Brazil as mediator: Everyone wants to go to Rio

This is from a organization, the National Intelligence Council, tasked with official future scenario creation for US intelligence agencies. One of the scenarios has Brazil playing a role as a mediator between the so-called BRIC countries.

BRIC Bust Up Scenario from National Intelligence Council 2025 Review

Global Scenario III: BRICs’ Bust-Up

In this fictionalized scenario, Chinese fears of
disruption of China’s energy supplies spark a
clash with India. With increasing resource
constraints likely out to 2025, disputes over
resources appear to us to be a growing
potential source of conflict. The sense of
vulnerability is heightened by the dwindling
number of energy producers and increasing
concentration in unstable regions such as the
Middle East. A world in which there are
more confrontations over other issues—such st
as new trade barriers—is likely to increase the
potential for any dispute to escalate into
conflict. As outlined in this scenario,
misperceptions—along with miscom-
munications—could play as important a role
as any actual threats. Also illustrated by this
scenario is the competition by rising powers
for resources. Both China and India—though
rich in coal—have limited and dwindling oil
and gas reserves and must rely on foreign
sources. In thinking about the increased
potential for conflict in this multipolar world,
we need to keep in mind the scope for the
emerging powers to clash with one another.

Preconditions underpinning this scenario

A steady period of growth has slowed as
states struggle to cope with energy and
resource shortages, which are particularly
acute in the Asian economies.

A rise in nationalist sentiments occurs
with the intense energy competition in this
zero-sum world.

A balance of power emerges that
resembles a 21st century replay of the
years before 1914.

Letter by current Foreign Minister to former Brazilian President
February 1, 2021
I once heard a story—though I don’t know whether it is true—that Goldman Sachs added
Brazil as an afterthought to the now-famous grouping of emerging powers or BRICs.
Rumor has it that they needed a fourth country, preferably from the southern hemisphere
since the others were in the north. It also helped that Brazil began with a B.
True or not, Brazil has pulled its weight over the past six months, performing feats of
diplomacy that even the US could not equal in present circumstances.
Let me go back to the beginning even though a lot of this you probably know. In fact, to
get to the root of the Sino-Indian clash one has to go back to before there was any news
coverage of the events. A lot of little incidents led to the Chinese attack on two Indian
warships near the Gulf of Oman, which in turn triggered the US attack disabling the
Chinese ships as they tried to withdraw from the area.
For a couple years, the Chinese had been watching what from their standpoint was a
dangerous confluence of events that could jeopardize their economic, and therefore
political survival. First, the Japanese had been making considerable progress in
increasing their sea control capabilities in contested ocean areas that looked promising
for producing oil and gas.
Second, there had been a notable acceleration in Indian military modernization as well as
Indian attempts to erode Chinese gains in influence in Southeast Asia, increasing India’s
sea denial capabilities in the areas through which oil and gas move to China from the
Middle East. China responded, extending its naval presence in the region by establishing
naval basing rights in Pakistan. It became clear that Beijing’s strategy was to deter any
attempts by India to cut off China’s sea access to energy resources by creating a threat
to India’s sea lanes in return. Tensions between India and China increased sharply when
a Chinese submarine disappeared without explanation while monitoring an Indian naval
Third, Sino-Russian ties were simultaneously taking a tumble despite earlier cooperation
in the Shanghai Cooperation Organization. Beijing detected increasing signs of Russia
undercutting Chinese relations with Central Asian energy producers. This stoked Chinese
energy insecurity. The fact that emerging alternative energy technologies—clean coal,
solar, wind, and geothermal—did not materialize after heavy Chinese and US investments
did not help.
As you know, even before the Sino-Indian incident, there had been a skirmish or two last
year between the Chinese and Russians in Russia’s Far East. If the Chinese had feared
Russian double-dealing in Central Asia, the Russians were just as paranoid about what
the Chinese were up to in Russia’s Far East. Russia’s accusation of spying by a group of
students from Beijing and their subsequent imprisonment in Vladivostok occasioned, as
427345ID 11-08
you well remember, the spectacular Chinese rescue effort which thoroughly humiliated
the Russians. Some called it a second Port Arthur in reference to the Japanese sinking
the Russian fleet in 1905.
Finally, the strategic competition for influence and access to energy that emerged in the
Middle East provided a new backdrop for the increasing rivalry among China, India, and
Russia. As the United States reduced its military forces in the Middle East following its
involvement in Iraq, the other great powers sought to fill the vacuum. The Gulf Arab states
in particular sought to strengthen their relationships with other powers to compensate for
what they perceived as a weakened US security commitment post Iraq.
Tensions in the Middle East meanwhile were building as Iran continued to exert its
growing power. A crisis erupted after a series of naval incidents between Iranian and
Arab naval forces in the Persian Gulf and the Iranian threat to close off access to the
Persian Gulf to all naval forces from outside the region except those of “friendly” powers.
In response the United States introduced new economic sanctions against Tehran
and sought to conduct an embargo of arms shipments to Iran. Tehran countered by
threatening to disrupt oil traffic through the Gulf if Washington did not back down.
US pressure on the Chinese, Indians, and others to reject Iranian blandishments and
eschew trade with the Iranians was intense. Beijing, fearing a disruption of its energy
supplies, sought to play both sides, maintaining good relations with the Saudis while also
promising Iran its support. China had established years back a strategic reserve, but that
would last only so long and the uncertainty about what happened after a couple months
was putting political pressure on the government. New Delhi also sought to nuance its
response noting its need for natural gas from Iran but also seeking to maintain its good
relationships with the United States and the Arab states. As a result, India declined to
participate in economic sanctions that were deemed to be most harmful to ordinary
Iranian citizens but agreed to help the United States enforce an arms embargo of Iran.
You can see how this set the stage for the incident at sea. Chinese nerves were on edge,
but the Chinese were feeling very confident after the Russian Far East affair. The Indian
attempt to stop a Chinese vessel believed to be carrying new antiship cruise missiles
to Iran was resisted by Chinese naval forces in the area. The Chinese saw the Indian
warships as surrogates for the United States. The US attack confirmed it. The original
crisis in the Middle East—which really pitted the US and Europe against Iran—was
suddenly transformed into a serious global one.
Fortunately over the past few weeks, unlike 1914, all the powers drew back from the
brink. But oil is now over $300 a barrel and stock markets are tanking everywhere. That
gets me to the Brazilian angle. We were the only country of any stature that had the trust
of all the others. Even the Europeans were discredited because of their links to the US
in the Iranian crisis. China was desperate to find a way out of what could have been an
even worse position if a full-scale conflict with the Indians and the United States had
ensued. The US too wanted a face-saving way out of the impasse since it looked like
the only victor would be the Iranians and to an extent the Russians who sat smugly on
the sidelines, reaping a fortune from the spike in energy prices. Of course, our continued
development of biofuels in a responsible way only added to our credibility.
In the negotiations, I have tried to do more than just get all sides to back off and pay
compensation to one another for the damages to each others’ fleets. China needs to be
assured about energy flows from the Gulf—at least once they resume.
I’m not sure that I have succeeded in building up mutual confidence and trust. I sense that
the militaries in all three places—the US, China, and India—will use the incident to push
for greater militarization of energy security. We could experience a new naval arms race.
In China, the government still fears public retribution because of the humiliation suffered
by the US attack. Of course, for the moment, the US is the target of the nationalistic
outburst—the United States’ new embassy is a charred ruin. The Iranians have let up
some, particularly as the US and its European partners made some concessions to get
the oil flowing again and defuse the crisis with China and India.
I’ve told the three—the US, India, and China—that the next round of talks has to be held
here in Rio. I’m hoping a more convivial atmosphere will do the trick. Rio Carnival is
around the corner…

Published by Janar Wasito

Janar Wasito is the manager of Magis Capital in San Diego, CA. He is a graduate of Harvard and Stanford Law School, and a former Marine Officer.

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