Brazil has voted. Europe should think EBASIC.

Lula da Silva’s re-election gives Europe a new opportunity. Whether Brussels can seize it depends on its understanding of the world in which Brazilians have voted. A government willing to deepen cooperation with Europe will also cultivate China, participate in BRICS[1] and defend its freedom to disagree with its European partners, whether on beef imports or Russia’s war in Ukraine. Any serious European strategy must begin by accepting that Brazil has a strategy of its own.

This is a world in which trade and investment have become instruments in a struggle over power. Trump uses access to the US market to demand concessions from trading partners, including allies. China’s control over rare-earth processing gives Beijing leverage over industries that depend on those materials. For Europe and Brazil, the question is how to protect their freedom to act when Washington or Beijing attaches political conditions to an economic relationship.

Differing approaches

Brazil matters directly to Europe’s answer. It holds the world’s second-largest rare-earth reserves and dominates global niobium production. Rare-earth magnets are essential components in electric motors, wind turbines and defence equipment. Niobium strengthens steel used in cars, infrastructure and pipelines, and improves alloys used in aircraft engines. Access to these materials helps determine whether Europe can fulfil its industrial, climate and defence ambitions.

Europe and Brazil approach these questions from different positions. Under Lula, they also have common ground on climate protection and reducing inequality. But their strongest strategic connection may be their shared interest in preventing either Washington or Beijing from dictating the terms on which everyone else trades, develops and exercises sovereignty.

Canadian Prime Minister Mark Carney has put forward a response to this predicament: middle powers should pool their influence rather than negotiate alone with stronger states. For Canada, the stakes are immediate. Its dependence on the US market leaves it exposed to decisions taken in Washington. Closer cooperation with the EU and other partners would give Ottawa alternatives and greater bargaining power.

Europe should welcome that initiative. It also needs an answer of its own. Even the EU’s biggest member states, including Germany, France, Italy, Spain and Poland fit broadly within the middle-power category in their own right. The EU collectively has the economic weight to aspire to a third pole in a world increasingly organised around US and Chinese power. Its internal foreign-policy divisions prevent it from consistently exercising that influence. In trade negotiations, Europe can bargain as a single power. In foreign policy, its governments too often pull in different directions. Partners consequently encounter a Union capable of setting demanding conditions for access to its market, yet unable to sustain an equally clear political commitment. Brazil is an opportunity to begin closing that gap.

Doing so requires Brussels to reconsider how it engages with developing countries. European leaders speak of equal partnerships, but too often the practical offer begins with rules already written in Europe. Partners are expected to adjust their production, demonstrate compliance and absorb the costs. Their own demands – for industrial development, technology and greater influence over international decisions – receive less attention.

Europe should take those perspectives seriously. A Brazilian ambition to process minerals domestically deserves as much consideration as a European ambition to secure their supply. Environmental standards will command greater support when cooperation helps producers meet them. European values will have more influence when partners can see how the relationship advances their priorities too.

This also means accepting that strategic autonomy is an ambition others share. Europe cannot seek greater independence from Washington while expecting Brazil to distance itself from Beijing as the price of cooperation. Nor should every disagreement become a test of the entire relationship. Brussels and Brasília can dispute approaches to Ukraine while pursuing joint industrial projects and climate protection. Brazil’s support for international carbon trading during the Belém climate conference (COP30) illustrates the scope for cooperation despite wider political differences.

EBASIC: a new chapter

Critical minerals offer a practical starting point. Europe should propose investment in Brazilian processing facilities, research and skilled employment alongside agreements to purchase their output. Brazil would gain industrial capacity and a larger share of the value generated by its resources. Europe would gain suppliers with whom it had built a lasting commercial relationship.

Japan’s experience offers a useful lesson. After China restricted rare-earth exports in 2010, Tokyo backed alternative production through public finance, commercial partnerships and long-term purchasing commitments. Its support for Australia’s Lynas helped develop mining and processing capacity outside China. Diversification required years of investment and a willingness to share commercial risk.

Europe should apply that lesson to Brazil. Mineral reserves alone will not deliver secure supplies. Projects need financing, processing technology and customers prepared to commit beyond the next price fluctuation. Environmental protection and the rights of affected communities must be built into those investments. A rush for minerals that undermines forests and local livelihoods would damage the climate partnership Europe also wants to develop.

Australia, South Africa, India and Canada, belong in this wider strategy. Together with the EU and Brazil, they could form EBASIC, connecting resource-rich democracies with Europe’s industrial capacity and market through joint investment in mineral processing, cleaner technologies and predictable trade rules. Partners would pursue shared interests while retaining their own foreign-policy choices.

Lula’s Brazil: Europe’s test

The EU already has agreements on which to build. Its difficulty is convincing partners that European commitments will survive European politics. That credibility matters beyond trade: it will also shape whether partners are willing to commit to the longer-term industrial and investment cooperation that a coalition such as EBASIC would require.

The EU-Mercosur interim trade agreement has been provisionally applied since May. Parliament’s consent awaits the European Court of Justice’s opinion on compatibility with the EU treaties. CETA, the EU-Canada trade agreement, marked the tenth anniversary of its signature in October, while full European ratification remains incomplete. France’s Senate rejected authorisation to ratify it in 2024, after the National Assembly had approved it in 2019.

Provisional application has delivered trade benefits. But prolonged uncertainty carries a political message: Europe can negotiate a partnership without being able to secure its completion.

Agriculture remains a source of resistance in both relationships. European governments should explain what they risk losing when they allow those disputes to determine the whole partnership. Brazil and Canada have other potential investors and customers. Delays in Europe do not oblige them to put their ambitions on hold.

Lula’s victory gives Brussels a chance to move quickly on a shared agenda: implementing trade commitments, financing mineral processing, developing cleaner industries and protecting forests. The relationship should be judged by the projects it delivers and the political trust those projects build.

For Europe, Brazil could become the significant test of a strategy suited to a world of competing powers and overlapping partnerships. The offer should be clear: Europe will invest in Brazil’s capacity to develop, and both will gain greater freedom from decisions taken in Washington or Beijing. The priority now is to turn that shared interest into tangible investment, industrial cooperation and lasting political commitment.

[1] Comprising Brazil, China, Egypt, Ethiopia, India, Indonesia, Iran, Russia, South Africa and the United Arab Emirates.

The views expressed in this #CriticalThinking article reflect those of the author(s) and not of Friends of Europe.