--- title: "Brazil’s Real Problem Is That Nobody Believes Its Deals Will Survive" description: "Lula and Flávio Bolsonaro offer opposite foreign policies. The harder question is whether Brazil can commit to either" author: "Nate Ledger" published: 2026-10-02T04:00:00Z modified: 2026-10-03T17:12:28Z url: https://rews.cc/a/brazil-s-real-problem-is-that-nobody-believes-its-deals-will-6e4c29 language: en tags: ["brazil", "politics", "economy", "corruption", "trump", "world"] publisher: "Rews (https://rews.cc)" --- # Brazil’s Real Problem Is That Nobody Believes Its Deals Will Survive *Lula and Flávio Bolsonaro offer opposite foreign policies. The harder question is whether Brazil can commit to either* By Nate Ledger · October 2, 2026 · https://rews.cc/a/brazil-s-real-problem-is-that-nobody-believes-its-deals-will-6e4c29 ## In brief - Brazil holds the first round of its presidential election on October 4, with Lula facing Flávio Bolsonaro - Matias Spektor argues in Foreign Affairs that Brazil is losing the state capacity that underpins its foreign policy autonomy - Over 90% of noninterest spending is mandatory; the IMF projects debt near 98% of GDP by end-2026, with real rates ~10% - The US has designated Brazil’s PCC and Comando Vermelho as terrorist groups amid unchecked gang expansion - The Petrobras and BNDES-linked scandals ended Rousseff’s presidency, briefly jailed Lula and fueled Bolsonaro’s 2018 rise Brazil votes on Sunday in a presidential election that offers, on the surface, a stark ideological menu. Luiz Inácio Lula da Silva is running for a fourth term as the champion of the Latin American left and of “strategic autonomy,” which in practice means deepening ties with China and generally keeping the world’s powers at arm’s length. His challenger, Flávio Bolsonaro, is the son of Jair Bolsonaro, the former president currently serving a 27-year prison sentence for trying to overturn the last election, and he would rather align Brazil closely with the Trump administration. Pick a pole. Choose a side. Writing in *Foreign Affairs*, the Brazilian scholar Matias Spektor makes the uncomfortable argument that this whole debate is somewhat beside the point, because it rests on a shared assumption: that Brazil still gets to choose its foreign policy at all. The premise of strategic autonomy — or of strategic alignment, for that matter — is that other countries take your choices seriously, because they believe that what Brazil signs today will still be Brazil’s position after the next election, and the one after that. Spektor’s contention is that this credibility is quietly draining away, and with it the country’s freedom of action. Both major powers, China and the United States, are increasingly able to dictate the terms of their engagement with Brazil rather than bargain with it. Closer to home, a country that helped build Mercosur and underwrote four decades of regional stability through its partnership with Argentina now doesn’t even have an ambassador in Buenos Aires — and Argentina doesn’t have one in Brasília. The logic here is worth walking through, because it’s really a story about how states, like borrowers, trade on their credit. A country’s influence abroad is a function of whether partners believe its commitments will be implemented. That belief, in turn, rests on what you might call state capacity: can the government raise the money to do what it promised, can its own institutions coordinate well enough to do it, and will the deal survive political turnover? If the answer to any of those is no, you are not a counterparty. You are a venue. ## The fiscal straightjacket Start with the money. Brazil’s economy is roughly the size of Canada’s — bigger than Spain’s — and the state is genuinely good at collecting taxes. And yet more than 90 percent of the federal government’s noninterest spending is mandatory, locked in by law before anyone gets to make a choice about it. The International Monetary Fund projects government debt will hit about 98 percent of GDP by the end of 2026. With real interest rates around ten percent, the arithmetic is brutal: servicing that debt eats resources that could otherwise pay for, say, security forces or the infrastructure needed to actually exploit the country’s vast reserves of critical minerals. You can be a big economy with a big state and still have almost no discretionary room to act. Brazil manages it. The consequences are concrete and slightly embarrassing in a geopolitical sense. Homegrown criminal gangs now operate over 1,500 clandestine airstrips across the Amazon basin, move drugs, gold and weapons across the borders with Brazil’s ten neighbors, and work a nearly 5,000-mile coastline the state cannot police — and Brazilian authorities can’t afford to keep up. Spektor makes the point that when a country can’t manage its own problems, other countries end up managing them for it, which is not great for your credibility as a partner. The Trump administration has designated Brazil’s two biggest criminal organizations, Primeiro Comando da Capital and Comando Vermelho, as terrorist groups, giving the United States new financial and legal tools to go after them, and several Latin American governments have signed on to Washington’s anticartel policy. Brazil, as Spektor puts it, is becoming the object of other countries’ security policies rather than the author of its own. ## A bureaucracy at war with itself Then there is the coordination problem. Brazil’s agencies are staffed by highly professional, exam-selected officials, which sounds like a strength until you learn that the agencies themselves fight viciously over authority and resources. Responsibility for security policy alone is scattered across federal police, highway police, an intelligence agency, military and civilian police in all 26 states plus the federal district, the armed forces, the federal revenue department, and independent federal and state prosecutors. Congressional efforts to coordinate the fight against organized crime under a central authority have died, opposed by the professional associations of the very agencies involved. Criminal organizations have proliferated in the bureaucracy’s seams, which is a tidy metaphor except that it is also literally what happened. Even with Paraguay and Uruguay — neighbors where Brazilian criminal networks operate and which can’t fight them alone — Brazil hasn’t built sustained intelligence sharing or joint operations. ## Notes on a scandal Corruption, finally, is the credibility tax that keeps compounding. The Petrobras affair and the construction-giant scandals financed by the development bank BNDES — massive bribes and kickbacks on projects across the continent — blew up deals Brazil had struck all over Latin America. Domestically, the fallout ended Dilma Rousseff’s presidency in 2016, sent Lula to prison in 2018 (his convictions were later annulled), and then, later that year, powered the anti-establishment backlash that made Jair Bolsonaro president. The judges and prosecutors who exposed it all emerged with extraordinary political authority as self-appointed checks on a failed political class — a legacy that is now tangled up in the scandal engulfing the Supreme Court, the very institution supposed to make Brazil’s commitments durable by enforcing the rules impartially. Add the Trump administration’s open meddling in Brazilian politics — which renders any deal with Washington instantly partisan and raises the odds that future governments in either capital try to reverse it — and the discount on Brazilian promises prices itself. Here is the dry kicker: it wasn’t always like this. In the 1990s Brazil tamed hyperinflation, consolidated its democracy and signed economic-integration and nuclear-safeguards agreements with Argentina — commitments that survived multiple changes of government, which is precisely why Europe and the United States treated it as a serious investment destination and a diplomatic force. The country demonstrated, in other words, that it knew how to borrow credibility and pay it back. Spektor’s grim observation, four days before a polarized vote, is that neither candidate has offered any clear plan to restore that capacity — and whoever inherits the Palácio do Planalto inherits the discount rate with it. A tilt toward Washington or an embrace of multilateralism are both foreign policies. You need a state that can deliver before either one counts.