ARGENTINE CG DISCUSSES REGIONAL INTEGRATION, CALLS FOR

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E.O. 12958: N/A
TAGS: ECIN ETRD PGOV PREL SCUL BR AR

SUBJECT: ARGENTINE CG DISCUSSES REGIONAL INTEGRATION, CALLS FOR
BRAZIL-ARGENTINA AMITY

REF: BRASILIA 661

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SUMMARY
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1. (U) In a recent speech on Argentine-Brazilian bilateral
relations, Argentine Consul General Vidal faulted regional
asymmetries for Mercosul's disappointing economic performance
(reftel) and proposed strengthening cultural ties as a means of
achieving regional integration. Vidal points to industrial,
juridical, and financial asymmetries as the primary obstacles to
southern cone integration. While by no means a cure-all,
reinforcing cultural similarities within regional partners could
help ease simmering tensions and encourage the long-term goal of
overall integration. END SUMMARY.

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IMPOLITIC AND UNDIPLOMATIC
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2. (U) Recently, Argentine Consul General Norberto Vidal, who has
since departed Brazil, delivered remarks at a professional
development seminar organized by Noronha Law Offices. Surprisingly
impolitic and undiplomatic, Vidal proved an engaging speaker with a
message seldom heard among Brazilians and Argentines: that they
should become better friends. To overcome the regional asymmetries
inhibiting regional integration, Vidal suggests strengthening the
Brazilian-Argentine cultural relationship. Vidal identified three
principal asymmetries: juridical, industrial, and financial.

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OBSTACLES TO INTEGRATION
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3. (U) INDUSTRIAL ASYMMETRY: Vidal blamed industrial asymmetry as
the main obstacle to commercial integration. Taking a historical
view, Vidal identified present-day industrial asymmetry as the
result of differing approaches taken by erstwhile Argentine and
Brazilian dictatorships, with Argentina seeking to de-industrialize
while Brazil sought progressive industrial reform and development.
These approaches left deep marks on the respective economies,
ultimately resulting in Brazil's industrial dominance of the
Southern Cone. Vidal noted that in the 1950s, Argentina was first
among the Latin American markets, whereas now it trails third behind
Mexico and Brazil. Although Argentina maintained dominance in some
sectors (e.g., viniculture - a pet industry of the Argentine CG),
Brazil's industrial dominance has given rise to resentment among its
neighbors. As evidence, Vidal cited the common Argentine complaint
of pervasive "Brasil dependence" - a pejorative reference to the
abundance of Brazilian imports on the Argentine market (estimated at
35 percent of total imports). This industrial asymmetry exacerbates
prejudices on both sides of the border, fostering resentment among
Argentines and a feeling of superiority among Brazilians. These
perceptions color the entire regional relationship and create
barriers to regional integration.


4. (U) JURIDICAL ASYMMETRY: Vidal also faulted juridical
imbalances between Brazil and Argentina for complicating regional
commercial integration. He cited great disparities in the quality
and substance of tax laws, corporate laws, and government
regulations, to name just a few areas. These juridical differences
account, in part, for the inability of Mercosul's adjudicating body
to establish itself as an effective dispute resolution organ. The
perceived weakness in Mercosul's dispute settlement body (witness
Mercosul's inability to mediate the bitter Argentina-Uruguay paper
mill row) has undermined confidence in the agreement as a whole.
According to Vidal, this is an outgrowth of the inability to effect

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judicial reforms throughout the region.



5. (U) FINANCIAL ASYMMETRY: Vidal was very frank in his treatment
of the Argentine financial crisis and cited financial asymmetry as
another factor undermining successful regional integration. He
described the Argentine struggle to overcome the financial crisis as
"re-emerging after the end of the world." Vidal admits that
Argentina's financial difficulties effectively handicap its ability
to focus on narrowing the gap between its neighbors, especially in
terms of industrial parity. He also recognized that the financial
crisis will leave its imprint on Argentina's society and political
machinery for years to come, complicating the national political
agenda and retarding formal overtures toward regional integration.
He used this to segue into "alternative" ways to promote regional
integration and strengthen the Argentina-Brazil bilateral
relationship in particular.

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"WE ARE BROTHERS"
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6. (U) EMPHASIZING SIMILARITIES: To Vidal, mutual cultural
approbation is the key to strengthening regional ties. He
criticized politicians as ineffective in this respect, given that
they seldom benefit from recognizing common ground and tend to find
advantage in highlighting differences. Vidal pointed out that, in
reality, Argentines and Brazilians have more in common than not.
Both were colonies, and while Portuguese and Spanish colonization
left distinct imprints on the respective societies, both countries
emerged form this experience with numerous commonalities. Vidal
mentioned that Brazil's ease of gaining independence and Argentina's
bellicose efforts marked the psyche of their peoples and credited
this experience with helping make Brazilians an "easier-going"
people. Both countries share a recent history of military
dictatorship and both have made the transition to representational
democracy. Vidal also pointed out that a shared love of art, music,
and food defines both Argentine and Brazilian cultures and provides
much common ground to build upon.


7. (U) INTEGRATING FROM THE BOTTOM UP: Vidal claimed that as a
grassroots effort, mutual appreciation can do more to enable
regional integration than bilateral summits and the exchange of
official delegations. As local opinions begin to favor regional
integration, national leaders are likely to become more comfortable
"leading the way." To this end, Vidal suggested academic,
agricultural, and industrial exchanges to help strengthen ties
between the two countries. During a meeting with the Governor of Sao
Paulo state, Vidal suggested a sister-state proposal that would link
Sao Paulo with the Argentine state of Mendoza and allow for the two
regions to share expertise. Vidal highlighted Mendoza as a region
that enjoys incredible bureaucratic efficiency and thriving
viniculture, whereas Sao Paulo enjoys a reputation as a leader in
industry and innovation. Sub-regional partnerships such as the Sao
Paulo-Mendoza pairing would serve to promote the regional
integration agenda from the bottom up. Vidal suggests that similar
sister-state pairings could prove highly successful, helping to
extend cultural contacts beyond Brazil's southern states that border
Argentina - i.e., Rio Grande do Sul, Parana, and Santa Catarina.


8. (U) NO CURE-ALL: Vidal recognizes that cultural exchanges alone
will not solve the regional integration problem. For example, lack
of pan-regional infrastructure in terms of integrated waterways,
roadways, and railroads between countries in the Southern cone is a
great obstacle to practical, functional commercial integration.
Nevertheless, increased cultural appreciation at the popular level
will facilitate political willingness to support regional
integration efforts, such as infrastructure projects.

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9. (U) CURRENT POPULAR OPINION: Vidal concluded his remarks by
citing recent polls indicating that 70 percent of Argentines have a
positive impression of Brazil, while only 12 percent have a
distinctly negative opinion. Moreover, 60 percent of Argentines
favor Mercosul and regional integration. Vidal claims that
traditional rivalries between Brazil and Argentina have lost their
original foundations and have simply become rivalries for the sake
of tradition. He believes culture will ultimately be the great
unifying force in the region. Given the seemingly insurmountable
obstacles to integration, creating a regional culture should be the
near-term goal, one that will facilitate the longer-term efforts of
strengthening regional industrialization, judicial reform, financial
security, and infrastructure development.


10. (U) This cable was cleared/coordinated with Embassy Brasilia.

MCMULLEN