Fearing a Failure on the Final Stretch: Milei's Uncertain Future in Mercosur Negotiations
Argentina's Upcoming President could Throw a Wrench in the EU-Mercosur Deal
As Argentina's incoming president Javier Milei curses out China, Brazil, and Mercosur during his election campaign, the EU rushes to finalize the free trade agreement with Mercosur as quickly as possible. With Milei's assumption of office on December 10, Germany and the EU will have to interact with this libertarian and his newly assembled team. If negotiations are not concluded in the next two weeks, the failure of current intensive talks could be catastrophic for the German economy, exporting an astounding 12,500 companies to Mercosur states with €16 billion in exports recorded in 2022 [1].
Impact of Milei's Presidency
While some have questioned Javier Milei's reliability due to his limited experience in government and questionable appearances, the EU will have to formally conduct business with the libertarian and his team once he takes office. Although Argentina has some domestic political issues, such as a rapidly depreciating Argentine peso, high poverty rates, and a negative trade balance, it remains essential for Argentina to increase its exports and rely less upon imports from the United States and China [1]. South America is a critical component of the EU's strategy to become less economically dependent on China, especially in regards to securing raw materials from democratic partner countries [2].
Geopolitical Implications
The geopolitical consequences of a Mercosur agreement absent or delayed could also be detrimental to the EU. As the two largest economies on the continent, Argentina and Brazil share close economic relationships, making coordination necessary even under Milei's ideology [1]. Given his opposition to nations such as China, Cuba, and Venezuela, Milei could potentially foster favorable trade relations with the EU, if willing to make concessions, thereby providing an alternative source for raw materials.
Challenges and Opportunities
Confrontations with Brazil's President Lula da Silva, who referred to Milei as a "thief" and "angry communist," could create complications for the Mercosur negotiations. Yet, this tension could be an opportunity for the EU to exploit if they can successfully negotiate favorable terms while addressing Milei's opposition to communist-leaning nations, such as China, as well as social policies [1].
However, Milei's radical vision for free-market policies does not necessarily guarantee a smooth path to a finalized agreement. A more assertive Argentina could negotiate favorable terms by potentially leaving Mercosur to secure a separate agreement with the US or exerting more power within the bloc [3]. This renegotiation process could delay the EU-Mercosur deal and hinder the EU's geopolitical ambitions in South America.
Final Thoughts
As Argentina prepares for a far-right presidency with Javier Milei, the EU faces several challenges and potential opportunities. Securing raw materials and strengthening economic relations with South America while dealing with Milei's radical ideologies will require skillful diplomacy to avoid political deadlock or diluting the terms of the EU-Mercosur free trade agreement.
Sources:
[1] (ntv.de) [2] (future-europe.eu) [3] (csis.org)
Enrichment Data:
- Pragmatism in Trade Relations: Milei's stance towards the United States has shown a willingness to leave Mercosur, suggesting a more pragmatic approach to trade negotiations. This may make him more amenable to negotiating with the EU.
- Assertiveness and Autonomy: Milei's desire for Argentina's autonomy within Mercosur could lend greater assertiveness to his negotiating position, which might result in a more favorable deal for Argentina in the EU-Mercosur negotiations.
- Effect on Mercosur's Cohesion: Milei's potential departure from Mercosur could affect the internal dynamics of the bloc, potentially altering the bloc's stance on trade agreements and further impacting EU-Mercosur negotiations.
- Enhanced Diplomatic Engagement: With Milei's international profile, there could be an increase in diplomatic efforts to finalize the EU-Mercosur free trade agreement. This engagement may prove instrumental to overcoming obstacles and concluding the EU-Mercosur agreement.
Enrichment Data Integration:
The geopolitical implications of Milei's presidency contemplate a myriad of factors. Milei's potentially pragmatic stance towards the United States, i.e., a willingness to leave Mercosur to secure a separate agreement, might render him more favorably disposed towards negotiating with the EU. Furthermore, his assertiveness backed by a sense of autonomy could empower Argentina to engage in more aggressive negotiations for the EU-Mercosur deal. The subsequent departure from Mercosur could experience ramifications within the bloc's internal dynamics while also facilitating increased diplomatic engagement, thus expediting the EU-Mercosur agreement.
