PSB candidate has suggested she would end Dilma’s cautious dealings with Buenos Aires
The nomination of Marina Silva as the presidential candidate for the Brazilian Socialist Party (PSB) has sent shockwaves throughout the political landscape in Brazil, threatening President Dilma Rousseff’s re-election bid.
If the latest polls are right, the environmentalist will tie with Rousseff in the first round of voting on October 5 and could even manage to beat the Workers’ Party (PT) candidate in the runoff.
But the consequences of a possible victory by the well-known environmentalist, who is running on the promise to “change Brazil,” would not only be felt domestically — it would also have important consequences for Latin America and, more specifically, on the Mercosur trade bloc as a whole as well as Brazil’s commercial relationship with Argentina.
The campaign has shown Marina to be a pragmatist. Last week, she denied that she would look to reduce investment in offshore drilling and rebutted comments from Rousseff criticizing her declared positions on the economy. She also signalled she plans to make some changes to the country’s international relations.
The environmentalist and evangelical has criticized Rousseff for not taking advantage of the gains that former president Luiz Inácio Lula da Silva made in the international arena and has suggested that the era of “strategic patience” toward the Argentine government would come to an end quite quickly if she wins the presidency.
‘Strategic patience’
Despite pressure from Brazil’s elite industrial sectors to do more, the Rousseff administration has arguably been cautious in its dealings with Buenos Aires, even though Argentine protectionism has often worked against regional integration and prevented Mercosur from moving forward as the unified bloc.
“China is Brazil’s main trade partner but they export mostly commodities. Instead, they sell us (Argentina) industrial goods, which makes us an important commercial partner for Brazil. The administration of President Dilma Rousseff didn’t feel it could afford the luxury of irking the government” of President Cristina Fernández de Kirchner, explained Federico Merke, an expert in Brazilian foreign policy and director of the International Relations and Political Science degrees at San Andrés University.
Certain similarities at an ideological level between Brasilia and Buenos Aires have also worked in favour of this more tolerant line, with many at Itamaraty — the Brazilian Foreign Relations Ministry — viewing Mercosur “more as a political instrument than a trade bloc and as a way to keep a peaceful relation with Argentina,” according to Merke.
But it is not only politics that have motivated Brazil’s “patience.” Small-and medium-sized companies that sell goods to Argentina are also interested in maintaining a friendly bilateral relations.
“It is mostly business chambers and the board of directors of big companies that are pushing for more openness. Official documents often call for more agreements, (and) point at Brazil’s ‘isolation.’ But when it comes to smaller businesses, the rhetoric is quite different: there’s still quite a lot of fear regarding what would happen if Brazil really did open up and their position is more defensive, protectionist,” explained Brazilian economist Pedro Da Motta Veiga, the director of the Cindes Centre for the Study of Integration and Development (Centro de Estudos de Integração e Desenvolvimento).
The future of Mercosur
What is clear, however, is that with the Brazilian economy slowing down and annual inflation close to surpassing the 6.5-percent limit set by the Central Bank, many understand that something needs to change.
There are also challenges from other trade blocs. Even within the Rousseff government, many view the growth of the Pacific Alliance — a trade bloc formed by Chile, Peru, Colombia and Mexico — as a direct threat to Brazil, which has failed to sign trade agreements with other blocs due to Mercosur regulations that ban its members from reaching bilateral accords without the involvement of the group’s other member-states.
A recent research paper by Cindes concluded that “ever since the creation of Mercosur, Brazil has been unable to implement trade agreements of a relevant scope.” The same report also declared the existence of “increased tensions in intra-bloc relations.”
A free trade agreement (FTA) with the European Union is currently the bloc’s most pressing issue, with elite industrialists in Brazil pushing for the government to break free from the Mercosur, in order to sign the accord.
In her campaign manifesto which she presented last week, Marina backed further integration with the Pacific Alliance and the idea of a two-speed solution for the Mercosur, whereby Brazil, Uruguay and Paraguay would sign an FTA with the EU, even if Argentina doesn’t.
“It would imply the beginning of the end for Mercosur. But assuming she wins the election, I think she would have the political support to go through with it,” Merke said. “The general perception (in Brazil) is that Argentina is holding the country back, that it is a heavy weight to carry.”
Da Motta Veiga warns that this two-speed solution would obviously “raise a problem for Argentina, considering that Paraguay and Uruguay would also be willing to sign.” However, he questions whether the Brazilian authorities haven’t been using Argentina’s reluctance as cover-up for their own doubts.
“I am not 100 percent certain that the Rousseff administration really wants an FTA,” he told the Herald. “Dilma could still win the election in October and, in that case, it would mean more of the same,” he said.
With general elections also coming up in Argentina next year, the future of the regional bloc is anything but set in stone.
Merke believes that both Buenos Aires Mayor Mauricio Macri (PRO’s presidential candidate) and former Tigre mayor Sergio Massa (who will run as a candidate for his own Frente Renovador) would reduce protectionism and attempt to open up the economy.
“I imagine Marina could have a good relationship with both Macri and Massa. There are economic advisers in both teams that are calling for further liberalization,” Merke said.
The Brazilian vote next month will provide an important clue, but the definitive answer of what will happen in Mercosur will only come in 2015.
