Appendix

Brazil, the world's largest sugar producer, fulfils 16 per cent of its energy consumption and approximately three quarters of its transport fuels with sugarcane-based ethanol. During Brazil's internationalisation under President Lula da Silva, and to a lesser extent in President Rousseff's first term, the country aimed at creating a global market for ethanol. The time seemed right to steer foreign policy towards this goal due to a benevolent structural environment with global discussions about energy security, climate change and South–South cooperation.

Within a Neoclassical Realist framework, I show how Brazil failed to bring its ethanol diplomacy to success and to create a global market for ethanol. Neoclassical Realism sheds light on the area of energy security. This is an approach that so far has mainly been applied to hard security questions.

The analysis covers three analytical levels: the bilateral with Brazil in power deficit, the bilateral with Brazil in power surplus and the multilateral, represented in three empirical chapters: Brazil–US, Brazil–Mozambique and Brazil's multilateral ethanol diplomacy.

Process tracing based on primary-source research and expert interviews leads to the conclusion that the Brazilian foreign policy complex (FPC) failed to formulate and implement a coherent ethanol strategy. Ethanol diplomacy was never a top priority for Brazil's Ministry of Foreign Affairs, representing a lack of cohesion in the FPC. In international negotiations, Brazil has deficits in predicting its negotiating partners’ preferences and therefore lacks the ability to form long-term alliances with converging interests, rather than merely convening disruptive ad hoc coalitions.

This study shows that Neoclassical Realism can combine foreign policy output with international politics outcome research and is useful to analyse policy outside the hard security realm. It offers a basis for further research towards an understanding of Brazil's overall foreign policy and the foreign policies of other emerging powers.

Methodology is about defining the research process in order to come to meaningful results. In the present case, it will be used to explain Brazil's foreign policy actions by understanding its ethanol diplomacy during the two terms of the Lula government and Dilma's first term as president. This chapter will cover the variety of methods used to explain and analyse Brazil's international ethanol strategy.

The discussion of the methods in use serves to enable other academics to reproduce and therefore validate the results of research, which therefore need to follow rules that are ‘intersubjectively communicable’ (Gläser and Laudel 2009: 31). How the researcher obtained her results needs to be clear to academic peers. The minimum amount of reproducibility that should be sought consists of a description of the steps to be taken and the rules to be followed to achieve the results (2009: 32). This chapter will lay out the methods I use to explore Brazil's international ethanol strategy in a coherent manner that will allow for transparency and possible reproduction by other researchers.

Transparency of research is even more important when applying and combining a multitude of methods. The use of different methods and theories within one study is called ‘triangulation’ (Gläser and Laudel 2009: 105). Given the complex nature of social processes and the limitations of methodological purism, Flick argues, ‘it is becoming more fruitful to combine different theoretical approaches or to take these into account in combining methods’ (2002: 16). This study will follow this recommendation.

Flick further advocates for a ‘pragmatic use of methods’, while keeping in mind the dilemma between ‘pragmatic but nevertheless methodologically acceptable short-cut strategies for collecting, transcribing, and analysing qualitative data’ (2002: 19). This general stream of thought is supported by Gerring's view, that a ‘good enough’ research design that has been developed ‘after a theory and hypothesis has been formulated’ can be judged by six general criteria: ‘theoretical fit, cumulation, the treatment, the outcome, the sample, and practical constraints’ (2011: 627).

The following paragraphs will therefore describe the pragmatic combination of case study research and process tracing, while keeping in mind the goal of reproducibility.

Introduction

This chapter will analyse how Brazil and the United States reached agreements on ethanol issues in a time frame dating back to the beginning of the first Lula government (1 January 2003) to the end of the first term of President Dilma Rousseff (31 December 2014). The ethanol diplomacy between the two countries played a special role in their relationship. As was shown in the literature review in Chapter 3, the two countries have lived through ups and downs in their bilateral relationship. The early 2000s was a particularly difficult period, when Brazil was on the rise and looking towards a levelled position regarding the United States but with generally diverging interests and positions regarding questions of security, trade and South American governance. In that sense, the structural conditions for an agreement cannot be seen as particularly permissive; however, the attitudes of the leadership of the two countries that wanted and needed to show diplomatic successes added a very beneficial element. This chapter will examine whether the 2007 biofuels MoU between the United States and Brazil constitutes a new period of good relations or merely one light in a sea of darkness. It will first establish an initial account of the structural relations between the countries, the most obvious one being the structural disadvantage that Brazil has towards the United States, but also include attitudes towards each other in their respective foreign policies. This will be followed by a mapping of the actors and institutions involved in the process, which effectively means drawing out the components of the respective foreign policy complex (FPC). Finally, I will track the developments towards the 2007 MoU on biofuels, assess its outcomes and its implementation phase up to the NSA spy scandal. The process tracing will end at the end of President Dilma Rousseff's (in the following ‘Dilma’) first term as president of Brazil with an assessment of the rapprochement between the two countries. To conclude this chapter, I will summarise the findings and describe the mechanisms that directed the two countries’ negotiation strategies and relationship in general terms and therefore the outcomes of their ethanol diplomacy.

Introduction

Since the 1990s, Brazil has been a proponent of multilateral organisations. Despite its traditional focus on autonomy, Brazil understood that multilateral organisations and global governance arrangements could leverage its power resources vis-à-vis the countries of the Global North and at the same time limit the extent of their reach, especially that of the United States. With its strategy of autonomy through participation, Brazil aimed at shaping the global governance framework, and thereby the international structure, to its benefit. Brazil's multilateral ethanol diplomacy is one example where the country aimed for a substantial structural adjustment in its favour by displaying expertise, exerting power over smaller partners and balancing against the United States and the European Union.

As outlined by Kloss (2012), Brazil aimed at promoting ethanol as an alternative fuel on the multilateral level, particularly within the World Trade Organization (WTO). The WTO was founded in 1995 as a result of the General Agreement on Trade and Tariffs (GATT) negotiations in order to reduce tariffs and, more generally, obstacles to international trade. Brazil is a founding member of both the WTO and GATT.

The main issue Brazil faces regarding its multilateral ethanol diplomacy is that apart from nuclear energy, there is currently no global energy governance system in place. Therefore, ethanol is traded according to WTO rules of agricultural products, which means that ethanol made from sugarcane can be subjected to tariffs and trade is subject to bilateral rules and commitments.

Brazil therefore aimed to include ethanol into a general governance regime that would free ethanol from such restrictions and enable a global free market, which would discriminate less against ethanol as compared to fossil fuels. The WTO Doha Round seemed an appropriate venue for this undertaking with its focus on sustainable development.

Ethanol, however, faced other issues as well, mainly questions regarding standards of quality and sustainability. Brazil sought venues outside the WTO to address these questions, in particular the United Nations–supported International Biofuels Forum (IBF) and the OECD-and G8-supported Global Bioenergy Partnership (GBEP). Both fora were also used to run outreach and information campaigns for third-party countries – mainly from the Global South – to convince them of the introduction of an ethanol economy.

Introduction: How to Explain State Behaviour in International Relations?

How can we understand and conceptualise processes, actions, outputs and outcomes within international relations (IR)? Two paradigms have dominated how scholars have approached this question in the past: political Realism and the idea of Liberalism (with the constructivist idea gaining momentum since the 1990s). There is still debate about the number of ideas in IR theory, for example, Legro and Moravcsik count ‘at least three paradigmatic alternatives’ to Realism (1999: 10). One approach to understand the differences and the different usages of the theoretical approaches is to look at the variables under consideration in each strain of thought.

Rose (1998: 146) argues that the main difference in explaining state behaviour lies in the dichotomy between Realist approaches that see international pressures and structures as the driving force in international politics, whereas ‘Innenpolitik’ approaches like Liberalism and Constructivism focus on domestic pressures. Sterling-Folker (1997) identifies the difference between environment-based Realist approaches and process-based Liberal approaches. While the assessment of the Realist approach coincides with Rose’s, her focus on process is not necessarily confined to domestic politics, but can rather be applied to international organisations and institutions as well. Legro and Moravcsik, on the other hand, equally claim that the central variable defines the respective paradigm in IR theory. ‘Power, preferences, beliefs, and information […] correspond to the four major categories of modern rationalist International Relations theory, namely realist, liberal, epistemic, and institutionalist theories’ (1999: 46–47).

Taking a step back from this theoretical discussion, what are the problems we are trying to analyse using these approaches? The main questions raised by the two dominant schools of thought are how states act in the international arena and what their motives are. Or to simply put it in Moravcsik's (1992) words, ‘to explain what states do.’ Deducted from these general considerations, the question of war, peace and security is dominant in the literature – indeed it has been a driving force of the normative ideas behind Liberalism – and has been extended by the question of how cooperation in IR works and what role do norms and institutions play.

Brazilian ethanol has been a strategic energy commodity in the South American country since the 1970s. The efficiency of sugarcane-based ethanol and the abundance of its primary resource convinced the military leadership of the 1970s to use this commodity to supplement the national gasoline market and thereby decrease the dependency on international oil markets.

After the 2003 introduction of the flex fuel engine, a car engine that can run on any mixture of ethanol and gasoline, ethanol expanded its market reach and thereby increased its strategic value for Brazil's energy mix. The Brazilian government that came into power in 2003 under the presidency of Lula da Silva understood the implications of this rise in internal ethanol consumption and saw the international potential that sugarcane-based ethanol offered for Brazil.

For one thing, with a consumption rate that equalled that of gasoline in 2010 (about two billion litres), ethanol provided a suitable substitute for fossil fuels and decreased dependence on international oil markets; however, at the same time, it created a new dependence on domestic production capacities. As the world's largest producer of sugarcane-based ethanol, Brazil cannot count on an international market to supplement the consumption of domestic production in the case of low production caused by droughts, flooding or other unforeseeable events.

Hence, Brazil has been working towards creating an international market for ethanol that would both reduce Brazil's dependency on the internal market and leave the country in a position as the technological leader in an increasingly important economic sector. To achieve this, it is important to broaden the consumer base of ethanol as a fuel as well as to increase the number of producers internationally. Furthermore, ethanol lacks international standardisation, which is one of the main reasons why the World Trade Organization (WTO) has not yet specifically addressed the product.

Additionally, promoting ethanol internationally gave Brazil the opportunity to position itself at the pinnacle of the climate change discourse of the 2000s and develop strong ties, mainly with other developing nations, through new ‘South–South cooperation’ that has gained importance since the rise of the emerging markets and their turn to the ‘Global South’ in the early 2000s.

This study is the first to examine Brazil's international ethanol strategy from a Neoclassical Realist perspective. Under Presidents Lula da Silva and Dilma Rousseff, Brazil had the explicit foreign policy goal to create a global market for fuel ethanol comparative to the global oil market. Given the benevolent international environment for greater use of biofuels in the early 2000s, with questions of energy security, climate change and South–South cooperation on the top of the international agenda, it is puzzling why Brazil failed to create a global ethanol market despite the beneficial international context. This research question was guided by a set of sub-questions:

• • What is Brazil's international ethanol strategy?

• • How was Brazil's international ethanol strategy elaborated and by whom?

• • Who are the central stakeholders within Brazil and abroad that are involved in the process of implementing Brazil's international ethanol strategy?

• • What power relationships are at play within Brazil and towards its partners that influence the implementation of Brazil's international ethanol strategy?

• • What are the turning points in Brazil's ethanol diplomacy and how did these happen?

• • How can the processes and outcomes be explained within the realm of IR theory?

The study relied on a case study design with three empirical chapters. The first two empirical chapters represented two dimensions of bilateral relations, Brazil–US and Brazil–Mozambique, where Brazil is in a relatively weak position in the former and in a strong position in the latter. The third empirical chapter analysed Brazil's multilateral ethanol diplomacy, in particular Brazil's actions in the WTO.

Process tracing was applied to test Neoclassical Realist hypotheses at the necessary points of analysis. The data for this work was gathered by document and literature research as well as during field work that led to almost 80 expert interviews.

The three empirical chapters showed mixed results of Brazilian foreign policy making. As Ricupero (2010: 29) states, ‘Progress varies just as the distance between Brazil's pretensions and reality’, and in none of the cases were objectives fully achieved. Three main threads continue through all of the chapters:

• -Ethanol was not of the highest priority and was subordinate to other strategic goals.

• -The heterogeneity and lack of coordination within Brazil's foreign policy complex (FPC) made its foreign policy less effective.

This is the first comprehensive work on Brazil's international ethanol strategy or ethanol diplomacy that has focused on the question of whether or not this particular policy achieved success at creating an international ethanol market. Fagundes (2013) offers an output-oriented overview of the major initiatives and suggests an unusual perspective on interdependence in the global biofuels sector. On the other hand, useful research has been undertaken on parts of the issue and several sub-topics. As a result, this literature review is divided into three major sections: research on global biofuel markets, research that has been done on Brazil's ethanol diplomacy in general and research that refers to specific geographical or organisational levels.

The research on global biofuel markets reflects the optimistic notion of the mid-2000s, outlining several of the structural assumptions that have been made before in this study. The research on Brazil's ethanol diplomacy in general will be further divided into three blocks: studies that focus on the actors involved in the process (the ‘ethanol complex’), studies that deliver a strategic assessment of ethanol diplomacy and studies that put ethanol diplomacy in the context of South–South cooperation.

The section on specific geographical or organisational levels will focus on literature that looks at the cases that are investigated in this study: the relationship between the United States and Brazil with respect to ethanol, between Brazil and Mozambique, and at the multilateral level with a primary focus on the WTO.

Literature on Global Biofuel Markets

During the second half of the first decade of the 2000s, the question of prospective biofuel markets was raised in a number of research centres. Most prominently, the UN Economic Commission for Latin America and the Caribbean (CEPAL) and the ‘Task 40’ group of the International Energy Agency researched these issues. While these studies are fairly optimistic about future biofuels markets and lay out quantitative projections and regulatory as well as material requirements for the creation of such markets, they do not explain why this endeavour has failed thus far. They do, however, outline areas of contention that we need to refer to when looking for possible mistakes in the Brazilian strategy.

Introduction

Mozambique is one of Brazil's closest partners in Africa. The two countries have had diplomatic relations since 1975, right after the African country's independence from Portugal, with a Brazilian embassy opening in 1976. In 1998, Mozambique opened its embassy in Brasilia, and regular political and diplomatic exchange between the two countries started to take place. ‘Under Lula's leadership, Brazil conferred considerable weight to prioritising Brazil's Africa relations’ (CFR 2011: 60), with Lusophone countries, and particularly Mozambique, at the centre of Brazilian diplomatic attention. As a general diplomatic strategy, ‘Brazil's leadership is proactively seeking wider and all-inclusive relations’ (Costa 2010: 2). According to Rossi (2015: 26), ‘Mozambique is the best canvas to display Brazil's arrival in Africa’ because it is the biggest partner of Brazilian cooperation, where between 2003 and 2013, over 30 Brazilian institutions were active (2015: 178). Brazil's total investment in Mozambique was 10 billion USD, which made Mozambique Brazil's most important investment partner worldwide (Frey 2016).

This chapter begins, according to the Neoclassical Realist approach, with an overview of the structural environment that determines the framework in which Brazil's foreign policy with Mozambique takes place. As a second step, I analyse the actors and institutions involved in the policy implementation before shedding light on two micro-cases that represent necessary points of analysis. These cases are the 2007 Brazil and Mozambique biofuels memorandum of understanding (MoU) and the ProSavana project, a trinational development project between Brazil, Mozambique and Japan. The chapter concludes with an assessment of Brazil's ethanol diplomacy through a Neoclassical Realist lens.

What is particularly challenging in the realm of Brazilian–Mozambican relations is ‘the way in which many programme officials use the current point of inquiry to talk about the past […], especially since the ‘re-writing of history’ is already apparent among many official ProSavana actors’ (Funada-Classen 2013b: 5). Throughout this chapter, I rely primarily on my interviews with representatives of the Brazilian FPC but am able to triangulate their statements with published literature on the topic.

Background

Mozambique and Brazil have a very close relationship; the Brazilian embassy in Maputo opened immediately after the establishment of diplomatic relations, which was not the case in many other countries as opening embassies is associated with high costs, and that is something Brazil tried to save money on throughout 20th century.