There’s a Big New Kid on the Block : Hemisphere: Brazil is economically strong and politically self-confident enough to batter U.S. hopes for Latin American free trade.

For many years Brazil has tried to secure for itself an international role consonant with its size, ambition and potential. But for different reasons in different cases, the effort had proved largely unsuccessful. Not even Henry Kissinger was able to deliver on his commitment as secretary of state in 1976 to give “intermediate power” status to Brazil. Either the country was too pro-American for the rest of the hemisphere--the case during the 1960s and part of the ‘70s; or it remained aloof from some of the region’s crises because it did not consider them relevant--Central America in the 1980s; or it went its own way on matters of international concern--in Africa with former Portuguese colonies and in its pursuit of a military nuclear capability.

Brazil is still far from achieving its age-old dream of being treated as a “great power” of global stature and influence. But Brazil is emerging as a major regional player, rapidly replacing Mexico, and to a certain degree Cuba, as the only Latin American nation with an international profile of its own. It has done so by taking a stand contrary to that of the United States on two major issues: its $115-billion foreign debt, and President Bush’s “initiative of the Americas” free-trade proposal.

Cuba no longer has the Soviet Union’s support and the sympathy of many Latin countries that allowed it to play an international role far beyond its size and means. Mexico essentially aligns itself with the United Sates on nearly every significant item on the binational agenda. Brazil is breaking ranks on these important points; what’s more, it is doing so backed by a virtual consensus of its body politic.

There is an awareness in Brazil today--perhaps more than elsewhere in Latin America--that behind the free-trade fervor there is more than simple concern for the hemisphere’s economies and “sound economic policies.” As many American economists and analysts have pointed out, the U.S. trade deficit began to diminish only after the brutal de facto devaluation of the dollar that the Group of Seven imposed on the rest of the industrialized world in 1985. But the devaluation of the dollar was not very effective--to say the least--in reducing the U.S. trade deficit in the “dollar zone,” mainly Latin America. While that market does not constitute a large share of the U.S. trade deficit, it does count, particularly since all Latin American countries have reduced their imports--partly from the United States--and increased their exports--partly to the United States--to meet payments on their foreign debt.

Free trade, and through it the opening up of respectably sized markets like Mexico, Brazil and Argentina, is obviously not the final solution to the U.S. trade deficit. But it contributes to that solution, as well as to making the United States more competitive in relation to Europe and Japan through greater access to cheap Latin American labor. Countries like Brazil are aware of this. They may favor freer trade, and they acknowledge that their economy needs to be opened in order to become more competitive and technologically advanced. But Brazil has an expanding economy, with a large, diversified and regionally distributed trade surplus. It has little to gain from a free-trade agreement with the United States, and much to lose: the Brazilian market itself.

This is why, while seeking to gradually bring down Brazil’s protectionist walls and paying lip service to Bush’s initiative, Brazilian President Fernando Collor de Mello would prefer a South American free-trade zone--one excluding the United States. He has thus become a leader of South American integration efforts, giving impetus particularly to the Brazil-Argentina-Uruguay integration process begun by his predecessor. Not all South American nations will follow Brazil’s lead--Chile, for one, has said no, and Venezuela is hesitant--but many others will go along. By adopting the free-trade banner, but using it in a sense against the United States, Collor seems to be winning for Brazil the regional role it always sought. On this matter at least, Collor’s policy appears to be expressing a Brazilian consensus, embracing the left and the right, business and labor, intellectuals and technocrats.

On debt, Brazil has now gone 15 months without paying interest to the commercial banks, and is $10 billion in arrears. Collor has denied that he plans an outright suspension of payments, but he obviously is in no rush to resume payments or cut a deal. With a trade surplus and a savings of $10 billion a year in debt service, he is under no great pressure to do so. And because he is not desperate for a deal, as some other government leaders have been, he will probably get a better deal when he feels ready. No wonder rumor had it in recent weeks that when John Reed, chairman of Citicorp and the country’s largest creditor, came to visit, Collor simply refused to meet with him. Brazil’s original, more independent position on debt probably will be more advantageous than those of Mexico, Venezuela or Chile.

Brazil is far too poor and unjust a nation to be a major player on the world stage. But it has become a sufficiently democratic country, and its economy is strong and large enough for it to play an important role in the post-Cold War state of U.S.-Latin American relations. Watch for Brazil to take the lead in drawing the line between the United States’ interests and those of the countries south of the Rio Grande--or at least south of the Rio Suchiate, which separates Mexico from the rest of Latin America. Those interests may on occasion converge, but not nearly as often as the United States would like its neighbors to believe.