance their overseas investments; they didn’t get the money from the China Development Bank. This is a very clear contrast in the role of the state across the first BRI and what we are showing with this data.

   What may be most surprising to outside observers is what I found in my interviews: Chinese government officials themselves may not be aware of the full range and aggregated total of these private sector green investments overseas. Individual ministries, like the Ministry of Commerce, of course give approvals to firms going out, but those approvals are done at the project-level. If the Chinese government itself is not tracking or coordinating such a massive surge of outward green manufacturing investment, it’s unlikely that this private sector-led BRI 2.0 is being coordinated at the government-to-government level.

   TS: How do recipient countries view Chinese green manufacturing investments, compared to Western alternatives. What recommendations would you give for the EU, for example, in their response to China’s financing overseas? Should it be competition, should it be collaboration?

   ML: I think it’s important to understand at the outset that in large part Chinese companies are not doing these kinds of investments as a matter of preference—they would prefer to maximize their profits by manufacturing their product inside China and then exporting it.

   It is only because host countries put conditions against Chinese imports that firms are forced to make these investments. As mentioned, host countries recognize that imports of new technologies from China represent a potential danger for their own industrial base, plans for further industrialization and development, employment, and so on. Manufacturing FDI from China, by contrast, can be seen as a potential opportunity to use these investments for industrialization, employment, and development goals. The crucial question is if and how the host country is able to make use of that opportunity. 

   How are host countries responding to maximize their own benefit from these investments? What principles and conditions should be demanded of Chinese investors? And how should new countries potentially receive these investments position themselves in global supply chains? What kind of requirements should they make for Chinese investors? Future analysis of this massive scale of planned investments should be oriented towards these questions.

7. Land Value Politics

   September 18, 2025 6:11 am Comments Off on Land Value Politics

   The rise to power of a new urban progressive politics has been a hallmark of the Trump era. From the City Council of Los Angeles and the Board of Alderman of Chicago to the State Legislatures in Sacramento, Springfield, and Albany, the basic assumptions about what cities do and who they serve are undergoing a historic revision. Nowhere is this clearer than in New York City, where the two-term assemblymember and self-described democratic socialist Zohran Mamdani defeated former Governor Andrew Cuomo in securing the Democratic Party nomination for the city’s mayoral election. Having organized a whirlwind primary campaign of 40,000 volunteers on the promise of freezing rents for the city’s 1 million rent-stabilized apartments, Mamdani now confronts a nearly united power structure of real-estate developers, corporate landlords, and hedge-fund and private equity financiers who have already raised over $30 million for the former governor. This patently ruling-class opposition argues that raising local revenues and strengthening tenant protections will provoke an exodus of capital and entrepreneurs from the Big Apple. “If we fail to mobilize,” read a recent invitation to an emergency donors meeting, “the financial capital of the world risks being handed over to a socialist this November. We cannot—and will not—let that happen.”

   Underlying this debate about the future of American cities is the assumption that what city government can do is limited by what private enterprise is willing to tolerate in terms of regulation and taxation. Yet as Daniel Wortel-London, an historian of New York City, argues, this conception of the source of profits and revenues for public services underestimates the expansive potentialities for a kind of urban growth not hostage to the preferences of the largest private owners. Currently visiting assistant professor at Bard College, Wortel-London recently published The Menace of Prosperity, a history of development politics in New York City from the Civil War period to the 1980s that shows how the growth of America’s largest metropolis forced a broadening of debate about where city revenues should originate and what services the city should provide.

   By allowing city governments to participate in profitable activities, and using the earnings of public enterprise to subsidize money-losing services, urban reformers at the turn of the last century saw a path for reducing tax burdens on working people and fostering an inclusive form of growth. But as racial and class-based segregation began to undermine the self-sufficiency of public enterprise, and as the public sector became dependent on taxing corporations and the wealthy, a new kind of urban politics emerged in the post-World War II era, coming to a head in the financial crisis of the 1970s. Today, those who warn of capital flight in response to a potential Mamdani administration continue to invoke the so-called “urban crisis” of that decade. Interviewing Daniel Wortel-London is Kim Phillips-Fein, the Robert Gardiner-Kenneth T. Jackson Professor of History at Columbia University, and author of Fear City, a history of New York City’s post-war financial crisis.—A.Y. Elrod

   An interview with Daniel Wortel-London

   Kim Phillips-Fein: The title of your book, The Menace of Prosperity, may be surprising to some readers. How would prosperity be a menace for New York, or for any city?

   Daniel Wortel-London: The title refers to the fact that every economic activity comes with costs. What appears like growth and prosperity can hide costs that ultimately undermine economies. If we think of economic activity as depending on a deeper layer of resources, any activity which depletes those resources is uneconomic. This is what the economist Herman Daly referred to as “uneconomic growth.”

   This creates costs for governments that need to both subsidize industry while cleaning up its mess. What this suggests is that fiscal crises and underdevelopment derive not only from the absence of growth, but also from its presence. Industry is fiscally dependent on policies meant to reduce the costs it imposes on the public, like welfare spending, or provide services for labor that households are unable to provide, such as childcare or public education or healthcare. This creates a cycle of mutual dependence and underdevelopment.

   Kim Phillips-Fein: The people from whom cities receive their revenue can come to exercise a disproportionate amount of power. That’s one of the menaces of prosperity that you point to—certain forms of growth not only have economic costs, but political ones too.

   The opening of your book discusses the fiscal crisis of the seventies. The city was on the edge of bankruptcy, and there were protests and fear about what the future would hold. But then you reveal that this was not in fact the 1970s, but the 1870s, when New York also had a fiscal crisis. What was the cause of this budget crisis, and was it similar to the fiscal crisis a hundred years later? Why do fiscal crises so often plague cities?

   Daniel Wortel-London: I structured the book around fiscal crises so as to give a sense of New Yorkers’ “fiscal imagination”—the way groups understand the costs and benefits of different development strategies. In the 1870s, one out of five American cities went bankrupt. This was partly a national issue: the market in railroad and municipal securities had collapsed. But at the city level, many local development decisions went awry. New York depended on property revenue, and it had tried to raise property tax revenue through the early nineteenth century by raising property values. The city sold public land, spent money on street improvements, and went into debt to finance grand infrastructure projects.

   After the stock market collapse, banks asked for their money back and New York couldn’t pay up. This led to a large revolt against debt-financed improvements during the 1870s, both from “good government” folks (who felt that a lot of that earlier spending had been corrupt) and worker activists in groups like the Knights of Labor, who felt that cities were subsidizing speculative industries at the expense of workers.

   This dynamic occurred again in the 1930s, when both the city and financial interests went into debt promoting real estate. Banks invested in real-estate speculation, and when the real-estate market collapsed the speculators couldn’t pay back their loans. The result was that the banks called in their loans and the cities cried default, setting in motion a new crisis. So again, New York’s fiscal crisis of the thirties was in part the result of these flawed development strategies. The 1970s are somewhat similar. In the years following the Second World War, New York changed policy tack, promoting white-collar industries and corporate headquarters at the expense of working-class manufacturing jobs, a strategy that arguably deepened the city’s fiscal crisis, making it more difficult to survive the broader economic downturn of the 1970s.

   Kim Phillips-Fein: You refer to the economist Henry George as one of the key advocates for a different fiscal imaginary for the city, especially in his 1886 mayoral campaign—one of the great working-class populist moments in the city’s history (and certainly a predecessor to Zohran Mamdani’s current campaign). What was Henry George’s fiscal imaginary?

   Daniel Wortel-London: Henry George emerged as a major figure during the golden age of American antitrust, roughly the forty years spanning the 1880s to the 1910s. This was also the period of the rebirth of labor republicanism—when the question of workers and producers’ equal citizenship was a driving force in national politics. It was during this time that American workers sought to reorganize the economy around productive enterprises and away from speculative investment and its manipulation of prices and values.

   George applied these ideas to the urban setting, arguing that the way cities were trying to raise land values was in fact costing them enormously. His logic was that raising the value of land makes it harder for employers to erect factories and for workers to build homes. Taken from households and producers, rents on land were already burdensome. Any municipal effort to raise land values would only increase this burden—a self-defeating strategy for encouraging enterprise. High land values also encouraged industrial depressions because it meant that landlords were drawing money away from the real economy of production, and from the pockets of productive workers. This money tended to be poured into speculative investments, which led to economic calamity as the 1870s had shown. In this way, as George’s 1879 book title made famous, “progress and poverty” were coterminous.

   Henry George argued that by taxing its full value, land—the ultimate requirement for enterprise—would be liberated from control by speculators and therefore cheaper for use as housing or for building the factories that would generate employment. With underlying values largely an accident of location, the rent on land was in effect the earnings of a natural monopoly, received irrespective of the efforts of the owner. This logic of natural monopoly motivated much of city politics during the Gilded Age and Progressive Era, with Georgists forming groups like the New York Tax Reform Association and the Municipal Ownership League devoted to fulfilling this project. Without speculatively inflated land values, and with public control of municipal franchises like buses and ferries, city life would be free to grow without industrial depressions caused by excessive debt burdens and high rents.

   George sought to unite workers, small businesses, and productive capitalists against speculative financiers and parasitic landlords. He earned support not only from a small fraction of homeowners and capitalists, who felt they were being taxed too much, but also from what we can name as early-progressive city officials who saw the city’s reliance on high land values a detriment for city planning. This kind of broad coalition almost propelled George to the mayoralty in 1886, and serves as a precursor to the coalition behind La Guardia and even Mamdani today.

   Kim Phillips-Fein: This is a reminder of the heterogeneous nature of economic thinking in the late nineteenth century, prior to the left’s consolidation around Marxism later in the twentieth century. What are the possibilities today for different ways of thinking about political economy? What are the alternative development strategies?

   Daniel Wortel-London: Another model would be expansive public ownership. Many reformers in the late-nineteenth century provided economic arguments for such ownership. Owning profitable enterprises in transit and power, they argued, could help the city earn some profits while providing better services than those provided by the private sector. And by generating its own profits, the city would have less need to tax the worker or homeowner. American progressives often looked to European cities like Frankfurt, which generated huge profits through public ownership with low tax rates of not only sewage and transportation but of museums, baths, and employment agencies. They argued that American cities should be run as businesses—as publicly-owned enterprises in which each citizen would be a shareholder, and which directed the collectively-generated wealth of the metropolis towards the economic development of the whole. This was a direct challenge to the liberal model of economic development, by which the private sector earns profits and the public sector provides public services. For municipal ownership advocates, you could lower taxes if the public sector did both.

   Kim Phillips-Fein: Let’s move to the 1930s and the next major fiscal crisis—the Great Depression. The New York City Housing Authority, the first public housing authority in the country, was founded at this time. Federal funding for public housing only began later. At the beginning, it was totally free of federal financing.

   I had always imagined that it was Mayor Fiorello H. La Guardia, the populist reformer who governed New York during the New Deal, who pressured the federal government to invest in the city’s housing. But you show that actually there was a constituency that wanted the housing authority to operate independent of the federal government.

   Daniel Wortel-London: Public housing was another area where profitable public ownership was promoted as a development strategy for cities. New York had been promoting private housing development for the wealthy and some small homeowners all through the 1920s. This didn’t save the city from a fiscal crisis—it led to vacant lots, empty apartments, and, when values fell, closed banks.

   Public housing, advocates argued, represented a superior development strategy. Not only would construction jobs and lower rent aid the economy but, thanks to high demand, banks could invest in building housing and rely on repayment by way of the rents charged to tenants without the danger of vacancies. This was, remember, a moment that saw both the failure of the private housing market alongside the success of public authorities, most famously the initial Port Authority of New York and New Jersey. The Holland Tunnel had been built and partly paid for itself, just through toll revenues. And there were people saying that we could pay for housing the same way, with rent revenues.

   The original housing advocates wanted a mix of incomes in public housing. This way, the earnings on the higher rents paid by the better-off would help cross-subsidize the lower rents paid by the poor. A lot was riding on whether or not there would be enough rent to collect in total for self-sufficient public housing, and mixed income was a solution to that problem. But as so often happens, mainstream liberals insisted that the private sector provide for middle-income residents, leaving public housing as a money-losing operation restricted only for the poor.

   After the crash, the suburban real-estate sector was begging the federal government for bailouts to help build housing for middle-income owners, which it eventually did receive via FHA-insured loans. They didn’t want to have to deal with any competition from public housing—and soon they didn’t need to. Something similar happened in cities themselves. During the ’30s, some economists and later policymakers made the argument that real-estate values weren’t enough for fiscal solvencies. They argued that cities needed to attract income generating firms and individuals to the city. This required reducing some land values to make it more affordable for development—just as Henry George had argued. But the city wound up purchasing land from bankrupt owners at high values and then selling it at a pittance to developers for “urban renewal.” So once again, private developers were allowed to pocket profits, while the city hoped that tax revenues would be generated from their developments.

   Kim Phillips-Fein: By the late ’20s, all five boroughs were developing, albeit unevenly. By the postwar years, the basic questions of construction, growth, infrastructure, and expansion had been addressed. Where does Robert Moses—the “power broker,” as biographer Robert Caro dubbed him, whose name is synonymous with urban renewal in postwar New York—come into the picture?

   Daniel Wortel-London: Robert Moses comes out of an older understanding of urban economic development. He drew from ideas that were common sense in the 1920s, if not earlier, which is that if you promote infrastructure development—bridges, subways, or highways—city land will become more accessible. Moses gained power in the ’30s to act on this, but there were already people advocating for a more fine-grained approach, targeted toward specific firms and sectors and not just relying on infrastructure. Moses was able to adapt to this strategy while maintaining his older obsessions with highway and bridge construction.

   Kim Phillips-Fein: Moses is a bridge between the earlier paradigm of investing in infrastructure and the postwar move to attracting white-collar corporate tourism, rather than industry. The Lincoln Center on the Upper West Side is an example of the kind of land development for the purposes of gaining revenue—attracting high-income people, bringing tourists into the city, and the like. What other white-collar visions of the city existed? And what changed in terms of the city’s tax structure in the ’60s?

   Daniel Wortel-London: Both John Lindsay, who was mayor between 1966 and ’73, and his predecessor Robert Wagner, mayor from 1954 to ’65, were advocates of the welfare state and tireless advocates of the city’s corporate transformation. Today we’re used to these things as being contradictory, but postwar liberals didn’t think so.

   During the postwar period bodies like the Regional Plan Association of New York, along with realty groups like the Real Estate Board of New York, worked with these mayors to promote the city as a corporate headquarters. The city combined this development strategy with an expanded welfare state by taxing firms in order to pay for social services. In the eyes of liberal policymakers, promoting corporate headquarters alongside a larger welfare state was not a contradictory position. The wealthy would pay for welfare. Progress would pay for poverty.

   In the 1960s, some neighborhood activists did lead efforts to remodel the city’s economy around its neighborhoods, rather than its central business district. Jane Jacobs made the case for a radically decentralized urban economy and railed against what she called “catastrophic money.” Black activists in Harlem and Bed-Stuy argued that their communities were akin to colonies in the sense that all local industries were white-owened, and that the money made in those neighborhoods flowed out. For his part, Lindsay did little to promote local ownership, as these activists had advocated for. He provided some aid for Black businesses but ignored the more radical elements of these demands.

   It’s not the case that the city’s white-collar transformation emerged from the conservatism of the 1970s; it dates back as far as Wagner and Lindsay. The balancing act between corporate growth and welfare-state expansion was fiscally fragile and politically unsustainable, as it remains today.

   Kim Phillips-Fein: How did corporate reconstruction and welfare-state expansion eventually come to a head during the financial crisis of the 1970s, and how do we draw a line of continuity from earlier crises to that of the ’70s?

   Daniel Wortel-London: We’re used to thinking of the fiscal crisis as the outcome of either an over-generous welfare state or of larger economic issues beyond the city’s control. But the city’s flawed development strategies certainly had a part to play.

   Corporate firms’ commitment to profit rather than place, together with their orientation toward national rather than local markets, made them liable to move from the city at the first opportunity —which they did in large numbers in the early 1970s. Those corporations that did stay were vulnerable to recession by virtue of their involvement and exposure to global financial fluctuations—and this, by extension, made city finances more vulnerable.

   New York’s massive debts largely took the form of corporate welfare: New York’s “capital budget debt,” economist William K. Tabb complained, “owes far more to the banker-real estate developer agencies—the Housing Finance Administration, the Urban Development Corporation—than it does to helping the poor, more to subsidizing commuters than to helping the unemployed get jobs.”

   The city’s costly welfare services were not so much a driver of the fiscal crisis as they were a downstream product of the private sector’s irresponsibility and their power to pay low wages, charge high rents, and deny investment to needy communities. In all these ways, the city’s obsession with attracting and retaining corporations and raising realty values had backfired.

   Kim Phillips-Fein: Your book captures the constriction of the fiscal imagination at this moment of austerity and defeat. The cuts of the ’70s inspired many protests, such as the occupation of the North Williamsburg fire station, Engine 212, in a campaign to keep it open, or the demonstrations at Hostos Community College in the South Bronx.

   But there was also a world of alternative economic thinking at this moment, from public banks to worker cooperatives, that just lacked a popular movement to back it. The popular mobilizations at the time were very defensive and localized, focused on preserving the welfare state—saving a specific hospital, program, or school. In some ways, one might say they became a trope for liberalism as a response to Reaganism: a call to maintain institutions but not to change, improve, or expand them.

   Daniel Wortel-London: Exactly. I argue that the scope of alternatives and responses in the 1970s was more limited than it had been in previous crises. The politics and costs of private growth were better understood in the 1870s than they were a century later. The sheer inertia of New York’s postwar developmental policies, weighing the city down with sunk costs in the form of repair bills and interest charges, had made dramatic shifts in economic development policy more difficult than in the past. Most liberal policymakers focused on expanding their city’s welfare state rather than questioning the economic development strategies that helped finance it—a gap which echoed what Judith Stein called the broader “poverty of liberal economics” during the 1970s. There’s also more of a focus on restricting growth in the name of quality-of-life among many professional-class liberals—except for white-collar growth, of course—which has contributed to some of our current dilemmas as Derek Thompson and Ezra Klein discuss in their book “Abundance.”

   There were other factors, too, contributing to the narrowness of the era’s fiscal imagination. Many white homeowners had been subsidized through Federal aid, low tax assessments, and municipal support for local infrastructure. Their subsidies often didn’t appear on the city’s budget, but welfare spending did. The changing demographics of the city also played into things. The Black population of New York counted for less than 5 percent in the 1930s; by 1970, it was 21 percent. Many white homeowners assumed that the welfare payments to racial minorities was responsible for the city’s bankruptcy, and businesses were quite happy to go along with such a view that deflected blame from themselves for the city’s fiscal crisis.

   After the fiscal crisis, some things changed and others didn’t. The welfare state got slashed and the idea of responsive government committed to public welfare was stigmatized. The city’s older commitments to corporate reconstruction, on the other hand, continued. And that’s roughly where we are now.

   So rather than seeing our era of “neoliberalism” as marking a novel turn towards economic logic, we should see it as a continuation of an older, very narrow fiscal imaginary established under liberal auspices—the assumption that only by attracting and taxing wealthy firms and individuals can we develop our economy and pay for social goods.

   Kim Phillips-Fein: Let’s talk about Zohran Mamdani, the Democratic nominee for New York City’s mayor who won the primary on a democratic-socialist agenda. How could Mamdani propose a new fiscal imaginary to realize his program?

   You’ve argued that where the city gets its revenue influences who the government is answerable to. Today, New York’s personal income tax has placed a disproportionate weight of the city’s budget on the high incomes of a very small number of people. While it’s not as vast as some suggest, it’s still significant. What does this mean?

   Daniel Wortel-London: I think Mamdani’s fiscal imaginary echoes some threads of alternative economic thinking today—he talks about monopoly, the need for public ownership, municipal grocery stores, and efforts to build more housing under nonprofit and public models. He talks about “abundance” in the form of public excellence: the state should take a lead role in providing for citizens in a way that is professional, efficient, and effective.

   At the same time, he’s not trying to displace finance as the city’s economic base or reindustrialize the city. He’s not talking about public ownership of profitable utilities. Rather, he’s largely trying to make the city more affordable. Nonetheless, there are a few economic strategies which can help him to do this.

   A big example here is public banking, which he already supported as a state assemblyman. The City of New York deposits billions of dollars in Wall Street banks that invest in polluting and militaristic enterprises while extracting wealth from low income neighborhoods, which in turn leads to economic underdevelopment. Public banking could allow taxpayer money to be reinvested in the city in the form of affordable housing and aid for employers offering well-paying jobs.

   The city also has an enormous power of procurement: it spends billions on contracts with private enterprises, and this money could be shifted towards different sectors. Cooperatives, for example, typically offer longer-term jobs with higher pay for workers, while providing higher-quality goods at lower prices for consumers than their conventional counterparts. And they do so, moreover, under far more democratic and equitable conditions than conventional privately owned firms. In this way, as Ethan Miller has written, cooperatives demonstrate that “it is possible to build real livelihoods while also building another paradigm of social values.” And by using his administration to help build these livelihoods, Zohran can provide the material grounding for expanding his political constituency.

   Kim Phillips-Fein: I love your point about the excellence of city services; one of Mamdani’s central slogans is that buses will not only be free, but also fast.

   It’s a truism in city policy that cities are creatures of the state. They are fundamentally different from state governments, let alone the federal government, in that they are responsible for providing a range of services—from fire, police, primary and secondary education, basic infrastructural maintenance (streets, lights), libraries, parks, cultural life, and even healthcare. Cities are expected to provide all this while wielding very little fiscal power. They almost always need permission from a higher level of government, usually the state, to raise or impose taxes.

   Cities are also thought to be weaker because people often don’t belong to them in the way that they do states and, especially, nations. It’s not difficult for someone to move out of city limits while keeping their job in that city. People are mobile and this constrains cities in the taxes they can impose and the services they can provide. It’s also clear that massive spending programs need to be taken on by higher levels of government who can impose taxes required for long-term financing. New York can’t pay for Medicaid alone.

   At the same time, one of the major themes of your book is that cities are not entirely creatures of the state. They’re not as dependent on the state and the federal government, as is often assumed, and there’s a lot they can do independently, especially when it comes to public ownership. Cities are also not as dependent on economic elites in building political movements.

   Daniel Wortel-London: Cities have more economic agency than they’re often given credit for and progressives like Mamdani, if he comes to office, have power to wield it.

8. Sacrifice Zones

   September 4, 2025 3:35 pm Comments Off on Sacrifice Zones

   Since Donald Trump announced in July that the US would impose 50 percent tariffs on Brazilian imports, there has been much speculation about the future of Brazil’s foreign trade, both with China and the US. One particular area of focus is the US interest in the exploitation of Brazil’s strategic minerals, as Gabriel Escobar, interim US ambassador to Brazil, made clear at a recent meeting with representatives of the mining industry. In the context of the domestic effort to develop a national policy on Critical Minerals, Finance Minister Fernando Haddad has indicated that critical minerals could be one possible area of trade with the US.

   Among the critical minerals now in focus are rare earths, a set of seventeen metals with high magnetization capacity, essential for the production of electronic components, batteries, and wind turbines, which make up the most advanced hub in tech innovation and a key component in the race for energy transition. Another area of growing demand is the military, where these metals are used for creating the strong magnetic fields necessary for drones and ballistic missiles. Not surprisingly, a recent discovery of rare earth deposits in Poços de Caldas, in the state of Minas Gereis in Brazil’s southeast, has already attracted more than 100 exploration requests to the National Mining Agency (ANM).

   Daniel Tygel is a former councilman for Caldas, a city close to Poços de Caldas, equally rich in critical-mineral reserves. A key figure in the movement against rare-earth extraction in southern Minas Gerais, Tygel spoke with Rosa Magazine and Phenomenal World about the topic.

   Here we present a summarized edition of the interview, which first appeared as a podcast published by Rosa. The discussion ranges from the environmental impacts that rare-earth mining entails, especially in “sacrifice zones” like Minas Gerais, to the geopolitical tensions that fuel such mining. The conversation was attended by the editors of Rosa Magazine, Arthur Hussne, Lucas Braga, Marcela Vieira, and Marina Bedran; Luciana Dias Bauer, founding lawyer of JusClima; Stélio Marras, anthropologist and professor at the Institute of Brazilian Studies at the University of São Paulo (IEB-USP); and Hugo Fanton, editor at Phenomenal World.

   An interview with Daniel Tygel

   Marina Bedran: How do today’s mining practices in Minas Gerais differ from earlier periods? What is unique about the exploitation of rare earths?

   Daniel Tygel: We are on the volcanic plateau of southern Minas Gerais, or the Poços de Caldas volcanic plateau, which is a gigantic crater. Thanks to the volcanic activity of the past, the region today is home to very special fauna and flora. The land has high levels of acidity, containing heavy metallic elements like uranium, which attracted mining attention early on, even before Brazil developed its nuclear industry. This mining, closely linked to the military dictatorship and carried out at breakneck speed, was a source of national pride.

   We are the largest open-pit uranium reserve on the planet, home to 100 million tons of heavy metals, of radioactive metals. Thanks to anxieties about radioactive waste, enthusiasm for new energy sources has a long provenance in the state, dating back forty years. Caldas has been celebrated as the future because it exported uranium to Brazil and the world. Now, once again, the region is being coveted because of the green energy revolution and NATO’s renewed military interest.

   The rare earths here were discovered in the 1990s by a group of Japanese researchers. The discovery did not originally attract much attention, even as China had pronounced its stakes in rare earth minerals as early as 1992. It would take until much later for four Australian companies to show interest in the area.

   With the crimes taking place in Brumadinho and Mariana, the question of dams in Brazil has gained prominence. Companies have adopted phrases such as “green mining,” which does not use explosions or dams and contributes to the energy transition. In this new phase, it is small companies that are approaching the environmental licensing process. This is something very different, because it seems that they have expertise in Brazilian legislation, communication, and co-opting regional powers and communities. But these companies, even though they are small, are already publicly traded. With so much geopolitical interest surrounding rare earths, smaller companies are ready to be taken over by traditional mining companies with greater operational capacity. The two companies that are most advanced in environmental licensing here in the region have capital of USD 20,000, which is totally inadequate. The big geopolitical question is, who will take control of these smaller companies. It is said that, on its own, this region can supply 10–20 percent of the world’s demand for rare earths.

   Marcela Vieira: There is coordinated action by companies to legitimize these projects. For example, students at the public school in Poços de Caldas are taking classes on rare earth extraction and how it will bring more progress to the city with minimum environmental damage. The people teaching these classes are not affiliated with the school or the city government; they are people from the company itself. Given this, who can we turn to?

   DT: The only thing that can stop a mining project of this size is the local community proving that we are not a sacrifice zone. In ancient, pre-medieval cities, when they killed a calf to collect its blood and save the harvest, the calf was sacrificed for the good of everyone. The only one who could try to escape this fate was the calf itself, by crying out loudly. Unfortunately, this is our situation. There is a long history of clashes with mining companies, and we have had some great victories. In this case, however, the companies will be trying to move as quickly as possible. It’s part of their strategy to make communities feel that there is no way to fight back because there is nothing else to be done. Our strategy is to say that there is indeed something to be done, there are still a number of steps to be taken.

   There are two major regulatory fields: mining law and environmental law. In practice, this means that any new projects need to undertake two distinct administrative processes: acquiring the mining concession and obtaining environmental licensing. Mining law is a fait accompli because it is based on the premise that the subsoil is the responsibility of the federal government. Those who inhabit or own the land above do not own the minerals below. The National Mining Agency (ANM) has already granted mining rights in cities like Poços de Caldas, Caldas, Andradas, and Águas da Prata. There are guaranteed mining rights underground even on the land where Caldas’ main church is located. Once ascertained, companies are under no obligation to even disclose the fact that they’ve gained legal access to a particular area, arguing that the location is a “trade secret.” Gaining rights on its own, however, is not enough to begin extraction.

   Environmental rights relate to what happens on the ground, not just underneath it. The law inscribes protections for certain areas, such as traditional communities, urban areas, and “permanent protection areas.” That’s where the trouble starts. Often, when the municipality is asked to issue a certificate of use and location—the only formal statement the municipality makes—companies say they already have the right to mine. But this is not true because they also have to get the permission of the Environmental Protection Council, which issues the opinion that supports the city’s decision. If there is local mobilization, it is possible to put pressure on municipal authorities, especially the executive branch, to negotiate the granting of this certificate of use and location. Caldas has already issued the certificate to the company Meteoric, and Poços de Caldas has issued a certificate to Viridis. But there is a petition underway in Poços de Caldas that asks the mayor to listen to the public and review his decision, because every administrative act of the Executive Branch is subject to self-regulation, so it is possible to revoke or suspend the certificate of use and location. Therefore, if there is mobilization to make a certain aspect related to this mining unpopular, it is possible to create mechanisms for negotiation.

   But there is a timing problem: these two mining activities will peak during the next municipal election process, and the burden will begin later, in the following administrations, six to eight years from now. The peak bonus is during the construction of the ore treatment plant, which absorbs a large workforce for about ten months, which will coincide precisely with the election process. For example, there are 1,000 direct jobs during the construction process in Poços and another 1,000 in Caldas, but after that, during operation, this falls to 170 direct jobs. That is very little. Compare it with Alcoa, for example, where for 500,000 tons of ore there are 600 workers. Here there will be 180 workers to exploit ten times more, five billion tons.

   At this point, we have to resort to mobilizing and raising awareness among the population so that they realize that the gains are not that significant. Caldas has been home to mining for a long time and its Human Development Index (HDI) has not grown in relation to Campestre, to take one example, which is a municipality of the same size and has invested in coffee, a product whose gains are renewed over several harvests and which brings far less environmental destruction.

   In terms of stopping these projects, we need to organize impact studies from technical experts. Another path is to appeal to the Public Prosecutor’s Office, although this is difficult as it usually won’t take action until the damage has already happened. The central element in all of this is time. The company is in a hurry, so we need to buy time so that people can better understand what this mining process is all about.

   Luciana Bauer: There seem to be speculative bubbles around critical minerals. In addition, there is an ongoing arms race for which these minerals are essential. How should Brazil be considered in this context?

   DT: Brazil ranks second in the world in known rare earth reserves. The BRICS countries, now with the addition of Vietnam, possess most of the reserves of these so-called critical minerals. And there is a lot of speculation going on because it is being seen as a “new oil,” and an opportunity to make a lot of money from fluctuations.

   Brazil is practically invisible in the international media, despite our weight in terms of wealth, GDP, population, and even market share. I am struck by the way Brazil is sidelined, and this has to do with our growing relationship with China and with the logic of BRICS, of so-called multilateralism. We are in a very dangerous zone: global governance mechanisms are failing, but new structures, such as BRICS, are unable to provide direction or replace existing multilateral organizations.

   The mining of rare earths cannot be separated from geopolitical competition with China. The world is militarizing at a rapid pace, within NATO in particular. These countries are now desperately seeking to manufacture more weapons in more locations. Until recently, Brazil was considered a reliable place for this task, but thanks to its membership in BRICS, that is no longer the case. It certainly raises the question of whether Brazil might even, one day, be a target of military threats from NATO. I cannot rule this out.

   At present, there is enough international dialogue to keep this off the table, but we also have an elite that works against our country. This weakens us in tougher negotiation processes, such as the one we are now facing with Trump’s tariffs. Within Brazil, there are those who play against us, and this makes it very difficult for us while facilitating their strategy of divide and conquer. Brazil is still considered, despite its strength, a banana republic, very susceptible to outside influence. With this degree of fragility in the international context, the fact that we have a mountain of wealth in critical minerals puts us in a position of great vulnerability. This is the dialogue I have been trying to have with the Presidency of the Republic. We need to create negotiating tables that treat territories as stakeholders, not as sacrificial zones. We cannot just be exporters of primary commodities, because technology will not necessarily be transferred here. It is an extremely complex production chain.

   Lucas Braga: What is Brazil’s perspective on the relationship between public policy and geopolitics?

   DT: We are in a very delicate situation as a country, and our elections are being closely monitored, with social media companies directly involved in the electoral process. So, how do we position ourselves?

   We need to build negotiating tables where Brazil can get a little closer to China, because alone we are not strong enough. If, as a nation, we were more cohesive, we could also move forward with Mercosur, the common market for the South. Otherwise, we will remain a colony, allowing ourselves to be exploited from all sides.

   Unfortunately, that is what I have seen so far. The National Bank for Economic and Social Development stance has been this: any company that wants to exploit us is welcome. But we could have a better approach. We could seek a gradual policy to reduce the export of raw lithium and rare earths and begin to stimulate industrialization processes within the country . On the other hand, from an environmental point of view, I don’t know what this represents. Would there be a reduction in the use of oil? No. Basically, an additional energy source is being added to boost the economy.

   Arthur Hussne: What are the main things currently influencing mining companies exploring Brazilian rare earths?

   DT: Time is a major factor. There is a feeling among the economic elite that if Brazil does not give the green light now, the country will miss the boat, and become weighed down by environmental concerns. The elite want to benefit from the new economic cycle rooted in rare earths, including the possibilities for military use and artificial intelligence.

   Brazil’s Congress is absolutely opposed to any national interest. The structure that was built to give a very large slice of the budget to the Legislative Branch broke the government’s negotiating capacity because now congressmen don’t even want to take on a ministry. Today, a congressman receives millions of reais in amendments to maintain his base, so what interest would he have in getting involved with the executive branch, something that requires much more effort? There are congressmen here in the region who even have their own programs, such as “Mais Genética” (More Genetics), with amendment money. What interests the congressman is how much he can funnel toward his base in order to guarantee his election in the next cycle. So Brazil is very vulnerable.

   In light of this, it might be that the best way forward is in getting closer to China, at least in regards to the critical minerals policy they have adopted, which abandons leaching and ammonium sulfate and includes strong environmental protection in relation to mining. Here, municipalities could at least form a rare earth consortium and only grant use and location to those who offer the best proposal, those who deliver more in terms of the production chain and environmental protection. But no one wants to work on this because mining is seen as a source of easy and quick money.

   LB: What are the repercussions in terms of pollution from rare earth mining in Brazil and, more specifically, in Poços de Caldas?

   DT: The impacts are enormous. Very soon we will have mineral pipelines for carrying materials to ports for export. A mineral pipeline uses enormous amounts of water, similar to what a city of 300,000 inhabitants uses. (Poços de Caldas has 200,000 people.) So this is a major problem.

   Three million liters of water are already used monthly just for the washing process, which generates traces of heavy metals and cumulative radioactive material. Every day, 20,000 tons will be generated in Poços de Caldas and the same amount in Caldas. In terms of transport, we estimate 700 truck trips per day, in each of the cities, between a particular mine and a processing unit. And there is seasonal variation: at one time of year it rains a lot, which makes transportation impossible for several days; and in the dry season, it can inflate the number of trips up to 1,200, with dust that is impossible to control. And this dust will carry heavy metals, which have the potential to cause serious neurological damage to people living and working in the area. It is a material that has a much greater impact on the nervous system than pesticides. Our region is a volcanic area with a lot of water. We are the water tank of Rio Grande do Sul, and we are sent to Argentina. The transport of heavy metals will make it impossible to use this water, because there is no treatment to clean it of such metals.

   LB: BRICS is considering creating commodity exchanges, including for grains. Could this be replicated for rare earths, given that the bloc would collectively have around 80 percent of the world’s reserves?

   DT: I don’t know. The BRICS debate around rare earth mining is not happening publicly, largely because Trump is so volatile. I was surprised at the BRICS summit in Rio de Janeiro at how little was said about rare earth mining. We had a meeting with the Minister of Science and Technology, Luciana Santos, with the Minister of the Environment, Marina Silva, with the offices of the Ministries of Mines and Energy, Industry and Trade, and Finance. We said that it is necessary to establish some form of dialogue with the population, to seek technological alternatives, so that the population is an interested party in this process, but so far nothing has happened. There is R$ 45.8 billion in financing from the BNDES for the group of companies in the critical minerals sector, and no resources for the organization of the territories, for universities and researchers, and for the population to organize itself and know what is happening.

   Caldas has an annual budget of R$ 70 million. These mining companies have forecast gross revenues of around R$ 6 billion per year. How can we have a negotiating table between the municipality and a company like this? We need the support of the federal government to set up a dialogue, and to think about building a rare-earth technology hub, which could innovate so as not to fall prey to “greenwashing.” That way, we can have some sovereignty, including with regard to the volume of minerals exploited and the kinds of technology we’d like to see transferred so that a national industry can start developing. Unfortunately, I currently see just the opposite: a huge rush to explore the region and prepare for mining on the one hand, and the passivity of the federal government—and even of BRICS—on the other.

9. Voting for Justice

   August 20, 2025 2:50 pm Comments Off on Voting for Justice

   On June 1, Mexicans voted to overhaul the country’s judicial system. The judicial elections were called to fill 881 positions in the federal judiciary, implementing the plans set forth by a constitutional reform approved in 2024. This is the first judicial election of its kind in Mexican history, and it has redefined the composition of the ministers of the Supreme Court of Justice of the Nation (SCJN), the magistrates of the electoral and circuit courts, and district judges throughout the country.

   Until now, Bolivia had been the only country in the world which established the right to elect its highest national ranking judicial officials through a popular vote, a result of its 2009 constitutional referendum during Evo Morales’s first term. In the United States and Switzerland, the judicial election systems are limited to the local level. In most Latin American countries, there are intense debates around the politicization of justice, the democratization of judicial structures, and the use of the law to legitimize political persecution. This is a phenomenon known as “lawfare,” which has been key to explaining the judicialization of conflicts and the persecution of political figures, leaders of social movements, and ideological currents opposed to the regimes in power. Brazil, Colombia, Ecuador, and Argentina are cases in point.

   In Mexico, the reform initiative that led to the elections was supported by the ruling government, led by the Movimiento de Regeneración Nacional (Movement for National Regeneration, Morena) who saw it as a bid for democratization in the fight against a corrupt judicial system. To this end, the judicial elections represented a political and legal strategy aimed at reshaping the judicial system at all levels, local and federal. Debates have since raged around the de-professionalization of judicial careers and its impact on the political and economic stability of the country. Amid polarization and disinformation campaigns, the judicial elections were chaotic—characterized by the absence of public financing, rampant disrespect of political parties, and subsequent sanctions. The National Electoral Institute (INE) found that an average of 13 percent of the citizenry (almost 13 million people) went to the polls. This was a very low turnout, especially when compared to the 61 percent turnout achieved in the 2024 national elections.

   Ahead of the election, Pablo Uc spoke to José María Soberanes Díez, a jurist with experience at the Supreme Court of Justice and an expert on Mexican constitutional reform. In the following interview, Soberanes critically examines the implementation of the judicial reforms, reflecting on the country’s long-term legal-political process which led to the elections. He surveys the potential scenarios that may arise from the election results—among them, the rising political power of Morena, which seems to have formalized its influence across Mexico’s judicial structure.

   An interview with José María Soberanes

   PABLO UC: The recent judicial elections have changed the way in which judicial positions in Mexico are filled, transforming the entire structure of the judicial power of the country. What was the political context that gave rise to the judicial reform initiative—approved in September 2024—which led to the June 1 elections?

   josé maria soberanes: Discussion around the initiative traces back a long time, mainly as a response to a series of disagreements between the former President of Mexico, Andrés Manuel López Obrador (AMLO), and the judiciary, in particular the Supreme Court of Justice of the Nation (SCJN). AMLO pursued a vision of politics that was not very institutional—he went so far as to say “to hell with the institutions”—while the SCJN insisted on institutional guidelines, through which it systematically blocked many of the projects pursued by the executive.

   Although AMLO had promoted the idea of reforming the judiciary as part of a political project against corruption, in the early years he held back—the beginning of AMLO’s presidency coincided with the arrival of Arturo Saldívar as head of the SCJN in 2018, with whom he was politically aligned. In fact, Saldívar resigned from the position in 2023 to join Morena, first as part of Claudia Sheinbaum’s campaign and subsequently as general coordinator of policy and government in the presidency. In the latter position, he worked closely with Sheinbaum’s team to become one of the main drivers and designers of the judicial reform.

   During AMLO’s administration, the government carried out a minor version of that reform. At the same time, the federal judiciary reached a series of decisions that upset the president. AMLO argued that they were “paralyzing” his large infrastructure projects and works—which had been accused of damaging the environment—as well as the electoral reforms he had promoted in 2023—which the SCJN ruled unconstitutional for failing to follow proper legislative procedures. This confrontational climate intensified, coinciding with the early termination of Saldívar as president of the SCJN and the arrival of Minister Norma Piña to the position. Piña was the first woman to preside over this body and soon became a target of the federal executive.

   Faced with rulings that opposed his interests, AMLO considered Plan A to transform the judiciary, a constitutional reform that failed to reach a qualified majority in the Congress of Deputies. Then he attempted Plan B, a set of legal reforms without constitutional reforms, which were challenged by the SCJN. Finally, once he had the necessary legislative majority after the national election of 2024, he went for Plan C, a reform at the constitutional level. This plan seemed difficult to achieve—a constitutional reform in Mexico demands two-thirds approval from the legislative branch. But as a result of the political reorganization following the 2024 national elections, in which Morena won a controversial over-representation in the Chamber of Deputies, the reform easily cleared the benchmark and was approved in less than forty-eight hours. The reform then found approval in the Senate Chamber, thanks to a sudden change in the decision of a senator from an opposing party, and finally by the majority of the state legislatures.

   After the speedy approval process, the reform was published on September 15, a non-business day, when the Official Gazette of the Federation is not usually published. It was published with a small nuance—a staggered renewal, so that with the elections of June 2 the SCJN and half of the magistrates and judges would be contested, leaving the other half up for election in 2027.

   PU: How did those opposed to the reform react, and what happened once it was approved?

   JMS: Once it was confirmed that the reform could move forward, which would replace all positions in the judiciary, the judicial branch announced its decision to go on an indefinite strike in August. There was pressure from the executive regarding the suspension of their pay. The only ones who did not go on strike were the ministers of the SCJN. 

   After the reform’s approval, there was a debate around whether or not it was possible to challenge it. While the judiciary rarely intervened in matters related to constitutional reforms, there were two options for potential challenges—alleging a constitutional controversy or alleging unconstitutionality. The opposition parties filed an action before the SCJN arguing that the reform was unconstitutional. But there was a problem—the question of whether or not the Constitution could be unconstitutional had never been raised. The SCJN dealt with it very quickly at the beginning of November 2024, but the ruling party had already warned that the SCJN’s resolution would not be heeded.

   Thus, the challenge was submitted to a vote: seven justices of the court considered the action of unconstitutionality to be admissible, while four were against it. Since a minimum of eight votes was required for it to succeed, the process concluded at that point and the reform continued unchallenged. Gradually, the courts began to reopen.

   After it was clear that the reform would not be ruled unconstitutional, the process of the replacement of judicial branch officials commenced. The Senate drew from a raffle to determine which positions would be voted on in June 1 elections, and which would be voted on in 2027. It was a painful process, and nearly half of the judges and magistrates (1,683 active judges in the country) resigned from their positions, with many arguing that they had obtained their place through professional means rather than popular campaigns. Some resigned immediately, and others decided to wait until the end of August 2025 and abstain from the election process. Eight of the eleven SCJN ministers also resigned.

   PU: Once the reform was approved, what were the legal and political procedures that paved the way for the election? Mexican voters were summoned to the polls on June 1. What did they encounter, in an election which had no precedents?

   JMS: After the reform was approved, candidates were nominated and selected between October 2024 and February 2025. The three branches of government—legislative, executive, and judicial—formed committees to register and evaluate nominees. Except in the case of the judicial branch committee, in all cases the selection would have considered the minimum requirements for the position and candidates’ professional profile. Based on this, the lists of candidates were sent to the Senate in February 2025.

   Once the National Electoral Institute (INE) received the lists, they prepared ballots that were distinct from past elections. Mexican election ballots usually display the logos of political parties, and voters mark the party of their preference. In the case of the ballots for the June 1 election, the names of all the candidates for judges, magistrates, and ministers appeared instead of the political parties.

   Each citizen received six ballots with a complete list of candidates, split by gender. For the SCJN election, for example, five women and four men were elected as a principle of gender equity. In this case, a voter needed to list nine numbers from a list of sixty-one names. It was a complicated voting procedure. Given the limited budget of the INE after a historic cutback, the election opted to use voting centers instead of traditional ballot boxes. Votes were counted not by citizens but by INE, and a repeat of a candidate’s number invalidated a ballot. Voter turnout expectations were low, given popular disinterest and little knowledge around those running for office.

   PU: How did INE educate citizens about the election process? And what is your read on the judicial candidates’ campaigns, which took place during a short period from March 30 to May 28?

   JMS: The INE set up a platform and posted resumes of each candidate for voters to see. But this requires a lot of time for the average citizen—there were hundreds of resumes to examine. The campaigns did not allow private nor public financing—each candidate needed to self-raise. Although the INE did establish a ceiling for personal campaign expenses, there was an oversight that tried to limit or regulate such expenses. In any case, campaigns utilized social media platforms, videos on Tik Tok, and the like. Instead of demonstrating their judicial philosophy or legal project, they sought to be funny and likable. There was limited campaigning around the real issues of the position and the capacities of the candidates to fulfill the role.

   PU: What do you see as the main risks of the election, especially when considering the hegemonic role of Morena and the role of interest groups, including organized crime?

   JMS: Political parties are the only organizations with a structure capable of mobilizing large numbers of voters on election day. Even before the election, it was already known that political parties were designing and distributing lists for voters to copy on election day. Although I am not certain about this, I think it’s plausible, especially given how party machinery works. I don’t believe these elections would be the exception.

   I don’t know anything about organized crime, but it does seem logical to me that these groups have been more interested in influencing this election than the average citizen. Operating in illicit activities makes you more likely to confront the judicial structure. If organized crime or special interests were to finance candidates, it could of course threaten the impartiality of a judge. In general, I believe that the election could weaken judicial independence.

   PU: Once the new judiciary is established after this election, what will be the role of a body such as the Judicial Disciplinary Court and the Judicial Administration Body, which will replace the Federal Judiciary Council?

   JMS: Until now, the Federal Judiciary Council was in charge of administration and discipline of the judiciary. Now, we will have two separate bodies for each function. With the Judicial Disciplinary Court, any person or authority will be able to denounce officials of the judiciary. But here the risk is that the Judicial Disciplinary Court could sanction judges or magistrates for voting against the political interests of the executive branch. The sanctions, which can range from suspension to dismissal, can condition the impartiality of judges and magistrates and seep into the entire judicial structure. It could affect the highest ranks, because it can sanction the members of the SCJN. The Judicial Disciplinary Court will be composed of five members who were also elected at the ballot box on June 1. It is one of the least discussed institutions, given the importance of the SCJN, but now it is something we are going to question—will the high court of the republic be the Supreme Court or the Judicial Disciplinary Court?

   PU: In Mexico and across the region, the critical issues revolve around immigration, security, trade, and human rights. How will the restructuring of the judiciary affect these issues?

   JMS: I am worried about what it means for human rights in Mexico. The main guarantee for a victim is the amparo—protection of rights in the Constitution—and the judiciary is responsible for protecting these rights. If the judiciary becomes politicized or loses impartiality, this bears risks on the guarantee of human rights.

   For example, a study of Bolivia, which similarly held a popular election for its judiciary, examines sentencing before and after the change of judicial regime. Two general trends were found: first, sentences had become more punitive, i.e., the number of convictions had increased; and second, sentences were more favorable to the state, giving the state the upper hand in a conflict against private parties.

   It will now become very difficult to grant an amparo for a human rights violation. I think the amparo is the most important issue in the debate around the reform—the loss of the ability of ordinary citizens to defend themselves against the arbitrariness of the state. Beyond a conservative political perspective, or the particular defense of some judicial authority, or an opposition to anti-corruption changes, this is the issue that worries me the most.

   PU: The official results of the election were announced by INE in mid-June. How did you read these results, and what are the main challenges that the new judiciary will face once it takes office in September 2025?

   JMS: Let’s consider the complexity of the voting process. There were more invalid votes (10.8 percent of the total votes cast) than those achieved by the candidate who earned the most votes in the election—Hugo Aguilar Ortiz (4.9 percent), the next president of the SCJN—the candidate who earned the second most votes—Lenia Batres Guadarrama (4.7 percent)—combined. In other words, 1 million ballots were annulled, far exceeding the previous record of 5.4 percent in 2009.

   The general turnout was very low, between 12.57 percent and 13.32 percent of the total voting population. This was low not only when compared to the presidential election, which always has a higher turnout, but also when compared to the midterms. More than 85 percent of voters decided not to vote.

   Why did this occur? There were controversies regarding the profiles of the candidates, but it’s important to recall that this was the responsibility of the three branches of the union, not INE. This is something that could be changed. In some states they are reforming the system so that only the state electoral organization is responsible for a serious and rigorous evaluation.

   The challenges to the already elected positions show several inconsistencies. In Veracruz, there was an elected candidate who is currently in prison. INE could not do much, because the lists were already compiled for the ballots. But there are people who should not be candidates, both for their lack of preparation and experience, but also for legal reasons. The other big issue was the use of the lists distributed by political parties in order to encourage citizens to vote for their candidates. This undermines democracy, it prevents a free and secret vote.

   When the lists given by the party in power, Morena, completely overlap with the election results, what we see is a “formalization” of a previous selection. It seems that the results were already known beforehand—candidates associated with the political party in power that promoted and approved the reform won. This was not a citizens’ election, it was a partisan election, and this is worrisome.

   The immediate judicial scenario, so far, has been frivolous. There have been no transformative, substantive agendas put forward. Instead, the changes have been at the surface-level, such as eliminating the mandatory use of robes by the judges of the SCJN, and opting instead for traditional indigenous costumes as an expression of multicultural inclusion. The new members of the SCJN will soon have to define the value of legal precedents and the SCJN’s decisions of the past 100 years. Perhaps they resort to a jurisprudence that omits the weight of precedents considered a criteria of a favored social class, and they instead elect to start from scratch. But starting from scratch could leave the country without a legal compass. The first sentences of this upcoming September will determine the value that the magistrates will give to jurisdictional precedent and, in turn, the future of the new judiciary.

10. An Ungovernable Country

    July 25, 2025 3:15 am Comments Off on An Ungovernable Country

    With the onset of the Washington Consensus in the 1980s, Brazil’s economy began grinding to a halt. The extraordinary growth that had set it apart in the decades after the Second World War quickly came undone as public investment receded, demand dropped, and deindustrialization set in. For the economist Luiz Carlos Bresser-Pereira, this resulted in a state of “near stagnation,” from which Brazil is still yet to recover. 

    Getting beyond this state of affairs will require the adoption of new macroeconomic and industrial policies, he argues. To that end, Bresser-Pereira has developed a theory of a “new developmentalism.” Key to the theory is the idea that the exchange rate is of maximum importance for the competitiveness of domestic industry and investment. 

    At 91, Bresser-Pereira remains one of the most important intellectuals in the country. A professor at the Getúlio Vargas Foundation since 1959, he is an economist, political scientist, business administrator, and lawyer. He was Minister of Finance (1987) in the José Sarney administration and Minister of Federal Administration and State Reform (1995–98) and Minister of Science and Technology (1999) in the administration of Fernando Henrique Cardoso. Since leaving public office, he has devoted himself exclusively to academic life. 

    Phenomenal World editors Hugo Fanton and Maria Fernanda Sikorski spoke with Bresser-Pereira in late June about the political and economic situation in Brazil amid Lula’s third term. The interview, conducted before the announcement of a 50 percent tariff on Brazilian exports to the United States, provides an overview of new developmentalism, and analyzes the consequences of Brazil’s semi-colonial position in the global market, as well as the obstacles to structural change in the national economy.

    Interview with Luiz Carlos Bresser-Pereira

    Hugo Fanton: Yesterday, the National Congress overturned the presidential decree that increased the rates of the Tax on Financial Operations (IOF). Can we begin with your analysis of the relationship between the executive and legislative branches during Lula’s third presidential term?

    BRESSER-PEREIRA: In the case of the IOF, Congress revoked the presidential decree that imposed a tax increase. The government needs to raise taxes because fiscal spending is—necessarily—very high. The lack of support from the legislature is a problem in itself, but in addition, the volume of amendments is immense and impacts the federal government’s ability to direct fiscal spending and make public investments of greater quantity and quality. 

    Since 2015, when Congress approved an amendment to the Constitution that made parliamentary amendments mandatory, Brazil has become an ungovernable country, or at least almost so. The electoral system for the Federal Legislature uses proportional representation but, absurdly, it uses open lists. This results in a huge proliferation of candidates, and makes running in an election very expensive, which in turn usually leads to the election of elitist parties. Created by the 1988 Constitution, this model only became governable because of the so-called “coalition presidentialism.”1 The term, coined by political scientist Sérgio Abranches, refers to the way in which the president of Brazil forms parliamentary majorities. In a system characterized by extreme multipartyism (in the 2022 elections, 23 parties were elected to the Chamber of Deputies), legislative support for the government depends on agreements (often spurious) and alliances between parties with heterogeneous positions on the political spectrum.

    In most developed countries, the party that wins the executive election has a majority in Congress; if it is not absolute, then it is at least substantial, allowing it, with a few alliances, to implement its political agenda. Because of the open list system, this rarely happens in Brazil. Coalition presidentialism has been the solution; the president usually does not have a majority in Congress, but he can buy deputies—literally buy them. The government only releases funds from parliamentary amendments if it has support in Congress. From 2015 onwards, however, members of Congress have become increasingly “independent” from the president, and so governing the country has become extremely difficult.2Dilma Rousseff began her second presidential term in January 2015 already under pressure. December of that year was marked by a definitive break with the government by the majority of the Chamber of Deputies, chaired by Eduardo Cunha, who initiated impeachment proceedings against Dilma. At the same time, also in 2015, Congress approved the first Constitutional Amendment (No. 86/2015) that made parliamentary amendments mandatory—the next decade would be marked by numerous other measures aimed at increasing the legislature’s interference in the public budget.  Sérgio Abranches addresses this problem of governability in a recent interview with Valor Econômico. He says that Brazil has a dysfunctional Congress that only looks after its own interests and has no concern for the public interest. Most deputies and senators work simply to defend their own prerogatives and ensure their re-election. 

    MARIA SIKORSKI:  It is Congress that advocates austerity because it imposes fiscal surplus rules on the government, but sees no problem with amendments.

    BP: Congress is not in favor of austerity. That’s just talk. Orthodox economists are in favor of it, but Congress, even though it speaks in the name of orthodoxy, absolutely does not want to raise taxes or cut spending.

    MS: The theory of new developmentalism advocates a form of fiscal adjustment that allows public accounts to be balanced without harming social spending and investment. Along the same lines, in your book, In Search of Lost Development, you advocate a fiscal rule model that adopts nominal (rather than primary, as is usually the case) targets, i.e., that includes interest payments in the account and also includes a target for public investment. Given this, what is your assessment of the fiscal framework implemented by the government in 2023, which adopts primary result targets and has a surplus bias, determining that the rate of growth of expenditures must always be lower than that of revenues?

    BP: The spending cap previously in place was absurd; no civilized country would impose such a cap. Now that a new fiscal framework has been proposed to replace the cap, a lot more is at stake: the government also needs to ensure the feasibility of the increase in social spending promised by Lula’s campaign. Haddad has been incredibly skillful in achieving both of these things in the face of an uncooperative parliament.

    That said, a higher primary surplus target should be achieved through both spending cuts and tax increases. The Brazilian government has a constitutional responsibility for health and education spending and a growing commitment to social assistance spending—not only because the population is aging, but also because the volume of income transfers has grown significantly since the pandemic, making programs such as the Bolsa Família no longer as inexpensive as they initially were. Meanwhile, the Brazilian tax burden has remained virtually unchanged: since the 2000s, it has hovered around 32 percent. It needs to increase. Many argue that Brazil’s tax burden is very high, but this is not true. In the case of countries that have never had the burden of social welfare, this might be true. But we do have it, albeit modestly: the Unified Health System is the greatest achievement of Brazilian democracy. 

    In addition, the budget also needs to make space for public investment. Historically, attempts to solve the problem of infrastructure investment through concessions, public-private partnerships, and privatization have failed. The privatization of monopolistic sectors, such as infrastructure in general, makes no sense. The fact is that without raising taxes, maintaining social spending and resuming public investment is impossible. This issue of tax increases, though, is incredibly hard to raise. Fernando Haddad is trying, but yesterday, for example, Congress overturned the tax review he attempted to implement. 

    hf: In addition to fiscal disputes, Lula’s third term has also been marked by clashes over monetary policy. Lula himself has repeatedly criticized the high (and, during much of his current term, rising) basic interest rate. What is your take on the Central Bank’s performance so far?

    BP: Why are interest rates high in Brazil? Nakano and I were the first to seriously discuss this issue, back in 2002, when we published an article showing that our real interest rate was much higher than the international rate plus country risk. We argued that, since financial liberalization made it difficult for the national currency to depreciate, this interest-rate differential existed to attract foreign capital. That was, in practice, the moment when I broke with Fernando Henrique Cardoso’s economists—all of them, except André Lara Resende, perfectly neoliberal. Since then, my explanation for high interest rates has always had two factors: first, the need to attract capital and second, the political power of the Brazilian financial-rentier system. 

    Recently, however, I published an analysis in Valor Econômico adding another idea (which deserves more serious research): in addition to political and economic factors, interest rates in Brazil are high because they have become customary. I identify two historical facts that are essential to the creation of this custom. The most important, in my view, happened in 1964, with the military coup.

    The military reinstated the savings account system and decided that these investments would be remunerated at a real—not nominal—interest rate of 6 percent per year. Today, to give you an idea, many capitalists in the global North are happy with 3 percent. Real interest rates of 6 percent per year were absolutely incompatible with the nature of savings accounts, but no one questioned the decision. Since the 1930s, there had been a usury law (still in force today) that criminalized the charging of real interest rates above 12 percent per year. Apparently, paying half that for a fixed-income product with virtually no risk seemed great. 

    The second historical fact dates back to redemocratization. The text of the 1988 Constitution set a maximum limit of 12 percent a year for real interest rates, reinforcing the usury law criterion. The adoption of a constitutional ceiling for interest rates was the work of my dear friend Fernando Gasparian, who fought hard for this during the constitutional convention. Congress ended up approving the cap, but with an annual rate of 12 percent. This illustrates how complicated the issue was: on the one hand, there was a limit, but on the other, the limit was extremely high! 

    But even though the limit was high, the issue did not go unnoticed. The financial market protested, economists said it was not compatible with the country’s macroeconomic reality, and after a while, the article was eventually removed from the Constitution. From that clash onwards, high interest rates became the norm. That is why I say it is a matter of habit: in Brazil, real interest rates of 4 or 6 percent are absolutely commonplace. The result is a huge capture of public assets: resources that could be used for productive investment are diverted to the financial market. 

    There are two fundamental captures of Brazilian public assets. Interest is by far the most important. The other is the result of the privileges of the public bureaucracy. When I was carrying out administrative reform as a minister under Fernando Henrique, I tried to limit this second problem. At the time, I came up with the idea of using the salaries of Supreme Court justices, without any perks, as a ceiling for public service remuneration. We managed to apply this for some time, but the perks soon reappeared—this time, of course, duly “legalized” by the Supreme Court. In any case, the privileges of the high bureaucracy are pocket change compared to interest.

    MS: Continuing with the topic of monetary policy, what about the current inflation target? Should it be higher? 

    BP: It should be higher, without a doubt. Inflation is not a good thing, but 5 percent inflation is normal in a country like Brazil. The economy is capable of adjusting to this level, which would even allow for reasonable adjustments in relative prices. This would make the Central Bank’s job easier. 

    You asked me what I thought about the Central Bank’s actions. Although this latest interest rate hike was somewhat abrupt, I think Galípolo did more or less what he had to do, because inflation was rising. As we discussed, the Central Bank’s work is constrained by factors that determine a kind of floor for Brazilian interest rates. This floor also has another consequence. There are countries that fight inflation by raising real interest rates from 0 or 1 percent to 3 percent, for example. Although this is a large increase, it is only two or three percentage points. In Brazil, to combat inflation, the real interest rate is raised by four or five percentage points. 

    MS: Why is the transmission of monetary policy weak?

    BP: You can do all the econometric studies you want, but this is a consequence of the factors that establish the basis for real interest rates. Instead of talking about transmission mechanisms, I usually put the question in simpler terms: it’s one thing to go from 1 percent, it’s another thing to go from 5 percent.

    MS: In 2023 and 2024, Brazil’s average annual growth was 3.3 percent, with an average per capita growth of 2.9 percent. This is much higher than the figure recorded in the period from 2015 to 2022, when GDP was almost stagnant, with an average annual growth of 0.2 percent. How do you interpret this recovery?

    BP: Since 1999, after leaving Fernando Henrique’s government, I have been talking about the near stagnation of the Brazilian economy. But the 2.9 percent per capita growth you pointed out cannot be called near stagnation. This figure surprised economists in general. Projections have failed multiple times in the last three years because it is a really difficult issue to explain. 

    Unlike in previous periods, the last ten years have been relatively free from Dutch Disease, largely because the price of commodities exports is not high, which means that the exchange rate hasn’t risen significantly and so domestic industry has remained competitive. Prior to that, Brazil did experience two recent cycles of Dutch Disease: the first, which began in the last decade of the last century, ended in the middle of the first decade of this century, and the second ended in 2015. Since then, the cycle has stalled and the exchange rate has remained at a reasonable level for industry; it has neither increased nor contracted. Unless I am mistaken, the industry’s share of GDP is more or less stable at around 11 percent.

    That said, regarding growth in 2023 and 2024, the only explanation I can come up with right now is that increased fiscal spending has led to increased demand. Under the Bolsonaro administration, and thanks to the pandemic, public spending increased substantially. Under the current Lula administration, there has been another increase to meet campaign promises. These are demand-side factors that provide a greater stimulus to the economy. 

    The problem is that, if this analysis is correct, it could foster a populist outlook for the economy. Although the short-term results are positive, eventual mismanagement of public accounts could end up not only reversing these effects but also undermining the very possibility of adopting a long-term development project.3N.E.: Historical cycles of economic populism in Brazil, on the left and right, have been analyzed by Bresser-Pereira at various points in his intellectual career. The book Populismo econômico: ortodoxia, desenvolvimentismo e populismo na América Latina (Economic Populism: Orthodoxy, Developmentalism, and Populism in Latin America), edited by the interviewee and published in 1991, is a seminal work that can be consulted (<)a href='https://www.bresserpereira.org.br/books/populismo-economico/000-populismo-economico.pdf'(>)here(<)/a(>). The budget needs to account for expenses such as those that have marked the recent period, but not only that. We spoke earlier about the importance of a small nominal deficit—not zero, but small—rather than a large primary surplus for development. The primary result, although it has some logic in terms of imposing limits on public debt growth, also has the ideological element of hiding interest. I advocate the adoption of the nominal result as a criterion because it is obviously essential that we pay less interest. But it is also important that there is fiscal space for public investment. 

    hf: Could you talk more about the relationship between exchange-rate policy and development in Brazil?

    BP: Between 1950 and 1980, Brazil grew extraordinarily. After Japan, it was the fastest-growing country in the world. The exchange rate was controlled during this period. Tariffs were one of the main mechanisms. Since the 1958 tariff law, we have adopted very high tariff barriers, which have acted as an instrument of currency depreciation. Before that, we used import-control mechanisms, currency auctions, and exchange-rate control systems.

    Of all the variables that influence economic development, in my view, the exchange rate is one of the most important. The most important is the rate of profit: without profit, there is no capitalism. There must be a reasonable rate of profit for there to be investment. The interest rate is important, of course, but, as we discussed, the Central Bank operates within a certain framework. In short, the government needs an exchange-rate policy. 

    There are two main causes for currency appreciation above the healthy limit for domestic industry. One is Dutch Disease, which is cyclical in nature. The other, also central to the theory of new developmentalism, is the current account deficit. When there is a current account deficit, there is necessarily a corresponding appreciation of the exchange rate, because it means that, in liquid terms, there is more capital coming in than going out. 

    The current account deficit must be reduced in some way. It is possible to reduce it without an inflow of capital by reducing reserves. But assuming that the government does not intend to touch the reserves, the country needs to adopt a policy aimed at eliminating the current account deficit. If the current account is consumption, a current account deficit is extra consumption. In other words, the country is consuming more than it produces. Eliminating the deficit therefore means tightening the belt. This means reducing wages. This is something that can only be done at the beginning of a government’s term, never at the end. 

    It turns out that in Brazil (and in Latin America in general), there is a religious belief that a current account deficit is good because it means being able to increase foreign savings. At the beginning of Fernando Henrique’s administration, the question of what development strategy was to be adopted was a big issue. The answer was very simple: increase foreign savings. One of the fundamental pillars of the new development, however, is to show that there is no sustainable growth with foreign savings, because this appreciates the exchange rate and undermines the competitiveness of domestic industry. 

    I recently published a new book, called National Project Against Near Stagnation (2025), arguing two things. First, the Ministry of Finance must recognize that Brazil is susceptible to the Dutch Disease—even if it is not manifesting itself now—and therefore, if there is a new cycle of commodity price increases, it must do its best to prevent damage to industry. Second, the Ministry of Finance should have at least a small department dedicated to exchange rate policy, i.e., that the ministry should be concerned with having a reasonable degree of control over the exchange rate. 

    So far in Lula’s third term, however, nothing has been done in this regard, mainly because the government already faces so many problems with the “market” that an exchange-rate policy of any kind could become another source of conflict. There is a mistake, however, in this political calculation: it is impossible to win over the financial market. The government has just learned a lesson in this regard. 

    ms: In this context, how do you analyze the current government’s resumption of industrial policy, represented by programs such as Nova Indústria Brasil (New Industry Brazil) and the new Growth Acceleration Program (PAC)? Can this be interpreted as a first step toward the adoption of a national development project in a broader sense?

    BP: Industrial policy can only be made affordable with the application of tariffs. In this respect, customs tariffs are the most important industrial policy in the history of capitalism. Every developed country, starting with England, developed by adopting high customs tariffs. But in Brazil and Latin America, the brainwashing carried out by economic liberalism was so brutal that it made economists forget this. They continue to argue in favor of industrial policy, but they do not include tariffs in their framework. It’s ridiculous. Without tariffs, industrial policy is nothing more than subsidies. Tariffs are not expensive: they are a tax that you create. Not to be used like Trump, of course, but it is a tool that can be used by Brazil. 

    I support the government, but I can’t say that it is trying to spearhead a development project. Brazil continues to be dominated by economic liberalism. The United States itself abandoned this type of ideology some time ago, Europe is more or less on the same path, but we remain trapped by it. 

    Brazil has not had a development policy for a long time. The military had one. Getúlio Vargas had one. But since the 1980s—with some exceptions during Lula’s first terms, because there was a major effort to expand social policy, although this did not exactly constitute a development strategy—we have not had a development policy. 

    hf: Do current historical conditions make it impossible to pursue a growth agenda, as Brazil did so successfully until the 1980s?

    BP: I don’t think they make it impossible, but I am convinced that Brazil will only emerge from this situation—which in my view is still one of near stagnation—when it abandons liberalism. Although there has been some growth in the last three years, the fact is that there is no such thing as a genuine development project simply because there is no liberal development project: the liberal project is to do nothing. Our trade and financial liberalization has been a disaster. In addition, there is a question of political economy: governments go through elections, they face Congress. For a development project to be viable, society as a whole must be united around it. 

    ms: When Lula was elected, the president of the United States was Joe Biden, who wanted to make the country “a modern supply-driven economy,” in the words of Janet Yellen.

    BP: Clearly developmentalist.

    ms: Exactly. But two years later, halfway through Lula’s presidential term, Trump took office. Do you think there was a break in the dynamic of Brazil’s external integration between the Biden and Trump administrations? 

    BP: In this recent period, there has been a political shift in the United States. If, in the 1980s, there was a neoliberal shift, between 2017 and 2022 there was a fundamentally developmentalist shift, mainly due to China’s success. In my view, this is the most important factor to consider. I don’t see a major break between Biden and Trump. It could be said that the shift continues today, but in Trump’s case, I prefer to characterize his politics as interventionist. It is a chaotic administration—so much so that it has earned the nickname TACO (Trump Always Chickens Out)4 In Portuguese, “Trump always cowers.”—constantly backtracking on its decisions.

    hf: Does this developmental shift in the United States change the conditions for policy-making in Brazil?

    BP:  It is to be expected that, as usual, after eight or ten years, Brazil will realize that economic liberalism does not work. Lula and Haddad know this very well, but it is important that Congress—which has become oriented toward rentierism—understands this issue, as well as business leaders. Then, perhaps, the conditions would be in place for a development project to be formed, though this will take time. Brazil’s reaction is always very slow. This is because we are a colony. 

    Until 1822, Brazil was a colonial country. Then, until 1930, it was semi-colonial. It became an independent country in the 1930s, though only until 1990, when Brazil, which had previously been subject to England and France, became subject to the United States. It was a return to semi-colonial status. 

    And since the 1990s, neoliberalism has been the fundamental instrument of imperialism to prevent Brazil’s development. There was a last attempt at development during the Sarney administration (1985–90). I, who was Minister of Finance for a little over seven months, ended up being defeated, to some extent, by the developmentists themselves. Sarney no longer wanted to make fiscal adjustments, and I saw that I had no chance of remaining in the government, so I left. And then, in a year and a half and in grand style, Maílson [da Nóbrega] led Brazil into a period of hyperinflation. In the last month of the Sarney administration, inflation was at 82 percent.

    Returning to the subject, it is Brazil’s status as semi-colonial country that explains its slow and submissive economic culture, happy to adopt foreign values—in this case, neoliberal values. For a submissive country, getting rid of these values is a slow and difficult process, whereas the country that subjugates, being a metropolis, can do so more quickly.

    hf: How might your concept of the new developmentalism illuminate a path forward for Brazil?

    BP: I formulated a detailed answer to this question in the appendix to my book O novo desenvolvimentismo (The New Developmentalism), published last year. There, I start with the 1970s because I believe that was the last decade in which the Brazilian economy adequately grew. It could be said that during Lula’s first terms in office, the country grew reasonably well, but this was in large part thanks to the commodity boom. In my view, two fundamental issues separate the current economic conditions from those that were driving growth into the 1970s.

    The first is that since the 1970s, public investment has fallen sharply—because public savings have fallen sharply. In the 1970s, public savings stood at around 4 percent. By the early 1980s, this figure had plummeted to -2 percent. In other words, in that period alone, there was a six percentage point drop, which is crazy. The impact of this on Brazilian growth was enormous. Public savings are important because the state needs to be able to save in order to invest, especially in monopolistic sectors like infrastructure. I am not advocating nationalization in general, but I do believe that the state should invest in monopolistic sectors. 

    The second is the dynamics of the exchange rate. There was a lot of privatization in the 1980s, which contributed to a reduction in public investment and, in theory, should have stimulated the private sector to increase its investment rate. But public investment fell and the private sector remained the same, with no increase at all. This is due to the exchange rate. The exchange rate appreciated so much that, at various times, it made private investment unviable. If, for the public sector, the fiscal issue is the key variable, for the private sector, it is the exchange rate. That is why it is necessary to have an exchange-rate policy that takes into account both the current account deficit and possible cycles of Dutch Disease. 

    In macroeconomic terms, the new developmentalism advocates for a decent exchange-rate policy that keeps the exchange rate reasonably competitive for industry and substantially higher public investment. 

    Other than that, from a political economy perspective, a national development project—in Brazil, Latin America, or any underdeveloped country—must necessarily be anti-imperialist, because it must combat economic liberalism. Furtado and Prebisch were anti-imperialist. They were at the Economic Commission for Latin America and the Caribbean (ECLAC), a United Nations (UN) agency, so they used terms like “center” and “periphery,” but the fight was against economic liberalism—against the empire, therefore. 

    Look, I myself believe that the market is better than the state at coordinating the entire economic system of competitive companies. But we must understand that this is not enough, that the state needs to intervene moderately in the economy to develop and direct development. And that implies adopting an anti-imperialist policy. The import-substitution policy in Brazil was anti-imperialist. Since we ceased to be independent, however, the main instrument of imperialism to block our development has been economic liberalism.

    hf: Is it necessary to address the issue of dependency?

    BP: After I left Fernando Henrique’s government, I decided to reread Dependency and Development in Latin America. It was only then that I really discovered what associated dependency was. Soon after, I published an article called “From ISEB and ECLAC to Dependency Theory,” the inaugural work of my critique of dependence theory. 

    The historical fact that confused Fernando Henrique, as it had previously confused Hélio Jaguaribe, was this: at the time of import substitution, Brazilian anti-imperialists—or nationalists—said that the United States—the “center”—was against Brazil’s industrialization. However, starting in the 1950s, large American companies began to invest in Brazil, followed by European and Japanese companies. Given this, how could one explain that the center was against the industrialization of the periphery? Jaguaribe attempted an answer, and ten years later, Fernando Henrique concluded the reasoning as follows: if the role of imperialism is to prevent the industrialization of underdeveloped countries, the fact that companies from the “center” were investing in Brazil could only mean that there was no imperialism, because these companies were helping the country to industrialize.

    It is linear reasoning; not dialectical, not intelligent. The big mistake in this explanation is that it ignores the fact that American companies and the American state are not the same thing. Companies need profits and seek profits wherever they can. When Brazil and other countries in Latin America adopted a policy of industrialization through import substitution, they raised customs tariffs sharply. This caused foreign companies to lose market share. The only way for these foreign companies to recover part of this market was to invest in the industry of these countries. However, private American business interests and the interests of the US government did not, of course, perfectly align. And the government was not (and is not) interested in the industrialization and development of Brazil. For me, this is the blind spot in Fernando Henrique’s dependency theory. Apart from that, in practice, it also became clear that growth based on foreign savings does not work.