Mercosur and Brazil: A European Perspective

Brazil is the core state of South America and sustains an alliance called Mercosur. Mercosur was the focus of much European attention during the 1990s, both politically and economically, attracting large amounts of investment to the region. Brazil has difficulties pursuing the Mercosur integration process to its logical end, with resistance coming from both developmentalist visions of the past and industrial interests in the present. Mercosur has drawn Brazil closer to the European Union, functioning well as an instrument of Brazil's external ambitions, though also exposing it to the risk of free trade with Europe. For both Mercosur and EU‐Mercosur relations to remain useful to current Brazilian ambitions, they must remain short of achieving their final goals and linger in a prolonged state of negotiation. Some EU states also prefer this solution. After four years of preparations Mercosur entered into negotiations with the EU in 1999, and since then EU‐Mercosur negotiations have passed through several dramatic phases, often influenced by international political and economic developments, both in Europe and in Mercosur itself. The current Mercosur economic crisis impedes further progress in integration and also delays the EU‐Mercosur process. The election of Lula da Silva as president of Brazil is not expected substantially to change the course of Brazilian policies towards Mercosur and the EU, though, faced with the challenge of reviving Mercosur, the president might have to make difficult choices with regard to Brazil's own interests. Through an EU‐Mercosur agreement Lula could resuscitate the Argentinian and Uruguayan economies, though this might be at a cost for Brazil. Will Brazil be willing to pay this price in order to preserve Mercosur?