An Emergent Third World

The global free market is currently in crisis, and is bracing for more. This has created windows of opportunity for so-called third world economies — an outdated metric that typically denotes the level of a country’s development during the Cold War — to become key players in the global power struggle.

A great deal of ink has been spilled about China’s challenge, via its Belt and Road Initiative, to the United States’ economic dominance. But that focus has glossed over the political significance of other emergent economies in the Global South that haven’t picked a dog in the fight between the two global superpowers.

In a major departure from the twentieth-century structural adjustment programs that brought the Global South to heel, many countries in the Global South now demand concessions from Western investors rather than the other way around. India and Indonesia have recently secured favorable deals with competing foreign investors drawn to their rapidly growing consumer and financial markets. In those deals, they’ve been able to stipulate state-capitalist projects that prioritize their national economic interests focused on hard infrastructure and renewable, independent energy sources.

Meanwhile the Gulf States in the Middle East, long economically competitive thanks to vast amounts of oil but invariably tethered to the US petrodollar, have begun to shift toward neoliberal financialization in a bid to eventually decouple from Western capital’s ebbs and flows. This recently came to a head with the Saudi-led OPEC+ decision not to increase oil production at the Biden administration’s political expense.

It is crucial to stress that a large chunk of these governments’ newfound authority rests on political authoritarianism and economic exploitation at home; while mounting a necessary challenge to Western capital, they’re hardly saints. Still, their growing comfort with conditioning and even deviating from Western political-economic interests is an important development in the geopolitical landscape that Lula and BRICS are set to reenter.

And not all of the nations challenging Western imperatives are capitalist dictatorships like Saudi Arabia. Latin American countries have seen a wave of leftist presidential candidates win democratic elections in recent years. Lula’s victory in Brazil, the continent’s largest economy and the world’s tenth, is only the latest development in this decade-long trend dubbed the “Pink Tide.” The people of Argentina, Chile, Colombia, Mexico, Peru and others have elected politicians campaigning on policies prioritizing national economic and environmental interests over Western political and financial ones. Lula is currently courting Argentinian president Alberto Fernandez to join BRICS.

Where the late 2000s and early 2010s signaled a potential return to international bipolarity divided along a Sino-Western divide, ever-expanding neoliberal supply chains and financialized markets informed by an exclusive, almost algorithmic commitment to maximizing profit margins have instead given rise to a tangled web of global political and economic relations that vice president of the European Commission Josep Borrell termed a “complex multipolarity.”

The United States and Europe are struggling to rein in the unruly neoliberal market they architected. The declining bargaining power of Western nations has resulted in windows of multipolar opportunity for the burgeoning economies of the Global South.

Waning Dollar, Waxing Alternatives

Countries in the Global South are still bound and informed by the global free market, which is invariably tied to structures that are monopolized by Western capital — institutions such as the petrodollar, the World Bank, and the International Monetary Fund, as well as emerging alternatives offered by geographical giants China and Russia defined in reaction to these structures of Western capital.

But the embedded primacy of Western, and especially American, capital in structures of the global free market is set to be severely hampered by the same neoliberal political-economic webs it first weaved in the 1980s and 1990s. Brazil, for example, has become reliant on trade not just with the United States but also with China and Russia — with the result that even the conservative Bolsonaro refused to take a stance on US-China tensions and Russia’s invasion of Ukraine during his time in office.

The Global South’s relative neutrality on Russia’s invasion of Ukraine is telling of these economic shifts. Leading economies including India, Indonesia, Brazil, South Africa, Mexico, Saudi Arabia, and the United Arab Emirates have refused to compromise their economic interests to punish Russia.

An even grimmer omen for the United States and its Western allies is that transnational American and European corporations are threatening to leave their nations behind for greener, more profitable pastures offered by their political adversaries and fair-weather friends. American oil and gas corporations lobbied Congress to limit sanctions on Russia in the lead-up to the invasion, contrary to their exploitative posturing in its aftermath. More explicitly, ExxonMobil initially refused to sever its business relations in Russia during the onset of sanctions.

As Russia’s invasion of Ukraine continues to escalate, its implications may accelerate this break from Western capital’s monopoly of the global free market. The West’s attempt to isolate Russia through economic sanctions backfired. Not only have the sanctions failed to stop Russian aggression, but the high oil and gas prices resulting from them have also boosted the ruble’s value.

More importantly, the sanctions are pushing Russia closer to China economically and politically. These conditions have led China and Russia to accelerate long-standing plans to decouple from the US dollar as the de facto universal currency for trade, encouraging other nations to follow suit. At its 2022 summit in Uzbekistan, the Shanghai Cooperation Organisation (SCO), a Eurasian economic alliance spearheaded by Russia and China that Iran is set to join in the near future, finalized a “roadmap” toward trading in member states’ respective national currencies, calling for other countries to drop the dollar and adopt similar measures.

Countries in the Global South had no say on whether sanctions on Russia were appropriate or sound, and yet they’ve paid the price: the universality of the dollar has resulted in inflation that has affected food prices in particular. When asked in October about the dollar’s negative effect on other countries’ economies, Biden told reporters, “I’m not concerned about the strength of the dollar, I’m concerned about the rest of the world. Our economy is strong as hell . . . the problem is the lack of economic growth and sound policy in other countries.” Countries may take Biden’s advice and follow the SCO’s lead, adopting “sound” policies that decouple their economies from the volatile US dollar.

Here’s where Lula and BRICS come in. Lula’s statement that Brazil will “not accept a new Cold War” and will instead look to “establish relations with everyone” suggests that his incoming administration will confidently chart an independent path. In so doing, Brazil could inspire a new nonalignment movement that works to strengthen the sovereign economic system capacities of the Global South through alliances such as BRICS and others, engaging with international trade, foreign investment, and domestic development on their own terms.

At the 2022 United Nations Climate Change Conference (COP27) in Sharm El-Sheikh, Egypt, Lula and his foreign policy advisor Celso Amorim gave speeches stressing Brazil’s intentions to pursue a pragmatic and active foreign policy in this vein. Lula pledged “to help construct a global order that is peaceful and based in dialogue, multilateralism, and multipolarity,” while Amorim called for a revival of UNASUR, the Union of South American Nations — a bloc originally formed by the late Venezuelan socialist leader Hugo Chávez in 2008 to counterbalance US influence in South America.

“Multipolarity” here is not just a buzzword — it’s a reality to which Western governments and corporations are already acclimatizing. In his recent visit to China in November, German chancellor Olaf Scholz, standing alongside CEOs of Volkswagen and global chemical giant BASF, said, “New centers of power are emerging in a multipolar world, and we aim to establish and expand partnerships with all of them.”

A Bright Future?

Lula’s election is an encouraging development in a global political and economic landscape that has long appeared poised to split into Sino-American spheres of influence, once more overriding the sovereignty of the postcolonial world.

But as history shows, the American empire never takes no for an answer — and is ready to use military violence or domestic sabotage should economic coercion fail. While Russia has shouldered and even benefited from the sanctions placed on it thanks to its sheer size and control over a large share of the world’s oil and gas deposits, even strong Global South countries like Brazil may not be able to withstand such a devastating blow. Even if Brazil could survive sanctions thanks to new multipolar and Sino-Russian economic alliances, the United States is no stranger to the orchestration of violent coups in South America, replacing leaders hostile to their interests with those friendly to them.

An American-backed coup in Brazil would only temporarily quash one “dissident” government to Western capital while others continue to crop up across South America and the Global South broadly. But the United States is unlikely to go out quietly as its time as the world’s sole superpower winds to a close — especially given the normalization of far-right elements in the Republican Party, and the Democratic Party’s uncompromising antagonism toward both this Sino-Russian sphere and progressive elements in the party that would temper its militarism. It is not outside the realm of possibility that the United States could engage in direct conflict with militaries much larger than those of the nations they have invaded in recent years, plunging the world into a crisis.

While the pacifist motivation behind Lula’s brand of nonalignment and multipolarity is admirable and principled, it could provoke the United States and threaten to scupper the progress the Global South has made in reclaiming its economic sovereignty. One need only look at the fates of the previous Non-Aligned Movement’s leaders in the last Cold War. Countries were pushed to the Soviet sphere for survival against Western aggression, as in Afghanistan and Egypt, or outright exiled and purged with foreign US backing, as in Indonesia and Ghana.

The answer isn’t full-blown alignment with the Sino-Russian sphere, which uses the same exploitative and oppressive methods the United States does, except in antagonism to it. Still, Lula must proceed with caution, as naivety toward American foreign policy could quickly turn the Global South’s optimistic future into a pessimistic one.