Feature: Brazil, Argentina trade insults

By BRADLEY BROOKS, UPI Business Correspondent  |  Sept. 27, 2002 at 11:31 AM
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RIO DE JANEIRO, Sept. 26 (UPI) -- It's not right to kick a man when he is down, conventional wisdom tells us. But what about two men -- both down -- kicking away at one another?

Such is the case with Argentina and Brazil, both facing enormous economic hardships and turbulence, both armed with presidential candidates sounding off against one another's countries.

The nit-picking has been going on for some time in both the Brazilian and Argentine press. Brazilian candidates for the presidential election -- now less than two weeks away -- have not been reluctant in the past few months of campaigning to point toward Argentina and essentially declare: "Elect me to the presidency, or we shall end up like them." That is, bankrupt, with high unemployment and existing as an economic pariah in the world.

The early candidates for Argentina's elections -- scheduled for next March -- have also not been restrained in using the example of Brazil -- which recently received the largest loan given in the history of the International Monetary Fund -- as populist proof that Argentina doesn't need outsiders' help: Brazil signed off on a $30 billion IMF aid deal and in the past week its currency has fallen below that of Argentina's against the dollar.

So it was in this charged atmosphere that Argentine President Eduardo Duhalde made his first official visit to Brazil Thursday to meet with Brazilian President Fernando Henrique Cardoso in Brasilia and to sign a bi-lateral trade agreement on automobiles.

The latest insults were heard this week as Brazil's top two presidential candidates painted Argentina as the portrait of how not to deal with IMF.

On Tuesday Lula da Silva, Brazil's leading candidate, said that should he be elected Brazil won't be relegated to the historically subservient role Latin American nations play in their business dealings with the U.S. and Europe.

"Brazil is not a miniature republic. Brazil is not Argentina. Brazil is not going to go bankrupt," Lula said.

On Wednesday Jose Serra, sitting at second in polls behind Lula, blasted Argentina for holding up free trade in Latin America.

"Until today we don't have a free-trade zone because each time there is an opportunity to have it, Argentina jumps in and drags it backward," Serra said. He went on to note that Brazil gave Argentina far too many concessions on the auto trade agreement signed Thursday.

The auto deal inked Thursday allows Argentina to export $2 in cars to Brazil for every $1 in Brazilian cars it buys. Previously, the ratio was $1.16 for Argentina to $1.00 for Brazil. In return, Argentina said it would lower tariffs on Brazilian auto parts from 20 percent to 5 percent by 2005.

The auto industry is a touchy subject between Argentina and Brazil. Argentina has produced cars for 80 years, but in the last five years, with internal demand coming to a standstill, automakers have been relocating plants to Brazil in search of cheaper labor and higher domestic demand. In August, Argentina's auto output fell nearly 20 percent in comparison to the same month in the previous year.

Argentina's former President Carlos Menem -- never one to miss an opportunity to make a politically advantageous divisive statement -- on Thursday responded to Lula's words, calling the former union leader "corrupt" and "loose-tongued." Menem is running to be the Peronist Party's candidate for president in Argentina's elections next March.

Menem, meanwhile, was absent from a court proceeding on Thursday in regard to his mysterious million-dollar banking accounts in Switzerland. According to his lawyer, Menem had several commitments which were impossible to postpone.

Norberto Oyarbide, the federal judge performing the latest investigation of Menem, said Menem must appear to explain his banking accounts on Monday. If not, he will order his arrest.

The investigation centers around allegations that Menem accepted $10 million from the government of Iran in return for Menem's insistence that Iran had nothing to do with the 1994 bombing of a Buenos Aires Jewish center in which 85 people were killed.

For his part, Lula later tried to minimize what he said about Argentina, sending out a spokesman to say that Argentina deserved everyone's "esteem, respect and solidarity."

Duhalde accepted the apologies of Lula, saying that with Brazil's elections less than two weeks away, it isn't surprising that candidates are using everything at their disposal -- such as Argentina as a bad example -- to try to win favor with voters.

Duhalde said that "it isn't necessary to magnify" the comments of Lula, rather "it is necessary to magnify the relationship between Argentina and Brazil and the common destinies of our people." Destinies they hopefully drive toward in Argentine-made autos, no doubt.

Carlos Ruckauf, Argentina's foreign minister, accompanied Duhalde to Brazil and did his diplomatic best to un-ruffle feathers.

"It is necessary to avoid grandiloquent declarations," Ruckauf said. "Argentina wants to continue in a deep relationship with Mercosur, and for this reason we came (to Brazil)."

In regard to Serra, Ruckauf said he had heard his complaints before, and that Thursday's act of signing a trade pact proves them otherwise.

"This is an old position of Serra's," Ruckauf said. "We think that the (trade) agreements that we are going to sign are a gigantic step forward, signifying 200,000 more cars in the bi-lateral commercialization."

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