More and More “hermanos”

por The Winners
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Roberto Luis Troster, economist

In Buenos Aires, exactly 210 years ago, dissatisfied citizens expelled the vice king and emancipated Argentina from Spain. It was the first embryo of independent South America. Províncias Unidas del Río de la Plata (United provinces of Rio de la Plata) was the name given, substituting the Vicereino do Río de la Plata. Since 1808 in Rio de Janeiro , Dom João VI was the prince of Portugal of the principality of Brazil.

In December 16th of 1815, the colony has its status elevated to the United Kingdom. The denomination was the United Kingdom of Portugal, Brazil, and Algarves, and covered all the colonies of the Por-tuguese overseas. With the defeat of Napoleon, the Portuguese and Spanish South American had different directions. Brazil remained part of the king-dom until 1822 when Dom Pedro I declared independence. During the Iempire, all separatist movements were held and the country main-tained and expanded its territory.

The Hispanic colonies realized they should expel the colonizers throughout the territory for consolidation of independence. The first steps for constructing an integra- ted Latin America were given by the liberators. José de San Martin from Argentina, who left Buenos Aires to Chile and after to Peru and Simon Bolivar from Venezuela, who went down towards the south.

Your troops expelled the colonization from the continent, they shared the same ideal however with opposite visions of the process. The Sanmartinian vision was of a continental bloc through a common institutional framework guiding integration. It was debated the dream of “Pátria Grande”, the Latin America integration. The Bolivarian was from a per-sonal strong leadership conducting the process.

It was the one that prevailed with an abundance of populist leaders who transformed the dream in a nightmare by cutting up the part of the Hispanic continent with fratri-cidal fights. Brazil and Argentina were directed to Europe with moments of approximation and distance. The brotherhood relationship was stong during the crisis. In the Paraguay War, Argentina assisted Brazil to face external invasion.

More than a century after Brazil also supported Argentina in the Malvinas War. The Mercosul, at the turn of the Millenium, awoke the project of “Pátria Grande” . Argentina and Brazil with Paraguay and Uruguay did an agreement that was the embryo of a Latin America focused on building a po-tency. The initial plans were auspicious, they included even a unified currency for Mercosul which was initially called “Gaucho”.The Mercosul progressed in several segments, such as education, culture, tourism and research, However, in the economy sector, the Sanmartinian view was once again defeated, the egos of the leaders weighted more. There were few developments in the synchrony of macroeconomic policies that undermine the project’s prospects. Imbalances are increasing routinely. Worsen the situation, for awful reasons, Paraguay was temporarily removed from the bloc and Venezuela was invited in its place.

If on the Atlantic coast, the scenario worsened, on the other side of the continent a way out began to be envisaged. The Pacific Alliance was conceived in 2011. Peru and Chile, which had already waged war between them in the past, together with Colombia, Costa Rica, and Mexico, managed to allocate San Martin’s dream into practice.

The group calls itself the eighth economy on the planet, has an ambitious integration project, and already announced joint embassies and has two observer countries. They work full speed on the project. In less than ten years they built more than Mercosul in thirty years and proved that the dream of “Pátria Grande” The pandemic showed is time for a change. It is an opportunity for actions and ambitions. There are a lot of benefits to enjoy. New agreements are happening across the planet.

They are powerful tools to grow, attract investments, and open markets. The larger and more integrated the better in all blocks. It is urgent to act.The moment we are living allows all Mercosul to have ambitious in the integration with the Pacific Alliance and bring about the “Pátria Grande”. This would make Latin America the third economy in the world. It is difficult to happen. Regrettably, Iberian colonization was replaced by that of populist leaders.

The good news is that they have already started to be expelled from the other side of the Andes mountain range, freeing them from a delay. It could be better only if it happens on this side of the mountains. It could be achieved with better integration between Brazil and Argentina. Despite what Ariel Palácios says that Brazilians love to hate Argentina and Argentines hate to love Brazil.

The integration of the two countries has already registered some remarkable improvements. There is a catalyst for the partnership which is the “SML (Siste-ma de Moedas Locais)”. It is a system destined for commercial transactions, which allows the Brazilian and Argentine impor- ters and exporters to make payments and receipts in their res- pective currencies.Its use is voluntary however, it allows transactions made through SML to be integrated into the bank-ing system of both countries.

The Brazilian foreign exchange market has qualities, such as a sophisticated future asset chamber with a conside- rable size and a modern and solid banking system. In a world that ex-periences exchange rate turbulence, the uncertainties associated with dollar quotations are eliminated.There are other qualities, like a more competitive currency exchange rate depending only on the dynamic of both economies, without any direct influence on what happens with the dollar market.

As well as lower transaction costs, more stability in the exchange rate between the two currencies, less use of international reserves, and weaker exchange rate vulnerability.The integration agenda of both countries is more extensive but this important step was already given. Another important measure adopted in 2017 was in the automotive sector, which facilitated production for both. The narrower the loop, the greater the synergies and gains for both.Both countries are living simi- lar times and are distressed with the pandemic.

The uncertainty about the direction of the world economy is huge. The economic dynamics of both countries were already presenting syntoms of weakness. It is certain that there will be a deterioration in terms of trade and a decrease in financial flows to both countries. It is something that requires reflection.

The situation demand actions to reduce the dependence of prices and commodities and external fi-nancing of deficits in both countries, which may be the construction of “Pátria Grande” by both countries. Brazil would include Argentina and vise versa. Argentinians and Brazilians have to create two agendas.

One for the integration, with measures to facilitate the customs procedures and worker mobility. The second is the expansion, which is the creation of a list of common external actions for more convenient external insertion, such as product standardization and the promotion of both countries.

One could be the tourism promotion ”From Oiapoque to Lapataia, visit South America, where the sun shines brighter”. The other could be the promotion or wine exportation for both countries, “Drink the wine where there is more sun”.If integrated, Brazil and Argentina would represent the 5th economy in the world, behind China, the USA, India, and Japan only. It would in front of Germany, England and over 185 other countries. The argentinians have a brother- ly relationship with Brazilians, who called them “los hermanos”.

The patron saint of Argentina, Uruguay and Paraguay is Nuestra Señora de Luján. t was made in São Paulo and taken there in 1630. One of the most famous tango lyricists, who com-posed “Mi Buenos Aires querido”, was Alfredo Le Pera, from São Paulo.During the Malvinas War, Brazil was unconditionally on the Argentine side with diplomatic and military support. They hired Embraer P-95 naval patrol planes and Xavante jets to the “brothers”. At the time of the fight, they were together as brothers.On the other hand, in soccer, they have a fratricidal rivalry.

The Argentines have more Olympics, interclub worlds, liberators and Copa America; Brazilians, more victories in the world cup. It is an endless war.On the eve of a game against Brazil, Maradona said ”There are those who think that a game between the two countries is a matter of life and death. They are mistaken! It’s more than that”. He is right. It ‘s it.

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