Lula Announces Ambitious Plan for South American Integration, Hopefully with Argentina

Since rescuing Brazil from the radically neocon, pro-Washington government of Jair Bolsonaro, President Lula da Silva has emerged as a solid spokesman for nations of the Global South. On the level of South America as well, he is assuming a leading role in pushing development. His statesmanship was again on display at the Dec. 7 heads of state summit in Rio de Janeiro of the Common Market of the South (Mercosur), a group not without its internal frictions. There, Lula put forward an ambitious regional infrastructure plan, consisting of five key routes designed to better connect and integrate some of the more remote areas of South America.

Financing in the amount of $10 billion has already been confirmed, he said, and will come from Brazil’s Economic and Social Development Bank (BNDES) for $3 billion; the Inter-American Development Bank (IADB) for $3.4 billion; the Latin American and Caribbean Development Bank, for $3 billion; plus $600 million from FONPLATA, a bank owned by the five Mercosur member nations (Argentina, Bolivia, Brazil, Paraguay and Uruguay). BNDES President Aloizio Mercadante described this as the “biggest financial fund in the history of South American integration and for Mercosur in Mercosur’s history”.

One purpose of the new and improved routes, which all connect to different parts of Brazil, is to boost trade with Asia, by reducing the transportation time for merchandise between the South American giant and Asian countries.

One major question mark, however, is Argentina, under the newly elected libertarian president Javier Milei (cf. SAS 47, 49/23), who calls himself “Chainsaw Milei”. On Dec. 12, Finance Minister Luis Caputo, who held the same position in the conservative Macri government (2018-19), announced a first package of austerity measures, which is mind-boggling. At the top of his list is a 54% currency devaluation, which would fix the peso, now at 366/dollar, at 800/dollar. In addition, all subsidies on energy (electricity, gas, water) and transportation are to be removed, taxes on imports and on non-agricultural exports are to be increased, the bidding on all public works will be suspended and all such projects will now be taken over by the private sector. In addition, the number of ministries will be reduced from 19 to 9 and massive layoffs of personnel are slated in all public sectors.

Anticipating the social unrest such measures will provoke, Security Minister Patricia Bullrich announced Dec. 14 a draconian law enforcement protocol aimed at repressing public dissent and “maintaining order.” Human rights advocates are charging that the new law violates the constitutional right of free expression and to protest.