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Al-Ahram Weekly 7 - 13 October 1999 Issue No. 450 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 7 - 13 October 1999 Issue No. 450
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Interview Features Profile Travel Living Sports People Time Out Chronicles Cartoons Letters Integration blues
By Hisham El-NaggarBrazil and Argentina are two countries which, outsiders might imagine, would have many reasons to be at loggerheads. Two mammoth nations (in terms of their geographic area), similar enough to be looking askance at each other, but different enough to disagree on any number of issues. Surely that is a recipe for regional conflict, if ever there was one?
Yet contrary to this view, which is shared by many foreigners and is seemingly confirmed by the South American neighbours' never-ending rivalry on soccer fields the world over -- just who is the best soccer player of all time: Pele or Maradona? -- relations between Brazil and Argentina have not only been relatively trouble-free, but have improved spectacularly since democratic rule was reinstated in both countries in the early 1980s. Recent developments, however, brought on by the establishment of the Mercosur free trade area, threaten to throw all that centennial friendship into the washing basket of history.
It is true that, after Argentina became independent in 1810, the two countries seemed to be headed in very different directions. While the proud residents of the Rio de la Plata provinces (later to become "the Argentine Republic") bade their Spanish colonial masters adieu, the Brazilians, no doubt pleased that the Portuguese royal family had settled in Rio de Janeiro after fleeing from Napoleon's armies, retained their monarchist sympathies and their link with the mother country for several more decades.
One of the first wars to be fought by the young Argentine Republic was with monarchist Brazil, over the east bank of the Uru-uay River. The result was a draw, out of which tiny Uruguay was born to act as a buffer between the two giants.
Yet this has proved to be, to date, the one and only war in which the two countries found themselves fighting on opposite sides. And soon afterwards, relations started improving, until they found themselves partners in the War of the Triple Alliance in the 1860s, which pitted them, along with Uruguay, against Paraguay.
For over a century thereafter, the two neighbours appeared to be locked into what might best be described as "sibling rivalry" mode. By the turn of the century, Argentina appeared to have chosen its identity: a mostly prosperous, thoroughly European-oriented country which actively, and successfully, sought to attract immigrants from the Old Continent. Brazil, on the other hand, though it never lacked for immigrants from Europe -- especially to its southern, more temperate, states -- had a much higher proportion of mixed race inhabitants (descendants of black slaves, and of the indigenous peoples whom the Brazilians failed to exterminate with the same zeal shown by their Argentine neighbours). While Buenos Aires consciously modelled itself on Paris, Rio de Janeiro emerged as one of the most charming semi-tropical resorts in the world.
The most difficult phase in Brazilian-Argentine relations came just after the Second World War. In the economic field, Brazil seemed hell-bent on making up for lost time, which it largely succeeded in doing, especially in the 1970s when it rapidly grew to be the world's eighth industrial power. Argentina, on the other, stagnated as internal political tensions -- and an elite so cosmopolitan that it appeared indifferent to promoting home-grown industry -- saw the country uncomfortably trapped in what was an almost no-growth situation.
This state of affairs was not calculated to make things run smoothly between the two neighbours. Brazilians, especially the industrious inhabitants of S‹o Paulo, came across as snotty and a trifle gauche to their Argentine neighbours, while Argentines, especially the proud porteños (inhabitants of Buenos Aires), struck Brazilians as insufferably condescending.
The experience of the 1980s, known as "the lost decade" in Latin America, was sobering for both countries, as both countries began to experience roughly the same problems: political turbulence as democracy replaced military dictatorship; severe decapitalisation as the debt crisis wiped out their access to capital markets; and inflation, soon to become hyperinflation, which all but destroyed the middle class.
Argentines also could not fail to note that, while Europe was standoffish at best, and at worst hostile, as during the brief and unfortunate conflict over the Falkland Islands, Latin America -- not only its governments, but its peoples as well -- was extraordinarily supportive of their country. As money became a problem, so trips to neighbouring countries began to replace the once flamboyant European tours to which both countries' middle classes had become addicted. A by-product of this was that Argentines and Brazilians began to get to know each other, and by and large were pleasantly surprised by what they discovered on closer acquaintance.
By the end of the 1980s, Argentina, Brazil, Uruguay and Paraguay had signed the Mercosur Treaty, laying the foundation for a free trade area which in time was envisaged to grow into a common market. Slowly, the Mercosur countries (notably Brazil and Argentina) reestablished economic stability, regained access to capital markets and appeared once again to be embarked on the course to high growth. The 1990s saw an impressive increase in trade between the allied nations, who now began to negotiate as a block with other trade groupings, in particular, the European Union and NAFTA.
It is thus a sad irony that developments over the past few months would appear to be resurrecting the bad old days of yore, just as the century draws to a close. For two reasons, relations between Argentina and Brazil seem to be deteriorating. The first cause of discord is Brazil's trading position with its southern neighbour following the devaluation of the real in January 1999. The second is Buenos Aires's tendency to launch foreign policy initiatives without consulting Brasilia, which is increasingly getting on the Brazilians' already overstrained nerves.
Brazil's devaluation was considered necessary to stem the haemorrhage of capital out of the country. As a result, Brazilian goods became dramatically cheaper overnight, threatening to flood Argentina with Brazilian products and reducing Argentine exports to Brazil (though both of these effects are still largely to be seen, due to the present recession in Argentina).
To make matters worse, several Argentine firms then indicated their intention to follow many auto parts manufacturers across the border and relocate to Brazil where, it is said, the cost of a factory is some 10 per cent lower, and the return on capital almost one and half times as high. Not only is Brazil benefiting from a cheaper currency, but the Brazilian government's aggressive policy for industrial promotion is in vivid contrast to the Argentine government's scrupulously laissez-faire policies.
The situation became explosive when Argentina, loathe to devalue its currency, tried to impose barriers to the entry of Brazilian footwear. Brazil retaliated by creating administrative hurdles to the entry of 400 different Argentine export goods, representing 90 per cent of the total value of Argentine exports to Brazil.
Argentina's President Menem has been acting pretty much on his own when it comes to international affairs, first making his country an "extra-NATO" ally of the United States, then proceeding to propose cooperating with the US over the quasi-civil war in Brazil's neighbour Colombia, as well as in sending troops to East Timor. Nor does Menem appear to have taken the trouble to so much as notify his Brazilian counterpart of these positions in advance. As a result, the Brazilians are beginning to wonder just how far their interests might, in fact, diverge from those of their southern neighbours.
Interestingly, however, popular attitudes are proving more resilient. The Buenos Aires papers' travel supplements are still advertising tours to all manner of destinations in Brazil (a bargain since the devaluation). And Portuguese -- the musical variety spoken by Brazilians, that is -- ranks a not-so-distant second after English with Argentine students eager to acquire a foreign language. To judge by enrollment patterns in colleges and evening classes, then, the young at least still believe that Mercosur has a future.
