Brazil seeks integration of divided LatAm

Brazil does not seek explicit leadership in Latin America but would rather work consistently towards regional integration, Ricardo Carneiro, the new IDB executive director for Brazil and Surinam, told Emerging Markets in an interview.

A rift seems to have opened in the region, with some countries developing closer ties with the US while others are linking more tightly with China. While Mercosur, the southern Cone common market, has expanded its reach to include Venezuela, a new grouping named the Pacific Alliance has emerged between Mexico, Chile, Colombia and Peru, which is often seen as an initiative from free market countries to deepen the links with the US.

“Brazil is a natural candidate to lead the regional integration process rather than impose its leadership. This depends a lot on Brazil’s efforts,” Carneiro said. “The integration issue is the priority of the Brazilian government.” He rejected the idea that the death of Hugo Chavez would boost Brazil’s leadership in the region. “Venezuela has been very important to help the most vulnerable countries in the region”.

There are basically two Latin Americas, according to Carneiro. One north of Panama, which is more integrated with the US, including from the point of view of the labour market, and the other south of Panama, less linked to the world’s powerhouse. “There are two integration projects,” he said. “But I don’t see a dispute.”

But he does see differing interests. “You may see Latin America now as a battlefield between two big global players: the US and China. And our capacity to negotiate will be measured against these two players.” China is currently much more important in South America than in the northern part of the region, in his view.

Nevertheless, some countries in the south are now joining the Pacific Alliance, and Uruguay, which is a member of Mercosur, has already expressed interest in obtaining a status of observer. But Carneiro argued their degree of integration was still “weak”. “We shall see how this project of the Pacific Alliance helps them to integrate themselves.”

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Asked if this was not a manner to reintroduce the thorny issue of the Free Trade of the Americas by the back door, Carneiro said: “I hope not”. But there is certainly a strengthening of two divergent forms of integration: one that is based on free market policies, and another one that favours development policies and state intervention.

“I do not see any conspiracy,” he added. “Latin America continues to have for historical reasons a certain cultural and political affinity. Some countries made an option of liberalization to preserve some interests and structures... Mexico is integrated with the US and can’t abandon its productive integration and labour market to join an integration with South America. It is not viable.”

The weight of China will be the decisive factor. “China is a great investor, what will be the interests of these countries? It is not a problem of will; it is an issue of strength of material interests. They cannot join an integration process with the US, because their interests are distinct. There are other actors in the region, especially China,” Carneiro said.


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