Argentina: Javier Milei wins presidential race. How will Brazil’s relationship with its neighbor country fare?

Nov, 20, 2023 Posted by Gabriel Malheiros

Week 202342

After the victory of the far-right candidate Javier Milei in the Argentine elections, which were closely watched by Brazilians due to the major trade relationship between their countries, one can’t help but ask: what will be the future relationship between the two nations?

Despite Javier Milei publicly maintaining an aggressive stance toward President Luiz Inácio Lula da Silva and promising to withdraw Argentina from Mercosur, behind the scenes, his representatives have been sending messages to Brazilian diplomats indicating that this posture was part of a campaign strategy, and actually parting ways with the bloc is unlikely.

According to an internal document circulating within the upper echelons of Brazil’s Foreign Ministry, Milei’s VP, Victoria Villarruel, and the economist Diana Mondino, elected national deputy and likely chancellor, have made discreet contacts with the Brazilian embassy in Buenos Aires to reaffirm “the central importance of relations with Brazil.”

Regarding Mercosur, they indicated the intention to update and modernize it, not necessarily to denounce it or remove Argentina from the group, as stated in the document titled “Perspectives on a potential government of Javier Milei for bilateral relations.”

Argentina is Brazil’s third-largest trading partner, behind China and the United States. Meanwhile, Brazil is the largest destination for Argentine exports, with a trade surplus of $2.2 billion in 2022 and $4.5 billion this year.

See below the evolution of Brazilian containerized exports to Argentina up to September this year. The data used in the development of the chart below was gathered through DataLiner, the market intelligence service by Datamar.

Container Exports from Brazil to Argentina | Jan 2019 – Sep 2023 | TEU

Source: DataLiner (click here to request a demo)

Below are the imports via containers from Argentina. The data is also from DataLiner:

Container Imports from Argentina to Brazil | Jan 2019 – Sep 2023 | TEU

Source: DataLiner (click here to request a demo)

According to the analysis conducted by diplomats, “Even in the hypothesis that Milei lives up to the threat of removing Argentina from Mercosur (unlikely but cannot be entirely ruled out given Milei’s personality), he would have to deal with difficult parliamentary requirements in a context of Parliament dominated by the opposition.”

During much of the campaign, Milei asserted that he would withdraw Argentina from Mercosur if he won the elections. “It is a customs union that favors businessmen who do not want to compete. I want to be aligned with the West; my partners will be the United States and Israel,” he said. The far-right politician also often claimed that the bloc is “stagnant” and “going nowhere.”

However, in the last TV debate on Sunday (12), when Sergio Massa asked if Milei still intended to leave the bloc, he replied: “That is a concern for the private market, and the state has no reason to intervene because every time it intervenes, it generates corruption.” This represents a backtrack from his previous stance, although the far-right candidate referred to Mercosur as a “hindrance.”

Even so, in the Itamaraty report, diplomats acknowledge that the far-right’s stance could lead to a contraction in the common ground between Brazil and Argentina and the weakening of cooperation within Mercosur.

To mitigate the negative impact, Itamaraty’s recommendation to the government is to “avoid unnecessary controversies, especially through the press and social media, preserve the bilateral relations, and keep channels of dialogue permanently open.”

Source: O Globo

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