Argentina’s Macri Shakes Up Mercosur

The election of Mauricio Macri as president of Argentina on November 22, 2015 ended 12 years of Kirchnerismo, the political movement of former presidents Nestor and Cristina Fernandez de Kirchner. Only the third center-right and non-peronist president since the return of democracy in 1983, Macri has tremendous challenges ahead as his government moves to overhaul Argentina’s economic difficulties. Yet, the new government will also usher in a new era for Latin American regional policy, particularly within Mercosur, the South American trading bloc whose members include Argentina, Brazil, Paraguay, Uruguay and Venezuela.

Mercosur — a free trade and custom union formed in 1991 between Argentina, Brazil, Paraguay, and Uruguay (and later joined by Venezuela) — promotes the free movement of goods and people across the zone. Mercosur’s members have benefited from having integrated markets that expand their commerce. The organization has also included non-commerce articles, such as the Mercosur Democratic Clause, which ensures democracy in the member states is not compromised by threatening of expulsion and sanctions from the group. This last clause was activated in 2012, when the political crisis in Paraguay lead to the ousting of former president Fernando Lugo, and which members of Mercosur, led by Brazil, saw as a coup and suspended Paraguay’s participation in the bloc.

The new Macri Administration is expected to change multiple bilateral relations strained by the Kirchner governments, including with the U.K. and the U.S. Mercosur, however, will be the focus given its importance to Argentine foreign affairs and economy. There are three ways Argentina’s Macri will change the South American bloc: by helping finalize the EU-Mercosur trade agreement, by expanding ties with the Pacific Alliance, and by focusing attention on the democratic deficit of its members, primarily in Venezuela.

EU-Mercosur Free Trade

Argentina under Macri has departed from previous governments, supporting the negotiations for an EU-Mercosur free trade agreement, in the works since 1999, and stalled by Argentina for years. A treaty is expected to be signed this year as the EU had discussed the possibility of a two-speed Mercosur, in which Brazil, Uruguay and Paraguay would sign the agreement, while leaving Argentina behind. During the December 21, 2015 Mercosur meeting in Asuncion, Paraguay, President Macri made it clear that Argentine policy has changed, and that Buenos Aires wanted to conclude the agreement as quickly as possible with the rest of Mercosur. The signing of the agreement would expand EU-Mercosur trade, as well as help diversify Argentina’s bilateral relations with Europe from the singular Falklands/Malvinas policy. This would also help Argentina attract European investment into its energy sector, which has been a priority since the later years of Cristina’s administration and will continue under Macri’s government.

Approaching the Pacific Alliance

President Macri also wants to expand the ties between Mercosur and the Pacific Alliance, a trade bloc signed in 2012 by Chile, Colombia, Mexico and Peru. The creation of the Alliance four years ago signaled a possible divide of South America, as Mercosur’s left wing governments were being challenged by the Alliance’s right wing states. Driven by statist policies, Argentina under the Kirchners focused on protecting its own domestic markets despite breaking Mercosur rules. As such, the creation of the Alliance dealt a blow to the growing use of Mercosur as a protectionist organization by Argentina. President Macri made it clear that he wants both organizations to cooperate, and has discussed the possibility with Chilean President Michelle Bachelet, who in the December Mercosur meeting, stated that Chile could play a role in bringing both sides to the table. President Macri also met with former Chilean president Sebastian Piñera, in office when the Alliance was created, to discuss regional integration through Mercosur and the Alliance. Expanding the ties between the two organizations would not only help trade relations, but also increase cooperation at the international level between Argentina and the Alliance members, particularly with Mexico, which previous Argentine governments had neglected due to its strong commercial and diplomatic ties with the United States.

Venezuela

A final break with the past 12 years will take place in Argentina’s relations with Venezuela. Under the presidencies of the Kirchners, Argentina was a staunch ally of Venezuela, joining in expanding regional integration and combatting U.S. policy in the region, most famously in the IV Summit of the Americas. President Macri has moved Argentina back to the center, and has put democracy and human rights as core principles of Argentine foreign policy. This was demonstrated clearly last December, when President Macri called on the Venezuelan government to release its political prisoners. Venezuela pushed back against Argentina, accusing Macri of interfering in internal affairs. Macri’s break with the previous government on its Venezuelan policy is a fresh start for the region’s democracy at a time when some South American countries appear to value ideological solidarity over democratic values.

President Macri has moved quickly to change Argentina’s economic footing, such as by ending foreign exchange controls and negotiating with the debt holders, but the new administration is also changing Argentine foreign policy. Mercosur will be a major driver in changing foreign policy as Argentina ends 12 years of economic isolation and joins Brazil, Uruguay and Paraguay in concluding the trade pact with the European Union, as well as expand its ties with the Pacific Alliance. Finally, Mercosur will also allow Argentina to renovate its commitments to democracy and human rights by challenging Venezuela in a forum setting within South America, while shifting Mercosur’s political alignment back to the center.

Luis Ferreira Alvarez is an Analyst specializing in Latin America energy policy, with research and analytical experience on trade, as well as social and security policies in the Western Hemisphere. His Twitter is @lferreira2190

Photo by Gobierno de la Ciudad de Buenos Aires / CC BY 2.0

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