Paulo Guedes says Brazil can become Argentina in six months

At a time when bilateral trade is reactivated and presidential diplomacy is enjoying a moment of calm after the storm, politics is once again sticking its tail in relations with Brazil. Paulo Guedes pointed to Argentina as the mirror in which his country should not be reflected. Economy Minister Jair Bolsonaro assured that if the government increases the budget deficit and makes bad economic policy decisions it will become Argentina “in six months”.

“Become Argentina, six months; to transform you in Venezuela, a year and a half. If you do it wrong, it goes fast. Now do you want to become Germany or the United States? It takes ten or fifteen years in the other direction, ”said the economist.

His darts with Brazil’s third-largest trading partner after China and the United States appeared to have a dual purpose: to set a spending limit at a time when Congress approves new aid for those affected by Covid-19, and to rally behind at the electoral base. . de Bolsonaro, for whom Alberto Fernández’s Argentina is a “bad word”. This is how Oliver Stuenkel, professor of international relations at the Getulio Vargas Foundation, considered PROFILE: “It’s something to engage your followers that still works and at a low cost ”.

24 days after the Mercosur summit where Alberto Fernández and Bolsonaro will have their first face to face meeting, Guedes shot Argentina. His statement also comes a week after Petrobras shares fell on the stock exchange following Bolsonaro’s decision to appoint a military man to head the state oil company, in an effort to ‘push up’ fuel prices. and prevent another strike by truckers. Guedes, a Chicago Boy who defends privatizations and deficit reduction, maintains a delicate balance with the head of state, in a tense relationship that has however survived the explosive resignation of Sérgio Moro.

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Guedes has assured that he will stay in his post as long as he has the confidence of Bolsonaro. “If I can help Brazil by doing the things I believe in, I have to keep going. The offense doesn’t get me out. What drives me crazy is the president’s loss of confidence, or the wrong way, ”he said on the Primocast podcast.

For Stuenkel, Guedes has lost the influence he had at the start of government and ceased to be a “super minister” valued by the markets. “He can no longer threaten Bolsonaro with his resignation because the markets realized his loss of power after what happened in Petrobras,” he said. “He no longer has influence. He does not have a good integration into the academic world, he is over 70 years old, basically this is his last chance to implement his project. He remains in the government because he has nothing to lose, ”adds the internationalist.

Bilateral exchange

Paradoxically, political shorts come at a time when the economic bond is at its best since Bolsonaro and Fernández coincide in the presidency of their respective countries. According to Indec, Brazil once again became Argentina’s main trading partner in January of this year, with $ 823 million in exports and $ 760 million in imports, implying increases of 18.1% and 15 % respectively. Bilateral trade balance is also said to have a surplus in February of $ 130 million, according to a report from Ecolatina

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“Trade flows had declined since the last four months of 2018, all of 2019 and 2020. During the pandemic, trade has been very weak. Nowadays, when the restrictions are looser, it starts to return to normal levels, ”said Joaquín Waldman, UBA graduate economist and analyst at the consultancy firm. “Both economies are recovering, both in general and in the industrial sector, which generates added value and creates jobs,” he added.

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The noise of politics seems that they will not hamper the trade tie in 2021, especially if the real one starts to depreciate, which would increase the competitiveness of Argentina. Therefore, Waldman argues that Brazil’s growth is good news for the economy: “It’s super favorable because it stimulates industrial sectors that have difficulty exporting to other markets. There is another activity that will lag behind the pandemic: tourism. But for the industry, this is excellent news ”.

Although the start of 2021 has sent positive signals in the exchange with Argentina’s main regional partner, providing air to the coffers of the Central Bank, the political dynamics of the two governments threaten to inject noise in the bilateral relationship, especially since He says that this year there will be midterm elections in Argentina and next year presidential elections in Brazil, events that could again trigger political tensions between two partners who have need each other but, at the same time, look sideways.