“If Brazil sneezes, Argentina catches pneumonia,” said Susana Malcorra, Argentina’s former foreign minister, in 2016. And she wasn’t wrong: Brazil is the most important market for Argentine exports, the main source of tourism and the fourth. the largest investor in the country.
That’s why the government of Argentine President Alberto Fernández is closely watching Brazil’s Oct. 30 election runoff between conservative incumbent Jair Bolsonaro and leftist former president Luiz Inácio Lula da Silva.
In Lula, the Fernandez administration hopes to regain an old ally. Under Bolsonaro, the government will continue to fight to improve economic relations between the two countries.
Both results in Brazil’s elections will have different consequences for the economic future of Argentina and the region, the role of South America’s Mercosur trade bloc and could decide which country will emerge as a political leader on the continent.
What is at stake for Argentina’s economy?
During the first eight months of 2022, Argentina received over $8 billion in exports to Brazil and is expected to receive $12 billion by the end of the year.
“Brazil is the best destination for the Argentine [small and medium sized enterprises]but especially for industrialized products”, he said Marcelo Elizondo, director of the consulting firm DNI.
The future of Mercosur, South America’s largest trading bloc, is also at stake in these elections.
In 2019, a major trade deal with the European Union was agreed, but has yet to be ratified. The deal has been blocked in part by European governments and activists who object to the Bolsonaro administration’s lack of interest in protecting the Amazon rainforest.
For his part, Lula has expressed his interest in ensuring that the trade deal is postponed.
“If I win, in the first six months we will complete the agreement with the EU”, said Lula during his campaign.
Argentina’s government is looking forward to signing the deal, but needs Brazil’s support to achieve it.
What to expect if Lula wins
“With a victory for Lula Da Silva, Brazil will have a more traditional role in regional foreign policy,” said Welber Barral, Brazil’s former foreign trade secretary in talks with chronicler.
According to economist Martín Kalos, “Lula would like to prioritize rapprochement and a geopolitical and economic agreement with Argentina,” in contrast to what President Bolsonaro has done in recent years.
Also, President Fernández would again gain a major political and strategic ally. Argentina’s president vocally supported Lula while he was imprisoned for his role in the Lava Jato international corruption scandal.
“An alliance between presidents of the same political ideology who think about an integrated Latin America would be interesting to see,” said Mr. Go through an interview with Financial sphere.
What to expect if Bolsonaro is re-elected
If Mr. Bolsonaro is re-elected, “the roles will change and he will start looking at Argentina to see what will happen in the 2023 elections, hoping that the ruling party will lose,” according to political analyst Gustavo Marangoni.
“Jair Bolsonaro turned Brazil towards de-Americanization, making distancing from Latin America one of the axes of his hyper-ideological foreign policy,” said foreign affairs specialist Tomás Bontempo. “He flirted with the partial flexibilization of Mercosur,” he emphasized.
The continuation of this economic model would cause greater damage to Argentina in terms of trade, as it would negatively affect several key sectors of the economy, such as the production of auto parts and tourism.
The final round of presidential elections in Brazil will take place on October 30, and Argentine government officials will be closely watching its results, hoping to strengthen relations with the neighbor.
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