Argentina and Brazil

Under the «Brazil-Argentina Binational Conference: How both companies are perceived through culture and media», organized by the Institute of Brazilian Studies at the Universidad Nacional de Tres de Febrero.  Original ideas and aspects were addressed regarding the relationship between the two countries and the panel arrived at interesting conclusions.

The myth of the historic rivalry between Brazil and Argentina has collapsed after almost three decades of democracy and regional integration. Both countries are now supporting conflict scenarios; however, the confrontation has been replaced now by a friendship not limited to sharing a long-term strategic alliance. Participants in the day’s discussion (journalists, scholars and men of culture) contributed valuable elements of analysis on the causes of the dialectic between confluences, commonality and divergences between the two nations.  Brazil has for some changed their status in the international order from a regional power to become a global player, with a privileged relationship with the United States, the European Union and China. And today Brazil is recognized as a full member of the BRIC group: Brazil, Russia, India, China. This entry into the twentieth century, under the Doctrine of the Baron of Rio Branco, started to recognize the priority of a strategic alliance with the U.S., as a determinant of international system, with a mission of leadership in South America — a needed consolidation, building on a strong economica and political structure based on a close partnership with Argentina.  That vision was based on a geopolitical foreign policy which, unlike Argentina, the continuities prevailed on the borders. All governments after 1930 met the consensus of «national-developmentalist» were civilian or military, right or left. This enabled Itamaraty to sustain the same model and use a deployment of strategic relationships with the region, the hemisphere and the world. This strategy and its policies of state have made it the country in the region with a greater voice in international forums, an emerging power and a global player with significant weight on the world stage. Is this position of «global player» inclusive or separate from Argentina?

The question examined over the whole day, had different responses of the exhibitors. However, the consensus was that Brazil as a major exporter of commodities (has become the second largest exporter of food) with China as its largest trading partner (iron ore is exported, and soybean oil). President Lula’s vision is to Argentina, mainly, and the rest of South America can and should accompany the expansion of production and trade, and that the country of Brazil holds the key to the international market for commodities is that China and the rest of Asia .

The other question important to the forum concerns: Is the current financial crisis and economic integration, is an opportunity for integration and in favor of increasing the differences between Argentina and Brazil?  The prevailing idea was that under the crisis, there  has been created «a new cycle of mistrust», primarily around the issue of protectionism and exchange rate policies, mutual negative views prevail, especially in the business of both countries. The odd thing is that both countries have been affected by similar problems, such as capital flight, falling exports and declining international trade. However their positions differed in the Doha Round and the London meeting of the G20, where Brazil has proposed paragraph 13 of the Final Declaration which rejects protectionism.

Towards the end of the day the discussion turned towards the events that made headlines in recent days, the nationalization of steel companies in Venezuela and its interference in relations between Argentina and Brazil and within the Mercosur.  There was one exhibitor who interpreted the demands of the Industrial Union of Argentina for his government to oppose the incorporation of Venezuela into Mercosur, and coincide with the lifting of the veto in the Senate to the incorporation of Brazil. The fact that it coincided with the visit of President Chavez to Lula da Silva, the place where they projected to the public of argentina, an expression of bias towards Brazil. Apparently, the steel of Venezuela should not surprise anyone, given that the country is promoting the vertical integration of the steelmaking process without dissimulation.  For exhibitors the real reason behind the industry claims to generate a pressure on the Argentine Government that will lead to a devaluation of the peso, placing it in a range between $ 4 and $ 4.50 abandoning the policy of managed slippage. The pressure that would be outside the Liaison Bureau of Agriculture, would create an enormous conflict with the rest of Brazil; and Mercosur would have to decide whether to follow the devaluation of the dollar internationally, without altering their exchange rate policies, as this could affect their ultimate partners in the integration process.

As can be seen the day was not merely a theoretical exercise, reduced to the rhetoric of good intentions and statements reflected in regional fraternity. The distinguised panel of speakers moved the discussion to topics of concern to the public. It was concluded that no  consensus can be built on the basis of mutual ignorance, remaining as «distant neighbors.» The crisis that was generated at the center of each countries core will ripple out to the periphery, requiring alternative adjustments. In Argentina and Brazil this situation, governments, businesses and corporations, must give proof of a strong political will, for the crisis…… instead of leading to further divergence.  Ironically the crisis can become an opportunity.  Common goals and constructive interdependence of these countries can promote  long term benefits for commerce which benefit both Brazil and Argentina.