Lula Goes to China: Three Takeaways

by Ted Snider Posted onApril 24, 2023

On April 14, Brazilian President Luiz Inácio Lula da Silva arrived in Beijing for talks with Chinese President Xi Jinping. Since their meeting, Lula, who is the leader of the largest economy and most powerful country in Latin America, has made statements, both with XI and alone, that have surprised and angered the US. Though they may anger the US, they should not surprise them. Lula foreshadowed every one of them during his first two terms as president and during his campaign for his third term.

Lula’s meeting with XI produced three outcomes that threaten US hegemony in a unipolar world. The first is his direct challenge by his support for a multipolar world and multipolar organizations. The second is his advocacy of liberating the world from the controlling role of the US dollar. The third is his support for China’s role as a negotiator for peace in Ukraine.

In his first two terms as president, Lula was a leader of Latin American defiance of US hegemony in America’s backyard. But he was also an important leader of global defiance of US hegemony. Lula was a founding member of BRICS, an international organization made up of Brazil, Russia, India, China and South Africa whose goal is to balance US hegemony and create a multipolar world.

It shouldn’t surprise anyone, then, that Lula and XI agreed to foster a multipolar world and to further build BRICS. XI said that "China and Brazil are resolved to . . . practice true multilateralism [and to] work for a more just and equitable international governance system." Lula echoed that resolution, saying that "Brazil is committed to building closer relations with China from the strategic perspective of shaping a just and equitable international order." He then clearly stated that "[t]he two sides both uphold multilateralism" before promising that "Brazil stands ready to work with China to strengthen strategic coordination in . . . BRICS and other multilateral institutions."

One of the mechanisms of multipolarity is weakening the hegemony of the US by weakening the hegemony of the US dollar. Most international trade is conducted in dollars, and most foreign exchange reserves are held in dollars. That privileged position of the dollar allows it to be very powerfully and quickly weaponized, making the US perhaps the only country in the world that can coerce other countries through the threat of sanctions.

Lula has proposed addressing that threat before. While campaigning in May, Lula pointed out that "We don’t have to depend on the dollar" before advancing the solution that "we will create a Latin American currency."

While in China, Lula addressed that threat again. "Why should every country have to be tied to the dollar for trade?" he asked. "Who decided the dollar would be the [world’s] currency?" And once again, Lula has advanced a solution. In March, Brazil and China each assigned one of their banks to conduct their bilateral trade in the Brazilian real and the Chinese yuan, escaping the US dollar.

But Lula went beyond bilateral trade and suggested a multipolar solution. “Why can’t a bank like the BRICS bank have a currency to finance trade between Brazil and China, between Brazil and other BRICS countries?" he asked. "Today, countries have to chase after dollars to export, when they could be exporting in their own currencies.”

The BRICS bank, or The New Development Bank, "is the product of a partnership among BRICS countries with a view to creating a world with less poverty, less inequality and more sustainability,” Lula has explained. Lula has been critical of the International Monetary Fund, accusing it of "asphyxiating countries’ economies." The BRICS bank offers an alternative to the IMF. It has reportedly "approved 99 loan projects totaling more than $34 billion, mainly for infrastructure projects, according to China’s Foreign Ministry."

One of the manifestations of this emerging multipolarity is China’s growing role as broker of diplomatic talks. China "blindsided" the US, in the words of CIA Director William Burns, by brokering a region transforming agreement between Saudi Arabia and Iran. Lula has infuriated the US with his criticism of US refusal to negotiate a peace in Ukraine and his support of China’s offer to negotiate a peace in Ukraine.

In a joint statement following their talks, Lula and XIinsisted that negotiations were "the only viable way out of the crisis" in Ukraine. Lula further irritated the US, who has rejected China’s efforts to help broker a peace, by supporting their efforts. Brazil says in the joint statement that they "positively received the Chinese proposal, which offers reflections conducive to the search for a peaceful way out of the crisis."

Lula has also proposed a joint effort, or a “peace club” that could include BRICS members China, India and Brazil and possibly Indonesia. Indonesia has been a leader in the nonaligned world and was recently welcomed as guests at the BRICS Foreign Ministers’ Meeting. In the joint statement, China said they "welcomed Brazil’s efforts toward peace." In an appeal to wider multipolarity, XI and Lula "appealed to more countries to play a constructive role for a political settlement of the Ukraine crisis."

Brazil has suggested before that Lula and BRICS could play an important role in negotiating an end to the war in Ukraine. They have said that negotiations must include the European Union and United State with the participation of China. Lula’s former foreign minister, Celso Amorim, has said that "Brazil can also be an important country, whose voice resonates in the developing world," adding that "The BRICS as a group could help."

But the comment of Lula’s that most infuriated the U S was his criticism that the US was encouraging the war instead of negotiating the peace. While in Beijing, Lula said that "The United States needs to stop encouraging war and start talking about peace." He later said that both Russia and Ukraine had decided to go to war. National Security Council spokesperson John Kirby fired back at Lula, accusing that he "substantively and rhetorically approached this issue by suggesting that the United States and Europe are somehow not interested in peace or that we share responsibility for the war. In this case, Brazil is parroting Russian and Chinese propaganda without at all looking at the facts."

Once again, though Lula’s comments may anger Washington, they should not surprise them. Lula has always held both Russia and the US responsible. In a May 4 interview, while campaigning, Lula told Time that "Putin shouldn’t have invaded Ukraine." But he then added, "But it’s not just Putin who is guilty. The US and the E.U. are also guilty. What was the reason for the Ukraine invasion? NATO? Then the US and Europe should have said: ‘Ukraine won’t join NATO.’ That would have solved the problem."

He has also always criticized the Biden administration for "encouraging the war" instead of "talking about peace." In his May interview, Lula said, "I don’t think [Biden] has taken the right decision on the war between Russia and Ukraine. The US has a lot of political clout. And Biden could have avoided [the war], not incited it. He could have talked more, participated more. Biden could have taken a plane to Moscow to talk to Putin. This is the kind of attitude you expect from a leader. To intervene so that things don’t go off the rails. I don’t think he did that.”

Lula’s meeting with XI resulted in statements in support of a multipolar world, including escaping the monopoly of the US dollar and its great potential to be weaponized; in support of China, BRICS and other countries in a multipolar world negotiating an end to the war in Ukraine; and in criticism of the US for encouraging war instead of peace. All of these statements have, predictably, angered the US. But they should not have surprised them.

Ted Snider is a regular columnist on US foreign policy and history at Antiwar.com and The Libertarian Institute. He is also a frequent contributor to Responsible Statecraft and The American Conservative as well as other outlets.