As South America melts down — Colombia the latest nation to erupt in mass protests, Bolivia searching for a consensus leader, Venezuela lurching into another year of economic, political and humanitarian crises — its two largest economies have been relative oases of calm, run by like-minded leaders cooperating on finance, trade and security. Now, the growing personal animosity between Bolsonaro and Fernández is threatening that stability.
Bolsonaro, a right-wing populist, has called Fernández and his vice president-elect, Cristina Fernández de Kirchner, “leftist bandits” and said their election threatens the Mercosur regional trading bloc.
Fernández, a Peronista with ties to the region’s leftists, has labeled Bolsonaro a misogynist and racist. He took time during his victory speech to call on Brazil to release imprisoned former president Luiz Inácio Lula da Silva, a Bolsonaro adversary. (Lula, convicted of corruption in 2017, left prison last month after Brazil’s Supreme Court ruled that some criminal defendants may remain free until they exhaust their appeals.)
“There is a real fragmentation of the region now, both symbolized and driven by the Brazil-Argentina cleavage,” said Benjamin Gedan, deputy director of the Latin American Program at the Wilson Center in Washington. “You can describe what’s happening with Brazil and Argentina as a function of a regional rivalry, but the reality is that Bolsonaro is an extremist in the region, and that not only limits soft power but can generate some conflict.”
While Argentina and Brazil maintain an intense soccer rivalry and have often pursued divergent policy goals, in recent decades, they have largely navigated similar ideological waters, emerging from military dictatorships to establish successful democracies, electing leftist leaders during Latin America’s pink tide of the early 2000s and supporting conservative politicians seeking open markets and free-trade deals more recently.
But Bolsonaro, a business-boosting, President Trump-admiring conservative, could not be further removed ideologically from Fernández, who was an official in the leftist administrations of Kirchner and her husband, Néstor Kirchner. Fernández, seen as more moderate than Cristina Kirchner, has nonetheless said he will rethink a free-trade agreement with Europe. He also has criticized the United States for cheering the ouster of Bolivian President Evo Morales and promised to seek alternatives to Macri’s austerity measures.
The two countries face different economic challenges. Argentina, suffering from mounting inflation, is skirting its ninth sovereign debt default. Brazil is trying to revive its economy by lifting trade barriers.
“We are seeing two different macroeconomic scenarios, on top of two apparently different ideologies,” said Federico Servideo, president of the Brazilian-Argentine Chamber of Commerce. “In Brazil, you have a pro-free-market government, and in Argentina, both due to financial and ideological limits, a more closed economy.”
Still, he said, the jabs back and forth must stop: “We have to think of the future, and not use campaign rhetoric to attack important external markets.”
At stake is up to $25 billion in trade between the two countries, the free flow of people and goods, and supply chains that are integrated across the region. Brazil is Argentina’s top export market; Argentina is the main consumer of Brazil’s industrial goods.
The schism is also jeopardizing years of cooperation on regional issues. Fernández says he will withdraw Argentina from the Lima Group, a bloc of Latin American governments critical of socialist Venezuelan President Nicolás Maduro. Bolsonaro has threatened to suspend Argentina from Mercosur if Fernández does not follow the policies of Macri, or to pull Brazil out of the trading bloc if Argentina does not agree to reduce tariffs on imports.
Elements of Brazil’s retreat from the continent predate Fernández’s election. Shortly after Bolsonaro took office in January, his foreign minister declared that the region would not be a priority under the new government.
“There have been some completely erroneous bets starting in the 1950s and even more in the 1970s with third-worldism, anti-Americanism and anti-Occidentalism,” said Foreign Minister Ernesto Araújo. Brazil would now look for partners that shared the country’s “Christian values.” He cited Israel, Hungary and the United States as potential partners.
Soon, Brazil said, it would relocate its embassy in Israel from Tel Aviv to Jerusalem, and it began voting with the Jewish state on U.N. resolutions. Meanwhile, Bolsonaro tried to position Brazil as the United States’ foothold in Latin America, joining the Trump administration in taking a hard line against Maduro and discussing the possibility of a U.S. military base in the country. One of Bolsonaro’s first official trips was to Washington, where the idea of a free-trade agreement was floated.
But the positions proved politically tenuous, with few obvious advantages for Brazil. Last week, Trump surprised Bolsonaro with a tweet accusing Brazil and Argentina of manipulating their currencies and saying he would respond by reinstating tariffs on aluminum and steel from both countries.
“From the beginning of the Bolsonaro government, there was a desire to realign Brazil’s alliances from an ideological perspective,” said Guilherme Casarões, a political science professor at the Fundação Getúlio Vargas, a university in Sao Paulo, Brazil. “The problem is that the number of countries with which Bolsonaro shares an affinity, the countries of the extreme right, is very small. It restricts Brazil’s deck of options.”
Upcoming elections in the United States and Israel could further reduce Brazil’s circle of friends.
With regional ties on ice and ideological alliances yielding meager results, Bolsonaro is looking to rekindle ties with the world’s emerging economies. An auction for oil drilling rights last month flopped when none of Brazil’s allies showed up. Only a couple of Chinese firms and Brazil’s state-owned Petrobras bid.
During the presidential campaign last year, Bolsonaro warned that China was trying to “buy up” the country. But as president, he’s in the market for customers. His government is now in talks to establish a free-trade agreement with China, its biggest economic partner. China is expected to be a major player in a 2020 bid to expand Brazil’s 5G network.
“The Bolsonaro government has reached a decision to follow the path of prosperity,” Finance Minister Paulo Guedes told journalists at the BRICS summit of emerging economies in Brasilia last month. “The integration of global markets is one path toward prosperity.”
Correction: A previous version of this report misstated the first name of Néstor Kirchner.