By Andres Oppenheimer
September 04, 2019 01:33 PM
President Trump’s economic nationalism has seriously hurt U.S. ties with its closest allies around the world, but it may result in an unprecedented alliance with Brazil’s right-wing populist government.
That could change Latin America’s political map.
In a Sept. 2 tweet, Trump confirmed that he is negotiating a bilateral trade agreement with Brazil’s President Jair Bolsonaro, whom friends and foes call “Latin America’s Trump.” Trump met with Brazilian foreign minister Ernesto Araújo at the White House on Aug. 30 to move ahead with trade talks.
Judging from what Araújo told me in an extended interview hours after the meeting, the two governments are talking about a forging special relationship between the two biggest economies of the Americas that would go beyond trade.
Washington and Brasilia want to “move forward with a very ambitious free-trade agreement, which has been a dream for Brazil for many years, but had been hindered by anti-American biases of previous (Brazilian) governments,” Araújo told me. “We are going to go ahead with that now.”
Araújo added that, “We have wasted many opportunities for cooperation in the past because of the anti-American sentiment of former Brazilian leaders, which did not correspond with the feelings of the bulk of Brazil’s population.”
Trump and Bolsonaro “share a world vision,” Araújo said. Over the past 30 years, there has been a “progressive erosion of national sovereignty,” caused by ideas pushed by multilateral organizations such as the United Nations, he added.
When I asked him if a U.S.-Brazil trade deal would automatically result in Brazil’s withdrawal from Mercosur — the South American common market that includes Brazil, Argentina, Paraguay and Uruguay — the foreign minister did not exclude that possibility.
Under Mercosur rules, no member country can sign a bilateral trade deal with third parties without the other bloc members’ participation.
Araújo said that Bolsonaro has already talked with Argentina’s President Mauricio Macri about relaxing Mercosur rules to allow a U.S.-Brazil trade deal. But he conceded that a victory by Argentina’s front-runner opposition candidate Alberto Fernandez in the Oct. 27 elections would endanger Mercosur’s existence.
Araújo said that Fernandez, who has former leftist populist Argentine president Cristina Fernandez de Kirchner as his running mate, is part of the “Sao Paulo Forum, a group that coordinates leftist parties and anti-democratic projects in Latin America.”
“If a project with that kind of vision wins in Argentina, that creates difficulties for Mercosur, because Mercosur is not just a trade bloc but also a pro-democracy bloc,” Araújo told me. “We have a very clear and very strong democracy clause in Mercosur.”
What’s my reading of all of this? We should take most of it with a grain of salt, because Trump might not be reelected next year, and a federal government led by the Democrats, no doubt, would return to a more multilateral approach to foreign policy that would seek regional — rather than bilateral — trade alliances.
But if Trump is reelected, and barring anything unforeseen in Brazil, we might see a new political map in Latin America.
Brazil — Latin America’s biggest economy — could become Trump’s top partner in the region, and could effectively pull out of the Mercosur trade bloc.
That would among other things pose huge problems for Argentina if Fernandez wins the elections there. Brazil is Argentina’s top export market, in part thanks to Mercosur’s preferential tariffs.
If a leftist government in Argentina is left out of Mercosur, Argentina would have few places to go for credit but China. Argentina may not get new loans from the International Monetary Fund — a lender of last resort for debt-ridden countries — and, much like Venezuela in recent years, could be forced to mortgage its future oil and gas production to China in exchange for short-term emergency loans.
The best thing that could happen — although it probably won’t if Trump wins a second term — would be for Brazil to lead its Mercosur partners to a regional free-trade deal with the United States. The worst scenario would be that Argentina, with nowhere else to go, becomes more China-dependent than ever, much like Venezuela has in recent years.