ARGENTINA-BRAZIL: Stop Bickering and Cooperate, Say Analysts

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Jul 4 2005 (IPS) - If Argentina and Brazil continue competing with each other over trade instead of establishing a joint development and industrialisation zone, the failure of their partnership as a model for South American integration could lead the other nations of the region to turn their sights towards the United States.

These words of warning come from Marcelo Gullo, a university professor and political analyst specialising in international relations, and the author of a new book, "Argentina-Brasil: la gran oportunidad" (Argentina-Brazil: The Great Opportunity).

Gullo’s book comes at a time when relations between the two largest members of the Southern Common Market (Mercosur) have reached a point of stalemate, marked by periodic conflicts between different economic sectors in the two nations.

This situation has dampened the high expectations created by what appeared to be a strong degree of political convergence among the current governments of the bloc’s member nations (Argentina, Brazil, Paraguay and Uruguay).

The regional integration project spearheaded by Brazil from within Mercosur, culminating in the founding last December of the South American Community of Nations, could prove to be more symbolic than genuine.

Throughout the past year, Argentine President Néstor Kirchner has repeatedly protested to Brazilian leader Luiz Inácio "Lula" da Silva over the "invasion" of Brazilian manufactured goods flooding his country. He is also demanding mechanisms to ensure a "more equitable" distribution of investments within the bloc.

The friction between these two giants has been felt by the smaller members of the Mercosur.

"We have regressed to a free trade zone, the most elemental form of integration. We have regressed to a customs union that has so many holes it looks like Swiss cheese. There is no coordination of macroeconomic policies, and Mercosur has practically no supranational identity whatsoever," declared the economy minister of the leftist Uruguayan government, Danilo Astori, shortly after the last Mercosur summit.

Despite the common ideological ground shared by the bloc’s members, three of which are governed by left-leaning administrations, "there is no political will" to solve trade problems through a greater institutionalisation of Mercosur, commented Argentine analyst Juan Tokatlián, director of Political Science and International Relations at the University of San Andrés.

"When Kirchner and Lula took over the governments of Argentina and Brazil, they brought with them two versions of political parties with a strong nationalist bent. As a result, their decisions as leaders are often far more influenced by domestic policies than by the dynamics of Mercosur," he told IPS.

Gullo recalled that the original proponents of European integration had to struggle – and not always successfully – to convince their constituents of the strategic importance of integration. "Leaders have to win elections, and they sometimes leave these issues aside," he told IPS.

But the analyst believes that integration is key to national development, and that its failure will lead to the isolation of the region’s countries and their direct alignment with the United States as hemispheric leader.

Nevertheless, he noted, "Mercosur in its current state does not serve the interests of Argentina, because Brazilian industry is destroying industry in this country, and Argentina cannot afford to let this happen, because half of its population lives below the poverty line."

The gap between the two nations stems from a series of structural and historical advantages enjoyed by Brazil, he maintained.

While the 1976-1983 military dictatorship in Argentina was marked by the dismantling of the country’s industrial sector, Brazil’s 1964-1985 military regime carried out a programme of accelerated industrialisation that served to provide the country with a solid industrial base.

These tendencies continued after the return to democracy and into the 1990s. While Brazil was not spared from the neoliberal wave, the government of Fernando Henrique Cardoso (1995-2003) adopted a more moderate approach, and one that maintained emphasis on the importance of production, noted Gullo.

In Argentina, on the other hand, the administration of Carlos Menem (1989-1999) embraced an "extremist and irrational" neoliberal model that eliminated all subsidies or other forms of support for industrial activity, among other measures.

In view of these differences, Gullo does not propose abandoning the strategic alliance between the two countries, but rather "returning to the original plan," envisioned as "a joint development zone."

"Bilateral relations were infected in the 1990s by the virus of neoliberalism. What is needed now is to go back to the essence of the alliance and work towards the joint development of both countries, as the European nations did in their own time," he stressed.

This viewpoint is shared by some and opposed by others in both nations.

The Argentine government has voiced its support for this initiative, but there are sectors with considerable influence on public opinion that would prefer to revive the deadlocked negotiations to establish the Free Trade Area of the Americas, the hemispheric trade pact promoted by the United States, noted Gullo.

In Brazil, there are foreign relations officials and academics who advocate the strengthening of strategic regional partners like Argentina as a means of ensuring Brazil a more influential role on the international front, particularly in view of the hemispheric power historically wielded by the United States.

Gullo noted that this group includes the presidential advisor on international policy Marco Aurelio García, Deputy Foreign Minister Samuel Pinheiro Guimaraes, sociologist Helio Jaguaribe (who attended the launch of Gullo’s book) and former foreign minister Celso Lafer.

At the same time, however, the powerful industrial sectors based in the southern Brazilian state of Sao Paulo are more concerned with their own growth in the short and medium term than with the potential advantages in the future of a strategic alliance with Argentina, he explained.

The stance adopted by big industry, which is largely considered the greatest obstacle to further integration, is based on pure market logic, but it should not be allowed to determine the decisions made by governments, which ought to be thinking in the long term, said Gullo.

"If Argentina forcefully demands a joint industrialisation policy, and Brazil concurs, a development fund could be created," the analyst noted. If this does not happen, Brazil could end up surrounded by countries that "won’t be hostile towards it, but which certainly won’t be very supportive," he warned.