The origins of Mercosur: democracy and regionalization in South America

STUDIES OF THE A MERICAS edited by

Maxine Molyneux Institute for the Study of the Americas University of London School of Advanced Study Titles in this series are multi-disciplinary studies of aspects of the societies of the hemisphere, particularly in the areas of politics, economics, history, anthropology, sociology, and the environment. The series covers a comparative perspective across the Americas, including Canada and the Caribbean as well as the United States and Latin America. Titles in this series published by Palgrave Macmillan: Cuba’s Military 1990–2005: Revolutionary Soldiers during Counter-Revolutionary Times By Hal Klepak The Judicialization of Politics in Latin America Edited by Rachel Sieder, Line Schjolden, and Alan Angell Latin America: A New Interpretation By Laurence Whitehead Appropriation as Practice: Art and Identity in Argentina By Arnd Schneider America and Enlightenment Constitutionalism Edited by Gary L. McDowell and Johnathan O’Neill Vargas and Brazil: New Perspectives Edited by Jens R. Hentschke When Was Latin America Modern? Edited by Nicola Miller and Stephen Hart Debating Cuban Exceptionalism Edited by Bert Hoffman and Laurence Whitehead Caribbean Land and Development Revisited Edited by Jean Besson and Janet Momsen Cultures of the Lusophone Black Atlantic Edited by Nancy Priscilla Naro, Roger Sansi-Roca, and David H. Treece Democratization, Development, and Legality: Chile, 1831–1973 By Julio Faundez The Hispanic World and American Intellectual Life, 1820–1880 By Iván Jaksic´ The Role of Mexico’s Plural in Latin American Literary and Political Culture: From Tlatelolco to the “Philanthropic Ogre” By John King

Faith and Impiety in Revolutionary Mexico Edited by Matthew Butler Reinventing Modernity in Latin America: Intellectuals Imagine the Future, 1900–1930 By Nicola Miller The Republican Party and Immigration Politics: From Proposition 187 to George W. Bush By Andrew Wroe The Political Economy of Hemispheric Integration: Responding to Globalization in the Americas Edited by Diego Sánchez-Ancochea and Kenneth C. Shadlen Ronald Reagan and the 1980s: Perceptions, Policies, Legacies Edited by Cheryl Hudson and Gareth Davies Wellbeing and Development in Peru: Local and Universal Views Confronted Edited by James Copestake The Federal Nation: Perspectives on American Federalism Edited by Iwan W. Morgan and Philip J. Davies Base Colonies in the Western Hemisphere, 1940–1967 By Steven High Beyond Neoliberalism in Latin America? Societies and Politics at the Crossroads Edited by John Burdick, Philip Oxhorn, and Kenneth M. Roberts Visual Synergies in Fiction and Documentary Film from Latin America Edited by Miriam Haddu and Joanna Page Cuban Medical Internationalism: Origins, Evolution, and Goals By John M. Kirk and H. Michael Erisman Governance after Neoliberalism in Latin America Edited by Jean Grugel and Pía Riggirozzi Modern Poetics and Hemispheric American Cultural Studies By Justin Read Youth Violence in Latin America: Gangs and Juvenile Justice in Perspective Edited by Gareth A. Jones and Dennis Rodgers The Origins of Mercosur: Democracy and Regionalization in South America By Gian Luca Gardini

The Origins of Mercosur Democracy and Regionalization in South America

Gian Luca Gardini

THE ORIGINS OF MERCOSUR

Copyright © Gian Luca Gardini, 2010. All rights reserved. First published in 2010 by PALGRAVE MACMILLAN® in the United States—a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN: 978–0–230–61313–3 Library of Congress Cataloging-in-Publication Data Gardini, Gian Luca. The origins of Mercosur : democracy and regionalization in South America / Gian Luca Gardini. p. cm.—(Studies of the Americas) Includes bibliographical references and index. ISBN 978–0–230–61313–3 1. MERCOSUR (Organization)—History. 2. South America—Economic integration—History. I. Title. HC165.G3326 2010 337.1⬘8—dc22

2009024057

A catalogue record of the book is available from the British Library. Design by Newgen Imaging Systems (P) Ltd., Chennai, India. First edition: February 2010 10 9 8 7 6 5 4 3 2 1 Printed in the United States of America.

To my parents, Gianfranco and Silva, with love. I trust they would not mind sharing this dedication with Professors Marco Nardone and Giampaolo Romanato. Their passion for and commitment to history, ideas, knowledge, and learning were of great inspiration to me at such important formative stages as high school and university.

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Contents

Acknowledgments

ix

Introduction

1

Part I

Diplomatic Investigations and Historical Analysis

Chapter 1 Argentine-Brazilian Relations in Historical Perspective: From Ambivalence to Solidarity

17

Chapter 2 The Genesis of the Argentine-Brazilian Bilateral Integration (1983–1986)

41

Chapter 3 The Genesis of Mercosur (1986–1991)

73

Part II

Political Investigations and Theoretical Analysis

Chapter 4 Domestic Institutional Setting and Regionalization

105

Chapter 5 Government-Business Relations in the Construction of Mercosur

129

Chapter 6 Democracy as a Foundational Idea of Integration

149

Conclusion

175

Epilogue

189

viii

CONT ENT S

Appendices

195

Notes

209

Bibliography

241

Index

261

Acknowledgments

During the last nine years I have devoted a good deal of my scholarly

effort to the study of Argentine and Brazilian foreign policy and the creation and evolution of Mercosur. During these years, and specifically during the research, conceptualization, and drafting of this book, I have benefited from the advice, ideas, criticism, as well encouragement and support of a number of friends and colleagues. I would like to thank Geoffrey Edwards, Geoffrey Hawthorn, and David Lehmann at the University of Cambridge; Leslie Bethell, Andrew Hurrell, and Lawrence Whitehead at the University of Oxford; Alcides Costas Vaz at the University of Brasília; Guillermo O’Donnell of Notre Dame University; Sean Burges at the Canadian Foreign Ministry; Andrés Malamud of the University of Lisbon; Tullo Vigevani of São Paulo State University; Patricio Silva at the University of Leiden; Philippe Schmitter at the European University Institute; and Scott M. Thomas at the University of Bath. I am also grateful to all the interviewees for taking the time to meet me and sharing their ideas and experiences with me. I heartily thank Guillermo Makin for his invaluable help with fieldwork and continuous support. Special thanks to Amado Luiz Cervo at the University of Brasília and Andrés Fontana at the University of Belgrano in Buenos Aires who hosted me during fieldwork in Brazil and Argentina, respectively. Thanks to all the friends and people who helped and supported me during the wonderful months spent in South America, in particular Horacio, Carol, and Marcela in Buenos Aires, Lila and Max in Brasília, Dema in Rio, and Rodrigo in São Paulo. I also owe part of this work to the precious help with early drafts of my friends Mark Bowmaker, Michael Johnston, and Nina Parish. Foremost, I am indebted to my PhD supervisor at Cambridge, Charles Jones, for providing me at one and the same time with precious academic guidance and the maximum of intellectual freedom to pursue and develop my own views and ideas. I also acknowledge the contribution and support of the editors, anonymous reviewers, and publishers of those journals where portions of the

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material discussed in this book have been initially published. In particular: The Cambridge Review of International Studies, The European Journal of Latin American and Caribbean Studies, The Canadian Journal of Latin American and Caribbean Studies, Business and Politics, Diplomacy and Statecraft, and the Bulletin of Latin American Research. The following institutions have provided generous support for my research during these years: The British Council, the Cambridge European Trust, the Centre of Latin American Studies at the University of Cambridge, Downing College, the Worts Trust, and the Ente Friuli nel Mondo, Friuli-Venezia Giulia Region, Italy. Responsibility for the views and arguments expressed in the book is my own. If any errors or omissions in the text have occurred, these are entirely my own too.

Introduction

I.1 The Subject of the Book: Scope, Aim, and Central Argument The processes of democratization and regionalization in the Southern Cone of Latin America ran roughly parallel to one another between 1985 and 1991. However, the nature of this relationship is by no means clear. The central aim of this book is to investigate the precise place of democracy in the regionalization process in the Southern Cone that led to the formation of the Common Market of the South, Mercosur, between Argentina, Brazil, Paraguay, and Uruguay. It has been persuasively argued that democracy and regionalization in the Southern Cone in the second half of the 1980s were not only interrelated but mutually reinforcing.1 That is to say that the relationship went two ways: democracy affected the development of regionalization and, in turn, the latter had an impact on the democratization process. In this book attention is specifically devoted to how, if at all, democracy has affected or influenced the decision to integrate taken by Argentina and Brazil that later led to the creation of Mercosur. The investigation has been conducted without predetermined intention or conclusion. The research was not intended to reinforce the body of democratic peace literature but rather to explore a set of concomitant historical events that were highly significant for the region concerned. Although seemingly vast at a first glance, the subject in fact leads itself to this kind of exploration. First, the study concentrates on Argentina and Brazil, by far the most decisive players in the process leading to Mercosur. Second, the book begins by examining Argentine-Brazilian relations from a historical perspective and giving a thorough account of bilateral diplomatic rapprochement (1979–1982). However, the core investigation is restricted to the years from democratization (1983) to the rise of Mercosur (1991). Most importantly, this is not a study of Mercosur as such, and discussion will not be centered on the nature and limits of this particular integration scheme. Most of the works involving discussions on regional integration include an overview of the main theoretical

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approaches explaining the emergence of regional cooperation. The present book does this only incidentally, partly because no single theoretical stance matches the Mercosur case, 2 but mostly because the focus is not on how and why regional schemes proliferate but on what role democracy has played in the rise of Mercosur. It has to be stressed that “to account for the emergence of an integrating region is not the same as to explain its further progress.”3 To a certain extent the final format and instruments of Mercosur are incidental, for the essence is the sense of direction of the political and economic changes that were being operated.4 Accordingly, while the primary aim of the book is to explore the relationship between democracy and regionalization, this is achieved by the pursuit of two objectives. The first is to offer an accurate historical reconstruction of the diplomatic history of Argentine-Brazilian relations in the formative years of Mercosur. The second is to connect logically explanatory factors and circumstances potentially linking democratization and regional integration. But there is no claim for a relation of the type if democracy, then regional integration, or that a particular model of democracy leads to, or is a condition for, a particular kind of regionalization. The research hypothesis, that there may exist a relationship between democracy and regional integration, appears plausible for at least three reasons. First, there is a striking coincidence in terms of timing between the two processes. Argentina returned to democracy in December 1983 and Brazil regained democratic status in March 1985. The formal intention to integrate the Argentine and Brazilian economies was first announced in November 1985. The first formal agreements were concluded in July 1986. These economic accords were steadily expanded and complemented by significant commitments in the political and nuclear realms. The regionalization process culminated in the project of a bilateral common market in 1990 and its extension to Uruguay and Paraguay in 1991: Mercosur was born. Second, all the key protagonists stressed at the time, and maintained later, that democracy was an important factor for the creation of the common market. It is possible that rhetoric and propaganda played a part, but the extent to which democracy was placed at the center of the integrationist discourse, especially in the early phases, makes it worth investigating further. Moreover, these declarations and narratives fail to explain systematically why democracy was so important and through which mechanisms or processes it displayed the alleged facilitating effects upon regionalization. Third, attempts at integration are nothing new in the history of the Southern Cone. Examples are plentiful, covering bilateral and subregional agreements as well as more ambitious schemes gathering all Latin American countries. Besides a pompous rhetoric on Latin American unity and solidarity, all of these attempts have another aspect in common: they all failed. In contrast, the Argentine-Brazilian integration and later Mercosur, despite numerous

INTRODUCTION

3

deficiencies, are regarded as successful. One of the observable differences, not necessarily decisive but certainly evident, is that this undertaking was the only one characterized by the presence of and the strong domestic and international consensus on democracy.5 The argument defended here is that democracy did matter to regional integration in the creation of the Argentine-Brazilian bilateral scheme and later Mercosur. The book explores potential links between democracy and integration through the institutional settings or societal participation channels characterizing democracy, but it concludes that links based on such hypotheses are at best tenuous. Instead the beliefs, ideas, and expected behaviors that democracy as an ideational factor brought about constituted the decisive link between the democratization and regionalization processes. Democracy conferred great legitimacy and room for maneuver upon the presidents and informed the guiding principles of their foreign policy. Cognitive approaches to international relations help explain how democratic ideas and ideals shaped the decision makers’ worldviews and perceptions, consequently affecting foreign policy preferences and choices, including those conducive to regional integration. At the theoretical level, a melding of cognitive approaches to foreign policy-making and realist theory of international relations provides a more nuanced, yet still systematic form for explaining reality.

I.2

The Existing Literature

Scholarly research on Mercosur has largely targeted the years following its constitution and/or concentrated on political economy, while the preceding historical and political dynamics remained relatively underexplored.6 From a historical perspective, the years between 1979 and 1991 are crucial for the incipient regionalization process in the area. Yet, only a few specific accounts exist in English and they are quite dated.7 From a political perspective, only very few systematic analyses of the linkages between democratization and regional integration are available. The three major works on the subject indeed suggest that actual linkages do exist.8 These works are discussed here in the introduction in order to identify their findings and draw from their strengths to develop complementary and original arguments. The first notable work on the subject is Karen Remmer’s “Does Democracy Promote Interstate Cooperation? Lessons from the Mercosur Region,” which explores whether democracy not only reduces conflict but also has a positive effect on cooperation.9 Remmer’s main methodological concern is precisely how to incorporate domestic variables into theories of international behavior. The establishment of a causal link between regime type and political culture, understood as particular sets of values, has proven to be quite weak. The consequence is that shared norms alone

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are a fragile theoretical basis to connect democracy and cooperation. The key word is alone. “What matters in the formation of politics, including presumably foreign policy, is not merely regime type, but decisionmaking processes, political beliefs, governing coalitions, bases of social support, socio-economic resources, and international linkages—all of which may vary within and across regime categories.”10 Instead, according to Remmer, transparency and interest offer a stronger theoretical basis. Regarding transparency, information is considered a key factor in most of the existing models of cooperation. Interest is strictly related, in that shared interests facilitate the flow of information and the construction of norms and confidence. “Similar regimes may be expected to reach agreements more readily than others.”11 Since the problem of consolidation is particularly acute in new regimes, recent democratization is likely to amplify this effect. Remmer’s empirical analysis reveals that cooperation, measured in terms of treaties signed, increased in response to both regime similarity and democracy.12 However, the results are ambiguous: economic cooperation is strongly enhanced by the presence of at least one democratic element in the dyad, and is boosted by a joint democracy, while in noneconomic issues joint authoritarianism performs better than joint democracy. This apparent paradox underscores the inherent limitation of statistical models in social sciences. Regardless of their general validity in indicating overall patterns, even the most sophisticated statistical models are not able to fully capture qualitative differences. To reduce cooperation to the number of treaties signed during a given time period obscures considerable variations in the nature and scope of the agreements. A comprehensive integration act, for instance, is likely to encompass several areas of potential cooperation thus resulting in a single act where there was theoretically space for dozens of minor treaties. Furthermore, an integration act is far more indicative of cooperation than ten accords on secondary issues. Remmer also investigates the effects of dynamic democratization on cooperation, suggesting that consolidation and stability of political institutions, sets of norms and legal constraints are not essential to cooperation. In fact other factors count too: the initial enthusiasm, reversal of values (often accompanied by a reversal of policies and alliances), and desire for consolidation following democratization are likely to produce frenetic diplomatic activity. However, this may be a temporary phenomenon, it is not possible to continue and sign new agreements keeping the same tempo forever. The initial momentum vanishes sooner or later, to be replaced by more routine activity. Also, though the potential issues for agreement are infinite, their concrete practicability is exhaustible. Again, a statistical model that does not take into account this kind of evolution is likely to produce some distortions in its conclusions. Remmer’s

INTRODUCTION

5

statistical analysis also shows that economic interdependence enhances the likelihood of economic cooperation. However, when interdependence is combined with the three possible dyads (democracy-democracy, democracy-authoritarian, and authoritarian-authoritarian), the pattern differs sharply. Interdependence and joint democracy have a limited positive repercussion on cooperation whereas the other two combinations are likely to jeopardize cooperation. This finding is consistent with the historical analysis in chapters one and two. Overall, statistical evidence shows that democratization, rather than democracy as such, enhanced propensity to cooperation in the Southern Cone. What can be retained of Remmer’s investigation for further analysis is that democratic norms and practices do not need to be well established to influence cooperation, that political beliefs and social bases of support affect decision-making processes, and that qualitative analysis is an indispensable complement to statistical models. The most convincing analysis of the consequences of regime change on international relations has been conducted by Philippe Schmitter in his contribution to the volume edited by Adler and Crawford on the concept of progress in international relations.13 Schmitter’s theoretical analysis begins by discussing how realism, neo-functionalism, and idealism have tried to explain international cooperation and integration. The first two approaches tend to downplay the relevance of domestic factors, while idealism places great emphasis on the internal distribution and management of power. Schmitter designs his own model of revised neo-idealism, in which democratization, conceived in terms of competitive elections, free associability, and popular accountability would have positive effects on interstate cooperation and, indirectly, on regional integration. It is worth noting that competitive elections clearly appertain to the sphere of political democracy, while both associability and accountability are principles deriving from liberal thought. Schmitter’s approach is very cautious, stressing that the potential impact of domestic democracy on progress in international relations is indirect and circular. Only if the domestic regime variable can produce significant changes in (a) interdependence, (b) threat of violence, (c) cooperation, and (d) regional integration is the revised neo-idealist paradigm viable.14 The empirical part of Schmitter’s study tests these four criteria against the developments in the Southern Cone. First, regarding complex interdependence, the results are not encouraging. Trade had not increased significantly in the years following democratization,15 and other indicators such as mutual foreign investments, migration or tourist flows, societal exchanges, diffusion of each other’s press or radio/ television programs do not provide encouraging results either. Second, regarding the threat of interstate violence, evidence is reassuring. It is true that there was no armed conflict between Brazil and Argentina in

6

T HE ORIGINS OF MERCOSUR

the twentieth century, but “the real and persistent security issue concerns not the actual use of armed violence [. . .], but the plausibility of threatening to use it in order to gain some advantage.”16 Bilateral rapprochement had started under military rule, but only the civilian democratic regimes could undertake an extensive and consistent program of security confidence-building, involving nuclear strategies and dramatically changing the perception of one another. Third, regarding the link between democratization and cooperation, “the change in regime type has had an unambiguously positive impact.”17 As in Remmer’s study, cooperation is measured by the quantity of discussions, summits, declarations, and agreements, which have never been so plentiful as in the recent democratic era. Regime similarity also appears to have had an influence, but this only slightly blurs the incomparable weight of democratic dyads. Fourth, regarding regional integration, Schmitter’s analysis could not be conclusive, since it was realized before the achievement of Mercosur. Nonetheless, the Treaty of Asunción was the final step of the cooperation process depicted by Schmitter and, by the same token, it is logical to assume that democratization has had a positive impact on regional integration in the Southern Cone. From a theoretical point of view, Schmitter’s work suggests two explanations for a possible link between democracy and cooperation. Following the Kantian argument, republican or democratic regimes are important for cooperation in that government accountability to the citizens makes violence against other states unlikely since citizens themselves would pay the highest price. Furthermore, under a republican (democratic) government, citizens are free to develop contacts and profitable exchanges with those neighbors who would also be potential adversaries. Chapters four and five of the book will apply and critically review these propositions. The third specific work on the link between democracy and regionalization in the Mercosur area is Franklin Steves’ “Regional Cooperation and Democratic Consolidation in the Southern Cone of Latin America.”18 This is probably the most ambitious attempt to establish both a link between democracy and regional integration, and their mutually reinforcing effect. Steves starts from the same premise underpinning this work, “[T]here is a strong temporal correlation among the emergence of democracy in the Southern Cone, the beginnings of regional economic integration, and the concomitant ‘desecuritisation’ of relations among longstanding rivals in the region. The question is whether and to what extent there exists a causal relationship among these three processes.”19 Steves investigates three hypotheses. First, “desecuritisation” of interstate relations was a necessary facilitating condition of democratization. Smoother relations between traditionally rival countries reduced the military claims for playing a central political role on the basis of security requirements. This evolution opened new spaces for liberal and

INTRODUCTION

7

democratic forces that had been previously heavily constrained, and facilitated international insertion strategies aimed at the consolidation of the civilian rule. Second, democratic institutions facilitated the rise of regional cooperation. Steves identifies two causal processes linking democracy to increased cooperation: transparency and a shared interest in consolidating democracy.20 Transparency enhances the credibility of external commitments because other states have a larger access to information and can better assess policies and real intentions. Elites in democratizing countries have a common interest in the consolidation of neighboring democracies because similar political values, goals, and reforms diminish uncertainty and increase stability. Cooperation therefore becomes instrumental to successful democratic consolidation domestically and internationally. Third, democratic consolidation and economic and security integration are mutually reinforcing. Although this is arguably the most challenging aspect of Steves’ investigation, it exceeds the scope and focus of this study, which is primarily concerned with the impact of democracy upon integration rather than the other way around. What can usefully be retained of Steves’ analysis for the development of this book is that pro-democratic ideational forces and shared interests in consolidating democracy seem to be promising links between democracy itself and the regionalization process.

I.3

Definitions

Having already made references to democracy, regionalization, and integration, and aiming to study their relationship, it is of utmost importance to make clear how these terms are understood and defined in the book. Since democracy is one of the main subjects of this study, its definition deserves conspicuous attention and, to this purpose, a thorough discussion will be conducted at the beginning of part two, chapter four. But at this stage the reader needs to be at least basically equipped with a compass for navigation in the historical reconstruction of part one to follow the flow of the arguments. Today, democracy has assumed an almost all-encompassing meaning to indicate a broad set of values characterizing Western European and North American industrialized civilization. Therefore, this definition, as such, would hardly be suitable for application in different contexts. Furthermore, to establish a link between a type of civilization and a particular interaction (integration) between its units would be far too complex. Democracy then has to be understood in a more restricted meaning, which is its original political meaning. However, this definition is too restrictive, in that representative democracy as a political concept is simply a method for selecting those entitled to govern on behalf of the people. Modern political systems generally defined as democratic

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incorporate other procedures and values that exceed mere democratic content. These systems are actually liberal democracies, where the liberal element is not only the qualifier of the democratic entity, but, arguably, the most relevant component in the dyad. Liberal legacies such as institutional and societal counterweights and the protection of individual rights are the most noticeable features of contemporary democracies. It is the extent of their effectiveness or weakness that defines democratic systems as working or imperfect democracies. It will be important therefore to delineate the appropriate position of the Argentine and Brazilian newly democratized regimes in this spectrum ranging from effective to “limited democracy.”21 It will be argued that the liberal component is precisely the element that makes democratic regimes more desirable partners for international cooperation than other regime types, in which the degree of political liberalism is lower. In fact, it is hard to assert that the mere existence of certain criteria for the selection of leaders may further cooperation. Instead, liberal mechanisms but also norms and beliefs enhance transparency and reliability, thus reinforcing the credibility of state commitment. Liberal democracy, rather than democracy tout court, appears a more appropriate tool to study the relationship between what is generally called democracy and regionalization. Regionalization itself has been chosen to qualify this work because it is a sufficiently broad, yet systematic, category to identify different forms of interstate interactions at the regional level. On the one hand, it covers issues such as political, economic, societal, security, and even cultural exchanges, and on the other it comprises actors such as governments (and their agencies) and private agents (and their groupings). These interactions may or may not take place in an institutionalized format. Within the general category of regionalization, two phenomena are particularly relevant to this study: “regional interstate cooperation” and “state-promoted regional integration.”22 The former involves “the negotiation and construction of interstate or intergovernmental agreements or regimes” and “may therefore entail the creation of formal institutions, but it can often be based on a much looser structure, involving patterns of regular meetings with some rules attached, together with mechanisms for preparation and follow-up.”23 This definition captures a good number of the features of Argentine-Brazilian rapprochement preceding re-democratization in the mid-1980s. State-promoted regional integration is an important subcategory of regional cooperation and involves “specific policy decisions by governments designed to reduce or remove barriers to mutual exchange of goods, services, capital, and people.”24 The kind of commitments and mechanisms established by Argentina and Brazil from the signature of the Program for Economic Cooperation and Integration (PICE), and the subsequent schedule and regulating norms that led to the emergence of Mercosur seem to fall within state-promoted regional integration.

INTRODUCTION

9

Sharp theoretical distinctions between cooperation and integration may sometimes appear arbitrary and only a flexible combination of the two theoretical devices meets the empirical case of Mercosur. Furthermore, this study embraces a dynamic perspective—the evolution through cooperation toward regional integration—and this obviously entails some overlap. At this point a short digression is necessary. In Latin America, the concept of integration is surrounded by a kind of mystical aura. Integration is used, especially in the media, but often also among politicians and supposedly well-informed practitioners, to refer to any interstate agreement of some salience. Most of all, integration as an aspiration, as a project, and as a concrete set of binding commitments is frequently used interchangeably and without particular precision. In this light, the reader is invited to examine critically references to integration emerging from interviews and journalistic reports.

I.4

Methodology: Approach to Foreign Policy Analysis and the Use of Sources

This book is intended as a contribution to knowledge in the disciplines of International Relations, Diplomatic History, and Foreign Policy Analysis. Such a contribution is not limited to original empirical findings but extends to the theoretical conceptualization and the methodology used during research. While the first two innovative aspects will be presented in parts one and two, respectively, methodology is necessarily an introductory topic. In deciding what was the most appropriate research method to meet the objectives of the book two considerations predominated. First, accuracy and detail in historical analysis were imperative to establish the correct development and sequencing of events and the motivational factors behind them. Second, stressing the liberal component of the concept of democracy implies a shift of attention toward beliefs, values, and perceptions. Accordingly, two key choices were made. The first concerns the approach to the study of foreign policy adopted in this investigation and the second the selection, retrieval, and use of sources. Regarding the study of foreign policy—regional integration is a product of foreign policy activity—different approaches based on different ontological and epistemological assumptions are possible.25 Ontologically the “dynamic foundations of social systems” can be located either with the individual or with the structure, while epistemologically social agency can be viewed either through objectivist (from the outside) or interpretative (from the inside) lenses.26 This leads to four possible combinations and approaches to foreign policy analysis. The one adopted in this work tends to privilege the individual ontologically and places emphasis on the interpretative rather than rational dimension of the agent epistemologically. In this investigation “the concern is to understand decisions from

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the standpoint of the decision-makers by reconstructing their reasons. The foreign policy behavior of states depends on how individuals with power perceive and analyze situations.”27 This means a restoration of the centrality of the human agent but not to the detriment of the structure (or situation) constraining the actor’s options and choices. Indeed it is the reasoned choices of decision makers, based on their individual interpretation of the context and the national interest that define a given foreign policy. In this book, content and analysis will focus as much on the what as on the why and how aspects of Argentine and Brazilian foreign policies leading to bilateral integration and eventually to Mercosur. The attempt is to offer an insider’s view of inner negotiations and the considerations informing them in order to explain episodes and choices through the reasoning and thinking of the actors involved rather than according to strictly causal sequencing and/or theoretical approaches.28 Furthermore, the degree of detail characterizing certain sections of this book is deemed appropriate to the pursuit of three objectives. The first is the preservation of historical memory of events, facts, and their protagonists. The second is to offer an analysis of the role of those protagonists and the complexities they had to face from the perspective of the time when events took place and not from ex-post and with the benefit of the hindsight. The third objective is an alternative strategy of explaining reality, based on logic, connection, and reasoning rather than on theoretical or quantitative analyses alone. Such instruments require accuracy and richness in content and chronology in order to reach an informed understanding of episodes and behaviors. To the extent to which proper knowledge is actually possible, without an appropriate knowledge of events, their content, and sequence, it is a futile exercise to try to explain them. After all, the devil is in the details. Regarding the question of sources, this investigation has large recourse to both written primary documents hitherto unexamined and fresh interview material. However, written primary sources on ArgentineBrazilian integration are not easily accessible.29 Reportedly, there is no documentation of the early negotiation process “but its own outcome, which includes the protocols and the [1986 Buenos Aires] agreement.”30 Ninety percent of the negotiations under investigation were conducted orally only and without a set agenda.31 Additionally, in Buenos Aires there is no archive on Argentine-Brazilian negotiations for integration and at that time reportedly there was not even a classification system of diplomatic documents.32 Finally, some of the sensitive documents that do exist are still classified. The use of nonwritten sources and the recourse to oral history were therefore as much a deliberate choice as a necessity because of raison de force majeure.33 This book and its research method are also a passionate defense of History as a discipline and oral history as a method of scientific investigation, both of which are relevant

INTRODUCTION

11

to International Relations and can be productively used for its study. Given restrictions to primary written material and the very nature of this investigation, based as it must be on perceptions, value-based preferences, and political bargaining, it is hard to avoid agreeing with Allison and Zelikow, who remarked that information about the details of differences in perceptions and priorities within a government on a particular issue is rarely available within a short time. [. . .] Accurate accounts of the bargaining that yielded a resolution of the issue are rarer still. Documents often do not capture this kind of information, since they themselves are often resultants. Much information must be gleaned from the participants themselves.34

Yet, some scholars might object to the method of oral history on the grounds of forgetfulness, reticence of narrators, inaccuracy of human memory, intrusion of subjective or social biases. However, “this criticism ignores the problems of accuracy faced by historians who use written testimony; it ignores a growing literature on the analysis of oral testimony for historical purpose.”35 The problem of distance from events exists, but arguably this exists for written sources too, which are often drafted some time after the events and by nonparticipants. “Oral sources might compensate chronological distance with a much closer personal involvement.”36 And one hardly understands why written memoirs are so much credited as they may suffer from the same bias. While written primary and secondary sources have traditionally depicted and reflected the history of elites and high politics, oral history has largely been used to discover the stories of those neglected by grand history, and consequently has itself been considered too often a marginal method to explore high politics and diplomacy. By contrast, here oral history is applied to the history of elites, and is used to investigate behind the curtains of a major historical and political process in the Southern Cone.

I.5

The Plan of the Book

The structure of the book reflects its duality of objectives. Part one (chapters one–three) is devoted to diplomatic investigation and historical analysis in order to provide a clear and comprehensive account of Argentine-Brazilian relations in the formative years of Mercosur. The second part (chapters four–six) is more concerned with political investigation and theoretical analysis to make sense of the relationship between democracy and regionalization. The selection of the “connectors” to be discussed is of course my choice. Chapter one puts Argentine-Brazilian bilateral relations in historical perspective. A survey of the attempts at integration undertaken in

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the Southern Cone prior to the 1970s suggests that bilateral relations had not been constantly conflictive. Yet the 1970s were characterized by tense and competitive relations, the nature of which is analyzed in detail to conclude that traditional explanations are not entirely satisfactory. While military regimes were partly responsible for the existing frictions, they also addressed the main reasons for bilateral animosity giving rise to a “long turn” toward cooperative stances. The point is to what extent the undertakings by the military may be regarded as the root, or the starting point of the integration process formalized in the mid-1980s. In this respect, the analysis of the Bi-national Group’s activities represents an innovative and substantial contribution. Chapter two explores the genesis of the Argentine-Brazilian bilateral economic integration. The long-term forces as well as the contingent reasons leading to the decision to integrate are thoroughly analyzed. The timing of diplomatic negotiations suggests that the idea of bilateral integration may have preceded the recomposition of the democratic dyad in Argentina and Brazil. The dissection of diplomatic relations during the year of regime asymmetry sheds new light on an underresearched aspect of Argentine-Brazilian relations, while the account of the secret negotiations leading to the 1986 Buenos Aires Act represents another innovative and valuable contribution of this volume to the systematization of the integration process in the Mercosur area. Chapter three explores the genesis of Mercosur. It challenges the view that the project of the common market was designed by the first democratic administrations and later distorted by the neoliberal governments of Presidents Carlos Menem of Argentina and Fernando Collor de Mello of Brazil. The relationship between Mercosur and the so-called ACE-14 agreement concluded by Argentina and Brazil in the framework of the Latin American Integration Association is also illustrated, as are the negotiations to incorporate new members into the incipient common market. Chapter four first tackles the problematic definition of democracy identifying liberal democracy as the most appropriate tool for analysis. Drawing from Schmitter’s neo-idealism, discussion then moves to the institutional setting brought by the return to democracy in Argentina and Brazil, in particular focusing on executive-legislature relations, and asks whether this may have somehow promoted integration. Chapter five takes analysis further following the neo-idealist model and asks if civil society, and in particular the business sector, played an active role in the emergence of Mercosur. Democracy supposedly gave more voice to those sectors that might have been silenced under the military. If these sectors demanded for integration, then this may constitute a link between democracy and regionalization. Chapter six concentrates on the fact that all the key protagonists of the narrated events attributed great importance to democracy for the

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attainment of integration, and asks whether this very belief may have been crucial: If Argentine and Brazilian political leaders acted in the belief that democracy mattered, this may have influenced their perceptions and actions. Following a discussion of psychological approaches to international politics and social constructivism, the chapter finally assesses the theoretical model elaborated by Goldstein and Keohane to explain the role of ideas in foreign policy and illustrates three possible pathways through which democracy may have been significant for regionalization.37 An epilogue explores the continuing relevance to Mercosur today of some of its original features, such as the importance of the ArgentineBrazilian axis, the intergovernmental approach to integration and the lack of real supranational powers and institutions, and most of all the consolidation of democracy as a foundational idea of integration not only within Mercosur but in the broader Latin American context. Overall, the implications of this book’s case study for historiography and theory are substantial and will be thoroughly addressed in the concluding remarks. These will also discuss the desirability of a plurality of theoretical approaches to make sense of reality and will make a call for reconciliation between cognitive approaches to politics and realist theories of international relations. The final argument provides a defense of representative liberal democracy and a justification for restoring a central role to the human factor in the study of international relations.

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Part I

Diplomatic Investigations and Historical Analysis

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CHAPTER 1

Argentine-Brazilian Relations in Historical Perspective: From Ambivalence to Solidarity

1.1

Introduction

From independence to the late 1970s, the history of the ArgentineBrazilian bilateral relationship has been labeled one of rivalry, and prominence has been given to conflictive rather than cooperative aspects. Recent scholarship however has demonstrated that views of ArgentineBrazilian relations stressing their essentially conflictive nature are not historically accurate.1 Conflict was certainly a salient aspect, but a pattern of attempts at cooperation is also present throughout the history of Brazil and Argentina. Indeed, it can be argued that efforts at cooperation have even outnumbered occasions of direct confrontation. The attempt to diminish rivalry and explore possible constructive relations with Argentina was a recurrent theme in Brazilian foreign policy in the twentieth century.2 Furthermore, both conflict and integration acted as the main forces in Southern Cone international politics from 1870 to 2003, and the trend toward integration between Argentina and Brazil has constantly informed their rivalry.3 Considering the changes in regime types, development models, economic conditions, and international scenarios on the one hand, and the persistence of this pattern of ambivalence on the other, the reasons for this continuity have to be sought in permanent factors. Whereas the deep roots of Argentine-Brazilian competitiveness dated to the PortugueseSpanish colonial rivalry, as early as 1915 these historical factors of conflict were, to a great extent, overcome. Still, ambivalence remained. “History does not begin ex novo every 10 years. It is, on the contrary, the consequence of a cumulative experience process through the years.”4 Drawing on the Annales School of historians, the French School of International

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Relations has defined these permanent forces as the deep “underlying forces” of history.5 “Geographical conditions, demographic movements, economic and financial interests, the collective characteristics of peoples and nations, public opinion—these are the underlying factors which make up the setting within which human groups have developed, and which largely determine the nature of the relations between them.”6 These “underlying forces” compelled Argentina and Brazil to share the same geographical space and spheres of interest, namely the Plata Basin and the South Atlantic. Therefore their interactions were numerous and inevitably gave rise to commonalities and divergences, complementarities and competitiveness, resulting in both conflictive and cooperative trajectories. Another misperception about Argentine-Brazilian relations concerns the supposed turn to improved relations following the settlement of the Itaipú Dam conflict in 1979. If one accepts the theory of deep underlying forces, history is not amenable to sudden change. Although not incompatible with the concept of crucial conjunctures, such a vision would suggest a more nuanced concept of change, where a combination of structural modifications and salient historical events, rather than single episodes, accounts for turns in long-consolidated trends and international relations. For example, the fall of the Berlin Wall was not the cause of the demise of the Soviet Empire but it was a clear sign of its decline and had a powerful symbolic effect on collective imagination. In fact the combination of profound structural changes in the Soviet system and superpower relations and the symbolic impact of the Berlin Wall episode accounted for the rapid, though not sudden, change of the bipolar world. By the same token, this chapter will challenge the “turning point vision” of Argentine-Brazilian relations, while proposing a “gradual turn approach.” The gradual turn occurred between 1979 and 1982, that is, between the signature of the Tripartite Agreement, which solved the question of the Itaipú Dam, and the Falklands/Malvinas War. Over this period of time, Argentina and Brazil established a new positive sign in their relations, confirmed and consolidated it, and maintained the new deal even in the face of a potentially disruptive occurrence. However, the events of the period 1979–1982 are not to be confused with the causes of change. Rather than prompting a new course in bilateral relations, these events were actually a manifestation of it. In other words, the long turn indicates that a change of attitudes had already occurred. In fact, the 1970s were a seminal period of this gradual turn for two major reasons. First, traditional mutual tolerance for respective assertiveness in regional affairs was broken. Second, changes in the international scenario were so significant that they altered the Argentine and Brazilian vision of both the self and the other. The combination of these two factors reshaped the deep underlying forces of history acting in the

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area. The result was a new long-lasting paradigm in bilateral relations: close association became a vital element in both countries’ concepts of national interest. The argument of this chapter is structured in three sections. The first concisely surveys five attempts at regional integration in the Southern Cone in the twentieth century to support the claim that cooperation had actually been a characteristic feature of Argentine-Brazilian relations up to the 1970s. The second part shows how international, regional, and national factors at work in the 1970s played a fundamental role in promoting the change of mutual attitudes of the late 1970s and early 1980s. During the 1970s, confrontation prevailed over cooperation. Cooperation was not absent but was mostly used as an instrument of containment toward the neighbor rather than as a tool for effective development. Ironically, because of its clear ineffectiveness, rigidity in foreign policy somehow facilitated the passage to a smoother attitude. The third section explores the significance of the major events that constituted the long turn in Argentine-Brazilian relations between 1979 and 1982. The signature of the Tripartite Agreement resolved the long-pending question over the use of water resources and eliminated the major reason for disagreement between the two countries. The presidential visits of 1980 and the signature of the nuclear agreements the same year initiated a process of confidence-building that later characterized cooperation under democratic rule. The Falklands/Malvinas War was the final and decisive test for the new course of cooperative relations. Each of these three episodes will be compared to the most significant bilateral rapprochement up to that moment, the 1961 agreements of Uruguaiana, in order to show how the late 1970s and very early 1980s were significantly different from earlier periods because of the unusual and unprecedented political will in both countries to pursue amicable relations.

1.2

Attempts at Integration in a Mixed Context of Conflict and Cooperation (1900–1967)

Argentine-Brazilian relations in the twentieth century up to 1967 were characterized by cycles of tension and cooperation. Even during moments of friction, areas of cooperation and understanding remained. The idea of bilateral integration long preceded democratization, but until the 1980s all initiatives invariably failed. The first embryonic attempt at closer ties was conducted as early as the beginning of the twentieth century. In 1905, the Brazilian foreign minister Rio Branco proposed a bilateral consultation system to Argentina when issues of common interest were at stake. Later the same year, Rio Branco designed a pact between Brazil, Argentina, and Chile, known as the ABC Pact. The objective was to guarantee peace in the Southern

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Cone through the acceptance of common rules in the event of a breach of good mutual relations. Conversations followed for the next two years but they did not result in any formal commitment. Encouraged by the positive attitude of the new Argentine president Saenz Peña, elected in 1910, Rio Branco reiterated his proposal but Argentina turned it down because of the possible negative consequences on Argentine-U.S. relations. Rio Branco left the Ministry of External Relations in 1912 and was not able to implement his grand project of a tripartite pact. Still, rapprochement between Argentina, Brazil, and Chile was prompted by the occupation of the Mexican city of Vera Cruz by the United States in 1914. The mediation conducted by the ABC bloc helped avoid war. This diplomatic success gave new momentum to the negotiations for a formal ABC agreement, which was eventually signed in Buenos Aires in 1915. However, its scope was much more limited than that envisaged by Rio Branco. The treaty only established that disagreements between the parties should be solved through diplomacy, arbitration, or investigation by a permanent commission. The agreement was never ratified on account of the pressure exercised by the United States, which feared the creation of a hostile South American bloc, and due to internal opposition in Argentina. A second attempt was conducted in 1940 when a Brazilian trade mission, comprising business representatives, traveled to Buenos Aires with the aim of expanding trade. Federico Pinedo, the Argentine minister of economy, welcomed the initiative and proposed bilateral arrangements to promote the export of surplus products. Negotiations assessed three possible solutions. The first aimed to establish new industries still absent in the two countries. It envisaged exemption from bilateral customs duties for ten years and explicitly provided for a customs union open to other Latin American countries. The second project dealt with credit for the purchase of surplus production, and the third envisaged the gradual elimination of economically unviable national food production and its replacement with importations. Negotiations were finalized in November 1941. Foreign Ministers Aranha of Brazil and Ruiz-Guiñazú of Argentina signed a treaty establishing a free trade area. This was meant to be conducive to a customs union and was open to other Latin American countries. The outbreak of war in the Pacific and the recrudescence of the conflict in Europe made the free trade area unviable. The unity of intent fell apart in 1942, when Brazil declared war on the axis powers while Argentina remained neutral. The third attempt at integration, the Vargas-Perón understanding for the creation of a pact between Argentina, Brazil, and Chile (ABC), has often been presented as a climax in bilateral relations. Instead, it reflected contradictions and ill-grounded expectations. In 1950, Perón praised Rio Branco’s idea of an ABC pact and believed that the election of populist

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leaders such as Vargas in Brazil and Ibañez in Chile would facilitate a revitalization of the ABC project. In 1952, Perón proposed the creation of a tripartite customs union to Vargas. Despite the absence of incontrovertible documentary evidence, it appears that Vargas gave his informal and confidential consent to open Argentine-Chilean negotiations, confirming the interest of his country in joining the project at a later stage.7 Yet, Vargas acted ambiguously. On the one hand, he sponsored the ABC to please the nationalist wing of his government and to counter growing disenchantment with the United States. On the other, he avoided any commitments, considering that integration with Argentina could jeopardize cooperation with the United States, Brazil’s main economic partner. Furthermore, Vargas avoided a personal meeting with Perón lest this should create political embarrassment on a domestic level. Rapprochement, such as there existed, never shifted from commercial to political. Eventually, a bilateral Argentine-Chilean agreement was signed in Santiago in 1953, but the commitment was diluted as compared to Perón’s ambitions. The treaty only provided for the reduction of customs duties and the increase of bilateral trade. The fate of the understanding was no better than that of its proponents. Vargas committed suicide in August 1954; Perón was ousted from power in September 1955. A short time afterward, the new Argentine government decided not to implement the agreement with Chile. Presidents Arturo Frondizi of Argentina and Jânio Quadros of Brazil undertook a fourth attempt when they met in Uruguaiana for a threeday discussion in April 1961. The talks resulted in the signature of two documents. The Declaration of Uruguaiana, signed by the heads of state, urged common action to tackle international problems and established democracy and freedom as factors of national development. The Convention of Friendship and Consultation, signed by the foreign ministers, provided for a permanent system of consultation and information, for greater integration in the economic, financial, legal, and cultural fields, and for a new legislation allowing free circulation of nationals in the two countries. In September the same year, President Frondizi and President João Goulart, who had replaced Quadros, confirmed the spirit and commitments of Uruguaiana. Nonetheless, the Argentine Senate, concerned about the Brazilian government’s potential extremism and about the fear of Argentine over-dependence on Brazil, postponed the ratification of the Uruguaiana agreements ad aeternum. By 1962, internal opposition had ousted Frondizi; two years later a military coup overthrew Goulart. A fifth attempt took place during the military governments of General Castello Branco in Brazil and General Onganía in Argentina. In February 1967, Roberto Campos, Castello Branco’s minister of planning, proposed a sectoral customs union to Adalbert Krieger Vasena, the Argentine minister of economy. The customs union was to cover the metallurgical,

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petrochemical, and agricultural sectors. It envisaged the reduction of trade barriers by 20 percent a year over a period of five years with a view to achieving a complete removal of customs duties. The initiative was also open to other Latin American countries. Given its advantages in the production of steel, Brazil aimed to consolidate a pattern of trade in which it would be the supplier of manufactured goods and Argentina of agricultural produce and food. This was incompatible with the industrial development policy of the Argentine military. Furthermore, powerful anti-integrationist forces were at work in both countries. The autarchic nationalism of the public sector and the protectionism of the private sector combined to oppose the initiative.8 In particular, Argentine business opposed the opening up of the economy, and several politicians and journalists favored a model of autarchic development, or, alternatively, of reliance upon Western great powers.9 As these positions spread among the military, the project never took off.

1.3

The Prevalence of Confrontation over Cooperation in the 1970s

During the 1970s, conflict prevailed over cooperation in ArgentineBrazilian bilateral relations. Most of the tensions were related to the dispute over the water resources of the Plata Basin. However, the roots of this quarrel are to be found in broader and deeper issues. The growing economic preponderance of Brazil in the region and the corresponding decline of Argentina are to be regarded as the real source of confrontation between the two countries. Geostrategic thinking, which was dominant in both countries at that time, amplified fears and suspicions. Furthermore, the Brazilian government seldom refrained from diplomatic and economic expansionism. Whereas these steps were probably subservient to Brazilian national development, they also increased the sensation of encirclement of Argentina. In such a context, even initiatives of cooperation could be perceived, or actually used, as instruments of containment.

1.3.1 Physical integration, the Plata Basin Treaty, and the emergence of the Itaipú question The case of the Plata Basin Treaty is paradigmatic in this regard. The first initiatives for a joint exploitation of the Plata hydrographical system dated back to 1965, when Argentine diplomats, under Foreign Minister Zavala Ortiz and President Illía, approached Brazil, Bolivia, Uruguay, and Paraguay. The major limitation to any attempt at integration in the area was the chronic lack of infrastructure. The Plata Basin initiative was initially conceived to improve physical integration and attract

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international investors. The project was maintained under the Onganía administration, which organized the first meeting of foreign ministers of the Plata Basin in Buenos Aires in 1967. Opposition to the plan emerged in both Argentina and Brazil when it became clear that physical integration implicitly entailed an agreement on multilateral exploitation of the hydroelectric potential of the rivers. Brazil had launched feasibility studies to build a hydroelectric power plant on the river Paraná in 1962, and it did not want to take the risk that decisions over these works were dependent on non-riparian states in the framework of a multilateral agreement. When Paraguay raised concern about the negative consequences of the works to be undertaken by Brazil, the Castello Branco administration involved Paraguay in the project by the signature of the Ata das Cataratas in 1966. The situation was more complex in Argentina. Whereas initial objections to the Brazilian plans concerned questions of navigation and fluvial trade, Argentina also feared that Brazilian hydroelectric projects would jeopardize future exploitation of the river Paraná. In particular, the construction of any Brazilian dam upstream would alter the regular flowing of water, affecting the construction of Argentine power plants downstream. Argentina had already envisaged the construction of the Corpus Dam downstream of Paraná. However, the actual concern in Buenos Aires was more related to fears of Brazilian economic and geopolitical dominance in the region. These were aggravated when Brazil disclosed its plan to site the Itaipú Dam only seventeen kilometers from the border with Argentina. By the late 1960s Argentina identified the Plata Basin system as an instrument to contain Brazil.10 In turn, Brazil did not deem it convenient to be excluded from a forum gathering all its neighbors in the Plata region.11 The Treaty of Brasília, establishing the Plata Basin System, was eventually signed in 1969, but while it had been initially conceived as an instrument of subregional cooperation, it ended up being instead an instrument to amplify rivalry and confrontation.12 Argentina started to invoke the principle of “prior consultation,” according to which upstream states should compulsorily consult with downstream ones before initiating works on an international river. Brazil rejected this position, asserting the right of a state to undertake any works within its territory unless these caused appreciable prejudice to downstream states. The meetings of the Plata Basin foreign ministers became the main stage for this quarrel. The Argentine delegation proposed a draft resolution envisaging shared sovereignty for contiguous international rivers, therefore requiring a bilateral approval of any use. Brazil felt safe as it held a bilateral agreement with Paraguay for the exploitation of the river Paraná. For consecutive rivers there was no shared sovereignty and each state could make use of the water resources as long as it did not cause appreciable prejudice to downstream states. Both Argentina and Brazil

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saw the approval of the resolution as a diplomatic victory because they interpreted it differently. Whereas the Argentines understood the resolution as implying a duty of prior consultation to assess how appreciable a prospective prejudice could be, the Brazilians did not recognize the existence of any prejudice, therefore they did not feel compelled to prior consultation. Argentina, dissatisfied with this stalemate within the Plata Basin System, brought the question before the United Nations where a compromise was eventually reached. UN Resolution 2995 established a duty of prior information, but not of prior consultation in cases of appreciable prejudice. The determination of what constituted an appreciable prejudice was left to bilateral negotiation. This was a nonsolution and the dispute continued.

1.3.2

Assertive diplomacy between containment and genuine economic need

Argentine and Brazilian diplomatic activity between 1970 and 1973 largely reflected the crisis over water resources. Besides the traditional quest for supremacy, Argentina and Brazil undertook new actions specifically directed to gain support for their positions over the Plata Basin. In Argentina, General Lanusse sought a rapprochement with the Andean countries, notably Peru and Bolivia. His goal was to open new markets for Argentina as well as to increase leverage vis-à-vis Brazil.13 The formal access of Argentina to the Non-Aligned Movement in 1973 could also be seen as an attempt to gain international support for its claims over the Plata Basin and the Malvinas.14 In the early 1970s, while Argentina was undergoing a phase of social and economic unrest, Brazil was experiencing high economic growth, which fueled the aspirations of the military government to the status of world power. Accordingly, Itamaraty (the Brazilian foreign ministry) undertook a diplomatic offensive at the regional level, which was perceived by other countries as imperialist.15 Brazilian participation in the 1971 coup in Bolivia brought this country under the sphere of influence of Brasília and obstructed Argentine plans to access the Bolivian iron-fields. Brazilian backing of the 1973 coup in Uruguay reinforced the links between the two countries. The coup by Pinochet in 1973 increased Brazilian political and economic presence in Chile. A Brazilian plan of huge investment in infrastructure, such as roads and railways, reoriented freight flows in the Plata Basin area. As a consequence, Bolivian, Paraguayan, and Uruguayan goods were increasingly attracted toward the newly refurbished ports of Southern Brazil, which competed now with Buenos Aires. Finally, the conclusion of the Itaipú Treaty of 1973 between Brazil and Paraguay for the joint construction of the dam and the power plant exacerbated the quarrel with Argentina. Diplomatically isolated in the region, Argentina opposed the status quo.

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The return to power of Juan Domingo Perón, traditionally favorable to good relations with Brazil, engendered within Brazilian political circles new hopes of finding a solution to the Itaipú question. General Ernesto Geisel, who assumed the Brazilian presidency in 1974, was confident of establishing a dialogue with Perón and of solving the quarrel.16 However, Perón’s attitude was ambivalent and his diplomatic stance is emblematic of the period. Goodwill toward Brazil notwithstanding, Argentina’s diplomatic isolation had to be redressed. Significant attempts at smoother relations were intermingled with intense diplomatic action to reaffirm Argentine national interest in the subcontinent. At best, bilateral relations under the peronista administrations “remained correct, although without significant advance.”17 Yet, Argentine initiatives had an implicit, and at times explicit, antiBrazilian character. At the end of 1973, Perón signed the Plata River Treaty with President Bordaberry of Uruguay, solving the fluvial frontier dispute between the two countries. On the same occasion, Perón suggested the creation of an Argentine-Uruguayan customs union, which irritated Brazil so much that President Geisel was reportedly ready to go to war to impede the agreement.18 Eventually, the Argentine-Uruguayan agreement of economic complementation (CAUCE) was signed in 1974, but its scope was very limited. In December the same year, Perón and President Stroessner of Paraguay signed the Treaty of Yaciretá for the construction of a bi-national power plant and speeded up the Corpus Dam project. The Treaty of Yaciretà was signed just few months after the Brazilian-Paraguayan treaty for the construction of Itaipú. This step was undertaken to increase Argentine powers of negotiation vis-à-vis Brazil about Itaipú.19 By linking Paraguay to the construction of another huge hydroelectric plant on the river Paraná, Argentina increased Paraguayan interest in a peaceful and quick solution of the dispute over the rivers. This way Paraguay had to take a more moderate position and refrain from unconditional support for Brazilian claims. The strategy designed by Perón could neither be completed nor display its effects. The administration of his widow and successor Maria Estela Martinez de Perón, better known as Isabel, was extremely weak. Internal subversion together with the alarming deterioration of social and economic conditions diminished the country’s capacity of external projection. At the same time, the foreign policy adopted by the Geisel government in Brazil to face the changes in the international scenario led to an increase in the Argentine feeling of encirclement and isolation. The world economic crisis that followed the oil prices shock of 1973–1974 largely influenced Brazilian foreign policy. The crisis not only contributed to reorient Brazilian economic interests toward the region but significantly altered Brazil’s self-perception and the conception of its international role. The dream of becoming a global power

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was abandoned in favor of a more pragmatic role of leadership in South America. To check the negative effects of the international economic crisis, Geisel increased industrial production to foster exports. As a consequence, Brasília had a particular and urgent need to increase energy supplies. Argentina admittedly underestimated the impact of the energy crisis on Brazil and regarded the Brazilian quest for new sources of power generation with excessive geo-strategic concern.20 The need of a quick solution for water resources prompted Brazil to offer Argentina a generous technical solution to the dispute regarding the Corpus/Itaipú Dams. When the government of Isabel Perón turned down the offer, Brazilian Foreign Minister Azeredo da Silveira refused further negotiations with Palacio San Martín,21 and decided to play for time and present Argentina with a fait accompli in Itaipú. Energy requirements, balance of payment difficulties, and the need to expand export markets also triggered a shift in Brazilian diplomatic style. The traditional bilateral dialogue began to be backed by multilateral efforts in the region. A bilateral agreement for trade expansion was concluded with Uruguay in 1975, counterbalancing that signed by Perón. At the same time, Brazil reinforced its links with Bolivia by a contract for the purchase of Bolivian gas and the creation of an industrial pole in the region of Santa Cruz. In 1975, a strategy to improve relations with the Amazon countries was launched. The same year talks were initiated with Colombia. In 1976 several agreements were signed with Peru. In 1977, Brazil concluded a Treaty of Friendship and Cooperation with Venezuela. Multilateral efforts in the Amazon also started between 1976 and 1977, when Chancellor Azeredo da Silveira approached neighboring countries to discuss a framework agreement of regional cooperation. In 1978, Brazil, Bolivia, Colombia, Ecuador, Guyana, Peru, Surinam, and Venezuela signed the Amazon Pact, committing themselves to joint efforts to develop and protect Amazon resources and to periodic meetings to monitor the implementation of the agreement. The Amazon agreement quite obviously excluded Argentina, which had no territory in the Amazon Basin. This does not necessarily mean that this undertaking was a deliberate Brazilian attempt to isolate Argentina. In fact, the Amazon Pact has been seen as a tool to manage interdependence under the sign of genuine cooperation.22 Alternatively, a more neutral interpretation regarded the pact as an endeavor to replicate the alleged positive achievements of the Plata Basin Treaty.23 However, there are strong indications that Brazil used this multilateral strategy, and in particular the closer relations with the northern neighbors, also with the intention of forcing a solution to the Itaipú/Corpus dispute and strengthening its position vis-à-vis Argentina.24 Moreover, regulation of the use of the Amazon Basin in accordance with the principles defended by Brazil would have constituted a solid legal and political precedent. Its

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large acceptance in South America by the Amazon community would have had an impact on any negotiated solution to the Plata Basin dispute. Indeed, the Brazilian proposal to include explicitly those principles in the Amazon pact was rejected by the other signatory parties because it would have implied explicit support for Brazil in its dispute with Argentina.25

1.3.3

The return of the military in Argentina and the peak of tensions over Itaipú

When a military coup ousted Isabel Perón from power in 1976, the new Argentine administration made the improvement of relations with Brazil a priority. However, at least in the first years of military rule, ambivalence still prevailed. General Videla, the Argentine head of state, appointed Ambassador Oscar Camilión to Brasília with the task of solving the dispute over the rivers and reestablishing good bilateral relations. Camilión had been one of the negotiators of the Uruguaiana agreements and was sympathetic to Brazilian resistance to U.S. nonproliferation policy. The military junta made an effort to adopt conciliatory economic measures toward Brazil, although these proved to be of limited significance. In any case, General Videla’s essentially geopolitical conception of bilateral relations delayed bilateral understanding. Videla suspended talks with Brazil about joint activities on the river Uruguay, arguing that these enterprises were more favorable to Brazil and that it was not possible to proceed further without a prior solution to the question of Itaipú. At the 1976 meeting of the foreign ministers of the Plata Basin, Admiral Cesar Augusto Guzetti, chancellor of Argentina, proposed a comprehensive negotiation with Brazil to discuss all issues of bilateral relevance.26 The Brazilian foreign minister Azeredo da Silveira agreed to discuss all subjects except the use of the river Paraná. Some months later, Argentina put forward the idea of a Tripartite Commission to solve the question of Itaipú/Corpus. Brazil rejected the proposal, arguing that the acceptance of the Commission would have amounted to acceptance of the principle of prior consultation. The failure of these initiatives led to an escalation of provocations and tensions. The news that Paraguay was considering changing its electrical cycle from fifty to sixty hertz in order to be compatible with the Brazilian network raised alarm in Buenos Aires. Not only would Argentina lose a market for its products (Argentina also used a fifty-hertz cycle), but Paraguay would be invariably and irreversibly attracted into the Brazilian sphere of economic and political influence. In July 1977, Argentina closed the Cuevas-Caracoles tunnel, under the Andes, to Brazilian trucks, thus impeding freight transport from Brazil to Chile. Despite the fact that Argentine authorities justified the measure as necessary for road maintenance works, Itamaraty considered it as another form of pressure related to the question of Itaipú

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and decided to retaliate, announcing the closure of Brazilian frontiers to 80 percent of Argentine trucks. Precisely when tensions seemed to have reached a climax, a new set of factors prompted an Argentine-Brazilian rapprochement.

1.4 The Gradual Turn in Argentine-Brazilian Relations The signature of the Tripartite Agreement of 1979 between Argentina, Brazil, and Paraguay that solved the dispute over the Itaipú/Corpus projects is largely regarded as a turning point in Argentine-Brazilian relations. However, the quarrel over Itaipú was only one aspect, although an important one, of Argentine-Brazilian rivalry throughout the 1970s. The roots of this tension were deeper and concerned political, economic, and security issues. Correspondingly, one single event would not be sufficient to shift bilateral relations from ambivalence to cooperation. A sequence of mutually reinforcing events was required. New attitudes had to be established, confirmed, and tested against adverse conditions and potential reversal. Too often in the past, moments of good understanding had been welcomed as decisive turning points in ArgentineBrazilian relations. From this perspective, the solution of the dispute over the water resources represents the first milestone in a long and gradual process. This process was confirmed and strengthened by the presidential meetings of 1980 and the agreements concluded on those occasions. Finally, the new course was tested against negative circumstances during the Falklands/Malvinas War. To support the argument that only a consistent sequence of events can constitute a significant and enduring turn in historical patterns, the Argentine-Brazilian rapprochement of the late 1970s and early 1980s can be compared with the sequence of events following the 1961 Uruguaiana agreements. Before 1979, Uruguaiana was considered the apogee of Argentine-Brazilian understanding. That agreement had generated great enthusiasm at its signature; its commitments had been confirmed one year after the signature, but when tested against potentially disruptive circumstances, it failed miserably.

1.4.1

The Tripartite Agreement of 1979

While the Tripartite Agreement cannot be considered a definitive turning point, it should certainly be regarded as the start of Argentine-Brazilian rapprochement. By the summer of 1977, negotiations over Itaipú had reached a stalemate, and minor tensions between the two countries had acquired increasing importance for they were perceived as instruments of leverage over the question of the dams. However, a number of

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international, regional, and domestic factors paved the way to convergence between Buenos Aires and Brasília. At the international level, the new posture of the United States under President Jimmy Carter vis-à-vis the authoritarian governments of Latin America and the consequences of the world economic crisis following the oil price shock played a key role. In the wake of détente, the Carter presidency decreased its level of support for authoritarian governments and promoted democracy and the protection of human rights. Furthermore, in order to limit access of other countries to nuclear power, the U.S. administration intensified its policy on nonproliferation. This included the severing of diplomatic and economic relations with, and the termination of military aid to, noncompliant states. The military regimes in Argentina and Brazil were significantly affected. U.S. tolerance toward abuses of human rights in the name of the fight against communism came to an end. The nuclear programs of Argentina and Brazil were censured in Washington. In particular, the United States opposed the agreement for nuclear technological transfer that Brazil had signed with West Germany. Ambassador Camilión clearly understood that Brazil was only the first target and that Argentina was to come next. He therefore expressed his solidarity with Brazil. The right of any country to develop nuclear programs for peaceful ends was a claim common to Argentina and Brazil. The international oil crisis of 1973–1974 had shown the vulnerability of Brazil to energy supply shocks. Brazilian interest in alternative sources of energy supply became pressing, and hydroelectric plants in the Plata basin seemed an excellent solution. This consideration increased Brazilian determination to find a negotiated solution with Argentina. Moreover, the growing protectionism practiced by the United States and the European Economic Community (EEC) in the mid-to-late 1970s compelled Argentina and Brazil to redirect exports toward alternative markets, whether regional or more distant. The increase of common interests at the international level was highly significant and materialized, for example, in the steady convergence of Brazilian voting in international forums with the Non-Aligned Movement, of which Argentina was a member. At the regional level, Brazilian relations with Paraguay and Argentine relations with Chile seem to have played a role in the search for a solution to the Itaipú question. The “pendulum policy”27 practiced by Paraguay toward Argentina and Brazil for the use of rivers contributed to the Brazilian decision to look for a negotiated solution with Argentina. In the absence of such an agreement, any problem that might have arisen between Brazil and Paraguay might have prompted the latter to align with the Argentines, to the detriment of Brazilian security. Whereas potential clashes between Paraguay and Brazil remained in the field of

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geopolitical speculation, Argentina and Chile came close to war. In April 1977, Queen Elizabeth II of the United Kingdom ratified the arbitration for the dispute over the Beagle Channel between Argentina and Chile. Three strategic islands were allocated to Chile, providing direct access to both the Atlantic and the Pacific Oceans. This was unacceptable to Argentina. Were Chile to insist on its plan of extension of its territorial sea and Exclusive Economic Zone, it would have appropriated fish and oil resources at that time under Argentine control and increased its influence over Antarctica. In the light of this risk, Argentina could not afford conflict on two fronts and was willing to compromise on the Itaipú question with Brazil. Internally, Argentina suffered from an increasingly aggressive campaign of subversion. This made it highly inconvenient to maintain a conflictual stance toward its most powerful neighbor. It has also been suggested that ideological affinity between the regimes in Buenos Aires and Brasília contributed to solving the quarrel.28 Yet, while this argument may have some validity, its actual explanatory power should not be overestimated. Ideological affinity had not prevented the conflict over the water resources from escalating under the administrations of Castello Branco, Costa e Silva, and Medici in Brazil, and Onganía and Lanusse in Argentina. The initial moves of the Videla administration had been informed by traditional ambivalence, and Chancellor Azeredo da Silveira was very skeptical about the intentions and the methods of Ambassador Camilión.29 Instead, what can safely be said is that the military in both countries were opposed to a possible conflict. It seems more than mere coincidence that, when relations were most tense, in July 1977, the military activated parallel channels of dialogue.30 Eventually, soon after a high level meeting in Foz do Iguaçú between the chief of the Brazilian air force Jardim de Matos and a member of the Argentine military junta Orlando Agosti, Chancellor Azeredo da Silveira decided to relaunch negotiations. An important advance occurred when Argentina finally recognized that, whereas Yaciretà was a priority for the government, Corpus was not. The minister of economy Martinez de Hoz confided to Ambassador Camilión that Corpus was neither economically nor technically viable.31 Furthermore, Brazil realized that it was impossible to force Paraguay to change its energy cycle and accepted the need to equip Itaipú with a double cycle system. This decision reassured the Argentines. Technical agreements on the partial and temporary interruption of the flow of the river Paraná were also reached. So it was that on the occasion of the UN General Assembly in September 1979, Foreign Ministers Nogués of Paraguay, Pastor of Argentina, and Saraiva Guerreiro of Brazil finalized the terms of the Tripartite Agreement, which was eventually signed in Puerto Stroessner (later Ciudad del Este), on October 17, 1979, bringing

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the long dispute over the water resources of the river Paraná to a definite close. Is this sufficient for the Tripartite Agreement to be considered as a watershed in bilateral relations? There are two reasons for hesitation. First, if one assumes that the controversy over Itaipú was the only significant reason for tension, then the Tripartite Agreement may be seen as a turning point. But the true underlying cause of tension lay in the unbalanced distribution of power between the two countries. The Itaipú question, although important in itself, had been aggravated by its being taken as an indicator of broader and traditional competition for dominance in the region. Furthermore, if the question of the dams had been the only major problem, and if it was clearly in the interest of both parties to solve it, then the long delay in finding a solution should rather be considered a failure of negotiations than a success.32 Certainly there was caution at the time. During a seminar in Porto Alegre in 1983, a celebrated analyst of Brazilian foreign policy remarked that “[t]he Itaipú agreement inaugurates a less competitive phase, [. . .], the duration and continuity of which are difficult to predict.”33 Second, and probably more convincingly, historical experience shows that on several occasions a single significant event has often been mistaken for a fundamental change in the course of Argentine-Brazilian relations. The most far-reaching attempt at political cooperation before the mid-1980s, the Uruguaiana understanding, provides a good example. The 1961 Convention of Friendship and Consultation provided for a permanent system of consultation and for greater economic, legal, and cultural integration. Two Brazilian foreign ministers, San Tiago Dantas and Horacio Lafer, believed at that time that the period of rivalry between the two countries had been overcome.34 Yet, after less than two years the Uruguaiana agreement was abandoned. So, while the Tripartite Agreement opened the way to a process of rapprochement, it would constitute a real transformation in Argentine-Brazilian relations only if followed by confirmatory events. The presidential visit of 1980 and its implications were particularly significant in this respect.

1.4.2

The presidential summit of 1980 and its consequences

The visit of General Figueiredo to Buenos Aires in May 1980 was only the third paid by a Brazilian president to Argentina during the twentieth century and the first since 1935.35 The visit therefore had a very high symbolic value. Its context was that Figueiredo had been expanding the use of “presidential diplomacy” as an instrument of negotiation and leverage to back Brazilian foreign policy.36 In particular, presidential diplomacy prioritized Latin America and the Platine countries, reflecting a new Brazilian diplomatic orientation. Foreign Minister Saraiva

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Guerreiro recalls in his memoirs that after that visit “the frame of bilateral relations turned into a different one, a new one.”37 During the visit, Argentina and Brazil concluded a number of salient agreements. The nuclear agreement was one of the major achievements of the summit. A set of circumstances favored this understanding, leaving scarcely any alternative to cooperation.38 Argentine mastery of nuclear technology was more advanced than that of Brazil, which was experiencing tensions with its suppliers. Both countries took a firm decision to move ahead with nuclear development, despite financial difficulties affecting their respective programs. There was also great consensus at the levels of political class and public opinion on nuclear development. Both Argentina and Brazil had stood aloof from the Non-Proliferation Treaty, and both had refused to adhere to the Tlatelolco Treaty, which had made South America and the Caribbean a nuclear-free zone. The 1980 nuclear treaty, following the Tripartite Agreement of the previous year, initiated a confidence-building process that was fundamental to the consolidation of the bilateral rapprochement. Nuclear development was no longer a mutual threat, and turned instead into an instrument that was subservient to the economic and social development of the two countries.39 Other salient agreements were signed, contributing to the new climate of confidence and trust. A protocol for the joint construction of military planes and rockets was concluded. A convention on the interconnection of the two national electrical systems was signed, reinforcing understanding in the energy sector. On the diplomatic front, a memorandum of understanding established a mechanism of permanent political consultation between foreign ministers. This was a considerable advance in the development of political dialogue. One of the most interesting experiences resulting from the presidential meeting was the so-called binational group. This was created in the course of the preparatory work for the visit and its aim was to discuss economic and trade integration between the two countries. The initiative came from Brazil.40 José Botafogo, then international advisor to Minister of Economy Delfim Neto, Celso Lafer, then an academic interested in issues of economic integration and liberalization, and diplomat Sergio Amaral discussed the idea of a working group on integration with Minister Delfim Neto, who reacted enthusiastically. Informal conversations started with a restricted number of Argentine friends. Among them was the future undersecretary of economic relations in the year preceding democratization Félix Peña, whose support for the issue was known. When Oscar Camilión became minister of foreign affairs in 1981, he supported the activities of the group, which informally gathered high rank officials, mostly at the level of undersecretaries. The legacy of the group is not clear, nor is its actual influence on future developments of integration. Discussions often hinged on trade balance rather than on

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liberalization or integration, reflecting the official priority of the time.41 However, two interesting ideas were generated. First, the group concluded that the private sector had to be actively involved in the integration process. Second, the nature and structure of the binational group reportedly provided inspiration for the design of the Common Market Group within Mercosur.42 After a number of meetings held over two years, the group reached the conclusion that Argentina and Brazil were not ready for economic integration and terminated its activity. While it is plausible that this experience had a very limited concrete impact upon the future of integration,43 it is also true that Félix Peña transmitted the files of the group to Jorge Romero, just before the latter became undersecretary for external economic relations of the new civilian administration in Argentina. Peña held discussions with Romero over three days. Much emphasis was put on the functioning of the group and issues of potential interest for the democratic administration were carefully highlighted and analyzed.44 There can be no certainty about how much of those conversations stayed with Romero. What is certain however is that ideas of integration and trade liberalization later received a good reception from Romero himself, future foreign minister Dante Caputo, and future president Raúl Alfonsín. The great merit of the binational group was to have initiated serious debate about economic and trade integration between Argentina and Brazil. For all the consequences it engendered and for the scope and nature of its achievements, the presidential visit of 1980 can safely be considered a solid confirmation of the new course of Argentine-Brazilian relations. However, is it possible to consider a period of nine months—from the Tripartite Agreement to Figueiredo’s trip to Buenos Aires—as sufficient to talk of turning point or watershed? Was reversal of these newly established amicable attitudes now virtually impossible? Historical comparison once again advises one to be cautious. The Uruguaiana agreement had also appeared to be a solid and enduring commitment, inaugurating a new era of friendly cooperation; this, too, was vigorously endorsed by Presidents Frondizi and Goulart one year after its signature. Moreover, the two presidents urged their foreign ministers to make their consultation system more effective and spoke copiously of the profound friendship and solidarity between the two peoples. Yet, when the commitment was tested against adverse circumstances, such as the U.S. pressure over the issue of Cuba and domestic tensions between the government on the one hand, and the armed forces and the most conservative sectors of society on the other, it did not last. Because of these internal and external pressures the spirit of Uruguaiana quickly evaporated and traditional ambivalence replaced concord. To assess how significant the rapprochement of 1979 and 1980 was, it should be tested against circumstances with the potential to disrupt bilateral relations.

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1.4.3

The Falklands/Malvinas War

The Falklands/Malvinas War was a serious test for the new course of cooperative relations between Argentina and Brazil. Argentina did not consult with or inform Brazil about its intention to invade the Malvinas islands. There is no doubt that Argentina was the aggressor, and this hazardous policy caused a certain resurgence of suspicion about Argentine imperialist ambitions in chancelleries across South America. Nevertheless, although Brazil officially took a neutral position, in practice it was rather sympathetic to the Argentine cause and provided diplomatic and material support. This imperfect neutrality was not determined solely by unconditional trust in the friendly relations recently consolidated with its neighbor. Feelings of continental solidarity may have played a part, but most of all Brazil followed the logic of national interest.45 On the one hand, Brazil did not want to jeopardize the new phase of good relations with Argentina, a key country for the success of any Brazilian diplomatic strategy in South America; on the other it did not want to jeopardize its relations with a major financial center such as London, and possibly with the United States and the European Economic Community. Foreign Minister Saraiva Guerreiro issued a declaration that incorporated the basic principles of Brazilian diplomatic action during the crisis. Brazil recognized the rights of Argentina over the Malvinas islands. The statement stressed the consistency of the Brazilian position, which had been first adopted in 1833, when Great Britain had occupied the islands with the use of force. Brazil at the time had instructed its representative in London to back the Argentine protest. The statement included three important aspects: first, Brazilian support of Argentina was not inspired by expediency but was grounded in a consistent position, maintained for over a century. Second, there was no mention of Argentine military intervention and this omission was a light form of dissociation from forceful occupation. Third, strong emphasis was given to the need for a peaceful solution to the conflict. The Brazilian stance was the result of careful strategic thinking, involving economic, political, as well as security considerations. First, from a geostrategic point of view, after the failure of mediation by the U.S. secretary of state Alexander Haig, the camps for and against the two opponents became clearer. Whereas Great Britain could count on the support of the United States, the EEC, and Chile, Argentina attracted the solidarity of all the other Latin American countries, of the Third World in general and of the Soviet bloc. The involvement of the latter was regarded with particular suspicion by Brazil. Had Buenos Aires been tempted to ask for Soviet or Cuban aid, the regional dispute would have turned into an East-West conflict, with the potential for direct intervention by the United States. Brazil sensed the danger and acted to

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minimize this possibility. Second, from a political and economic point of view, Brazil had no interest in exploiting a temporary Argentine difficulty to replace it as a supplier of meat, wheat, soya, and other cereals in international markets. Instead, economic aid and diplomatic assistance to Argentina were calculated to draw Buenos Aires further into Brasília’s political sphere and foster economic interdependence between the two countries. For all these reasons, Brazilian action during the crisis aimed at restoring the pre-conflict situation. Such an objective entailed the adoption of a partial neutrality, so to favor Argentina slightly, the weaker party in the conflict and the potentially more rewarding partner. Brazilian strategy materialized in diplomatic, economic, as well as military support. Itamaraty displayed its diplomatic action at both the bilateral and multilateral levels. Brazil took up the representation of Argentine interests in London when the two opponents broke off diplomatic relations.46 Brasília conducted an active lobby to dissuade the British from attacking the Argentine mainland, which would have brought an increase in Brazilian, and most likely broader South American, support to Argentina. A visit by President Figueiredo to Washington was scheduled for May 1982. Brazil was tempted to cancel the meeting as a protest against the United States’ solidarity with Britain, which operated, in the eyes of the South Americans, to the detriment of the U.S. hemispheric security commitment. However this might have compromised relations with Washington irretrievably. When it did take place, the meeting between Reagan and Figueiredo predictably neglected the Brazilian-U.S. bilateral agenda and concentrated on the crisis in the South Atlantic. Figueiredo was able to reiterate his request that Great Britain refrain from attacking the Argentine mainland lest this be perceived as an aggression against South America as a whole. At the multilateral level, Brazil used all the available forums to implement its diplomatic strategy and contain the negative consequences of the war on Argentina. Brazil insisted on the compulsory character of UN Security Council resolution 502. The resolution urged the cessation of hostilities, the withdrawal of the Argentine troops and the use of negotiation to solve the dispute. From the Brazilian point of view, and in accordance with the partial neutrality, the latter point did not entail a return to the status quo ante, provided that negotiations indeed directed toward a solution to the dispute and not merely to the immediate conflict. Also, within the Organization of American States (OAS), Brazil tried to maintain a pragmatic and balanced position. The final OAS resolution on the Malvinas strongly supported Argentine claims, but did not characterize British intervention as an attack on the continent. Therefore there was no legal base to invoke collective defense measures, as advocated by the hawk countries. Within the Latin American Economic System, too,

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Brazil sponsored the adoption of a moderate position. Brazilian diplomats were instructed to dissuade the other members from employing the “rhetoric of resentment” toward Great Britain and its allies, for this was prejudicial to good relations with the industrialized countries.47 Brazilian economic support resulted in concrete measures aimed at evading the economic embargo declared on Argentina by Britain, the EEC, and the United States. The ports of Southern Brazil were used to transit Argentine exports to their final destinations. Ironically, these facilities and infrastructures were those that Brazil had developed through the 1970s and had already contributed to a diversion of freight traffic from the port of Buenos Aires.48 Then Argentina had reacted with irritation and retaliation; now it was counting on them. Moreover, Brazil fought in multilateral forums to declare the economic sanctions illegitimate, arguing that they found juridical justification neither in UN Security Council resolution 502, nor in the UN Charter or GATT norms.49 Finally, Brazil granted Argentina limited but significant military assistance.50 What remains unclear is the extent to which military assistance was a response to precise political instructions as distinct from an unauthorized initiative of the Brazilian air force. Foreign Minister Saraiva Guerreiro explained that Brazil resolved not to concede the use of any naval or air base in its territory to units involved in war operations. The only authorized exceptions referred to emergencies, mainly concerning the rescue of crews in distress.51 The extensive use, with scheduled missions and dates, by Argentine war units of airfields in Southern Brazil may be attributed to a broad interpretation of the concept of emergency by the Brazilian air force. But Minister Saraiva Guerreiro later affirmed that this had been “a violation of the adopted political direction, which was, in military terms, neutral.”52 The new deal between Argentina and Brazil stood firm through a period of deep crisis. Back in the 1960s, the agreement and spirit of Uruguaiana had been abandoned because of internal opposition and disagreement on international questions, most of all U.S. policy toward Cuba. Now, unilateral aggression by the Argentine junta in the South Atlantic challenged Brazilian commitment to closer association with Argentina. However, Brazil resisted emotional reactions and judged the situation using its own national interest as the guiding criterion. Good relations were maintained only partly because of feelings of continental fraternity. The most powerful reason was that close association satisfied the needs and interests of both nations. This was the root of the strong political will indispensable to friendly cooperation. The strength and endurance of political will cannot be measured or evaluated against a single episode, even one as significant as the Tripartite Agreement. Political will needs to emerge, to be consolidated, and to be tested in adverse circumstances. The latter criterion is particularly important to establish

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whether political will is just the result of contingent events or emanates from more permanent interests and commitment. Only the combination of the Treaty of Itaipú (emergence), the presidential meetings of 1980 (consolidation), and the Malvinas War (verification test) can be considered a decisive turn in Argentine-Brazilian relations.

1.5

Conclusion

Throughout their history, Argentina and Brazil have competed for supremacy in the Plata Basin and, broadly, in South America. However, their relations have not been in a perennial state of tension. In addition to the rhetoric of hemispheric unity, Argentina and Brazil have undertaken a number of attempts at subregional political coordination and economic integration. Perhaps, the real difference between these undertakings and the integrationist project of the mid-1980s lay indeed in the fact that the latter was successful. The mixed record of rapprochement and competition continued through the 1970s, although in this decade feelings of animosity prevailed over the desire for concord. This chapter has identified and discussed three false views about the turn of Argentine-Brazilian relations from competitive to cooperative. The first of these was that the quarrel over the water resources was the principal if not sole source of Argentine-Brazilian conflict throughout the 1970s. Instead, it has been shown that there were deeper sources of friction, mainly arising from long-term changes in the international position of the two countries and their relative economic status. At the beginning of the twentieth century Argentina had been a flourishing economy and the established power at the regional level, while Brazil trailed. From the 1930s Brazilian economic development took off, while the Argentine economic model, and consequently its potential for external projection, was reaching exhaustion. Between 1960 and 1980, differences in economic performance widened. Argentina lacked the resources to compete successfully. The economic gap altered the regional balance of power and this provided the real essence of the tensions between the two countries. In the mid-1970s, the growing economic and political preponderance of Brazil in the region, the redefinition of the bilateral links of Argentina and Brazil with the United States, and the quarrel over the uses of water led the Geisel administration to reject the traditional paradigms and adopt a hard stance toward Buenos Aires. However, the reversal of the traditional policy vis-à-vis Argentina proved to be ineffective, if not counterproductive, when faced with the volatile international circumstances of the mid- and late 1970s. Ironically, Geisel’s rigidity facilitated a reconsideration of bilateral relations by the Figueiredo administration.53 This exercise resulted in the construction of new paradigms in the late 1970s, which eventually led

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to the rapprochement of 1979–1982, and were later maintained and consolidated under the democratic administrations. The gradual evolution of mutual perceptions and foreign policy approaches calls into question a second common interpretation: the role of the Tripartite Agreement as the engine of rapprochement. The resolution of the differences over Itaipú did not change as such the sign of Argentine-Brazilian relations, and the adoption of new paradigms did not occur instantly. Instead, international and domestic elements slowly but surely contributed to the emergence of a new approach to bilateral relations. A closer association between the two countries became a fundamental element of their national interest. Therefore, the solution of the Itaipú dispute alone cannot be considered a decisive turning point. The turn was long and covered the years from 1979 to 1982. But perhaps the question is ill-posed. It was not the solution to the Itaipú problem that prompted a new course in Argentine-Brazilian relations; instead it was a firm political will that gave rise to a new course in ArgentineBrazilian relations, the first manifestation of which was the signature of the Tripartite Agreement. A third and final misunderstanding concerns the relationship between Itaipú and Argentine-Brazilian integration from the mid-1980s. The Tripartite Agreement and the accords of 1980 have been regarded as the nucleus of what would be Mercosur.54 This view was reinforced by the fact that an important aspect of the rapprochement was the development of closer relations between civil societies. The Brazilian entrepreneurs who accompanied Figueiredo to Buenos Aires negotiated a number of commercial deals with their Argentine counterparts. A few months after the Malvinas War, a joint Argentine-Brazilian entrepreneurial meeting in São Paulo put forward the idea of fostering economic integration through sectoral agreements. Despite being significant events and bearing some similarities to the process of Argentine-Brazilian integration of 1986, none of these constitutes a decisive indication of undertakings comparable to Mercosur. First, the Itaipú Treaty and the nuclear agreements of 1980 eliminated major security obstacles to further cooperation.55 They were a necessary condition for, but did not amount themselves to, political or economic integration. Second, the 1980 economic commitments agreed in Buenos Aires were extremely limited in scope and did not represent a breakthrough as compared to previous bilateral conventions; in addition, they raised strong opposition in Argentina and resulted in scant implementation. As for the São Paulo proposal, the idea of sectoral integration dated back to the times of Castello Branco and, as in 1967, did not command any immediate consensus. What is noteworthy is that between 1979 and 1982, in the wake of political rapprochement, a lively discussion about modalities and instruments for closer integration took place within political elites and civil

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society more generally. Agreements on double-taxation and mutual investments were concluded, but both Oscar Camilión and Ramiro Saraiva Guerreiro, foreign ministers of Argentina and Brazil during the late military period, have dismissed the idea that the integrationist project started during those years.56 The former insists that no discussion regarding a free trade agreement or customs union was ever put forward under the military. The latter recalls that times were felt to be premature for such an undertaking.

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CHAPTER 2

The Genesis of the Argentine-Brazilian Bilateral Integration (1983–1986)

2.1 Introduction When did bilateral integration between Argentina and Brazil begin? How was the process started? Contending arguments have been put forward in the literature and the aim of this chapter is to provide an original answer to these questions about the diplomatic history of Mercosur. The resolution of outstanding major security concerns (nuclear agreements and Plata Basin arrangements), together with a number of initiatives calculated to revitalize trade exchange have led some scholars to identify the turn in bilateral relations of the late 1970s and early 1980s as the starting point of the integration process later to be formalized under the democratic rule in 1986.1 However, both Oscar Camilión and Ramiro Saraiva Guerreiro, foreign ministers of Argentina and Brazil, respectively, during the late military period, rejected this argument.2 Other scholars have given the credit for the launch of the integration process to the newly democratic administrations, and have identified the summit at Foz do Iguaçu, in November 1985, between Presidents Alfonsín of Argentina and Sarney of Brazil, as the starting point of bilateral integration.3 Despite their different historical interpretations, these approaches do not sufficiently emphasize that integration is a gradual process and perhaps miss the importance of what occurred between diplomatic rapprochement and the formal beginning of integration. The two concepts do not necessarily coincide. It is possible to have a diplomatic rapprochement without integration, and this is just what happened between Argentina and Brazil in the period 1979–1982. However, diplomatic rapprochement and integration are not completely unrelated either, since the former appears as a necessary precondition for the latter. Here an alternative argument is offered. It acknowledges, and draws upon, some aspects of the previous contributions, but most of

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all highlights the importance of the seminal period between 1983 and 1985. On the one hand, it is true that the roots of Argentine-Brazilian integration may be traced back to the period 1979–1982, in that the elimination, or strong retrenchment, of security concerns is a first indispensable step toward political dialogue and economic cooperation. But the turn in bilateral relations of the late 1970s and early 1980s is not a precedent of the 1986 integration, as there is no direct link between the two events. The new circumstances that emerged between 1979 and 1982 certainly represented a necessary, although not sufficient, condition for any integration project.4 On the other hand, and of the utmost importance, at Foz do Iguaçu, the two presidents announced their will to create an integration scheme, but it is unthinkable that they came up with this idea out of the blue. The Iguaçu declaration must have been the climax of talks and negotiations that secured a convergence between the two countries. That means that the pursuit of integration had already been decided, elsewhere and at an earlier stage. So far it has been established that no attempt at integration was discussed so long as the military were in power in both countries, and that bilateral integration was announced in November 1985 and formalized in July 1986. Logically, it follows that the integrationist idea must have been conceived and discussed somewhere between the return to democracy of Argentina in December 1983 and the summit at Iguaçu in November 1985, and this is precisely the argument presented here. Also, the first ideas and sketches must have been developed and finalized between November 1985 and July 1986, when the first formal integration agreements were in fact signed. This chapter focuses on the period between 1983 and 1986. The central aim is to give a clear and comprehensive account of the reasons, the major issues, and the facts and events marking the genesis of ArgentineBrazilian bilateral integration. Particular attention will be paid to relatively under-investigated aspects and to historical questions still partly unresolved, such as the relations between different institutions and agencies within the governments of the two countries. The relationship between the president and the Foreign Ministry apparatus is of particular importance in this respect both in Argentina and in Brazil. Also, prominence will be given to the role of key individual players in the process. The contribution of the human agent, and the values and interests of the institutions he or she represents are often downplayed in International Relations, but they can help fill important explanatory gaps. The chapter is articulated in two main parts. In the first, discussion hinges on one main question: Why integration? Analysis initially targets long-term factors that facilitated Argentine-Brazilian understanding in the first half of the 1980s by creating common interests and challenges in international affairs as well as domestically. Then, investigation moves

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on to the differences characterizing the Argentine and Brazilian authoritarian and transitional experiences. This combination of commonalities and discrepancies resulted in differing strategies of international insertion in the two countries, an analysis of which follows. Then the motives leading to the decision to integrate at that specific historical moment are dissected. The second part of the chapter focuses on how integration was achieved and addresses another set of fundamental questions: When and how did the two countries decide to embark on the process? Who conceived the idea and took the initiative? The first section analyzes the year of regime asymmetry between the return to democracy of Argentina and that of Brazil. The second section investigates the diplomatic advance leading to the Declaration of Foz do Iguaçu in November 1985. The third and final section explores the phase of intense and mostly informal negotiations that led to the signature of the integration agreements of July 1986.

2.2

Why Integration?

Newly democratized Argentina and Brazil shared many systemic constraints and predicaments. This increased the feeling of commonality and shared interests that democracy would bring to fruition. However, differences in the political and economic legacy of the military rule as well as in the modality of transition drove the two countries toward distinctive readings of reality, which resulted in the formation of specific interests and priorities. As a consequence, the ends and means of their respective foreign policy also differed. Whereas in Brazil change in foreign policy was a contingent adjustment in the framework of a general continuity, in Argentina foreign policy guidelines were completely reversed and revolutionized. Interestingly, this mix of common and divergent motivations also resulted in compatible and even complementary approaches to integration.

2.2.1 International and national factors of convergence between Argentina and Brazil In the first half of the 1980s, commonality of perceptions in the two countries facilitated dialogue and understanding. These commonalities came from a varied set of political, economic, technological, and security factors, which displayed their effects and consequences on the internal as well as the international plane. In the political sphere, democratic consolidation and relations with the United States were prominent on the agenda. Reacquired democratic status was arguably the most powerful factor of convergence between Argentina and Brazil. Internally, the search for the acquiescence of, and accommodation with the military,

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the implementation of the rule of law, and the achievement of satisfactory economic performance were common problems in Buenos Aires and Brasília. Most of all democracy spread a sense of common identity and shared destiny, which resulted in mutual sympathy with each other’s concerns and expectations. Externally, the pursuit of democratic consolidation materialized in common positions on peace and disarmament and in efforts to establish good and friendly relations with as many countries as possible. A highly sensitive issue was the quest for political support, technical assistance, and, most of all, economic aid from the industrialized world (namely the United States and Western Europe) to strengthen the new regimes. Argentina and Brazil soon realized that their reacquired democratic status made little or no difference to the logics of North-South relations and their dealings with multilateral organizations. Pooling of resources therefore became more and more attractive. Additionally, both Argentina and Brazil were in search of smooth yet pragmatic relations with the United States. On the one hand, both countries wished to secure U.S. support for two key issues: their democratic transition in a period of recrudescence of the Cold War and the reschedule of their huge foreign debt, which constrained economic policy. On the other hand though, a degree of autonomy from the United States was required too for an independent foreign policy. This entailed, in particular, the rejection of East-West logics, especially in the Central American conflict, the exercise of a leading role in the North-South dialogue, and the sponsoring of disarmament. Shared concerns vis-à-vis the United States reinforced the idea that a common front would better defend Argentina’s and Brazil’s interests internationally. In the economic sphere, long-term forces and circumstances specific to the first half of the 1980s were at work. The debt burden, competition on the world markets, and the exhaustion of the existing development models provided Argentina and Brazil with common challenges but also with incentives to find common solutions thus promoting closer relations. The 1970s world economic crisis resulted in adverse conditions for economic development. Financial instability and the worsening of the terms of trade for commodities exports affected Argentina and Brazil. In particular, foreign debt, largely contracted under the military, subjected the development projects in both countries to the creditors’ policies; it also limited their capacity to mobilize resources for investment. Although Argentina and, most vigorously, Brazil long maintained that each debtor should find an appropriate individual solution, the issue united the two countries in multilateral forums. Besides, debt increased shared interests in one very practical respect. Debt service repayment eroded reserves of foreign currency, making the purchase of technology, namely instrumental and capital goods, from industrialized countries

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extremely expensive. If Brazil and Argentina had been able to provide each other with these types of goods at acceptable conditions of quality and price, there was considerable room to divert trade toward regional productions.5 Argentina imported metallurgical goods and Brazil capital goods and food. Both countries were reliant on industrialized countries for automotive parts. At the same time, both possessed technological and productive facilities of reasonable standards, and with some upgrade could meet each other’s needs. Additionally, this would improve industrial efficiency through bigger scale production for an enlarged market. This specific aspect of the debt issue and the ensuing considerations would later be key factors in the shaping of Argentine-Brazilian bilateral integration Increasing competition on the world markets and the decline of the development models adopted under the military administrations provided Argentina and Brazil with additional reasons to look at each other as potentially close partners. The United States and the European Economic Community (EEC), two traditional markets for Argentine and Brazilian goods, increased protectionism, targeting both agricultural produce and manufactured goods. Furthermore, these industrialized countries accompanied protectionism with export incentives to facilitate national producers’ competitiveness in third markets. This situation was a stimulus to forms of South-South cooperation in two ways. First, the search for new markets reinforced the Latin American orientation of Argentina and Brazil, and induced them to look at each other’s market. Second, suffering from the same setbacks and complications in the world trade, the two countries coalesced in defense of their common interests within multilateral economic arenas. Internally, the economic situation was not much better. This was partly due to the international conditions, but also to the exhaustion of the economic models developed by the respective military regimes. Minister Martinez de Hoz had tried to revive the development model based on agricultural and commodities export that had made Argentina an economic power at the beginning of the twentieth century. Obviously, times had changed and the result was a catastrophic dismantling of industrial capacity, huge rates of unemployment, and a general negative trend of all the main economic indicators. In Brazil, import substitution industrialization (ISI), which had generated the economic miracle of the 1960s and early 1970s, was no longer sustainable and by the end of the 1970s had led to depressed growth rates and huge social costs. Despite different economic trajectories, the two countries shared an imperative need for new paradigms of development, including industrial modernization, investment reactivation, and anti-inflationary and macroeconomic stabilization plans. These common requirements reinforced the attractiveness of a closer association.

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In the area of technology, fast-paced development led Argentina and Brazil to closer positions. By the mid-1970s it was becoming clear that sustainable and successful development could not be based on metallurgy, petrochemicals, or automotives, but required investment in the most advanced technological sectors, such as informatics, biotechnology, and new materials.6 Brazil undertook huge investments to develop a national informatics and aerospace industry. Argentina was more successful in developing nuclear technology. However, technological research is extremely expensive and requires investments in equipment as well as in human resources. The burden of debt and the reluctance of industrialized countries to sell sensitive technology limited the possibility of technological progress. The pooling of financial and knowledge resources appeared a sensible solution. Finally, the redefinition of security concepts and military strategies was a direct corollary of the political, economic, and technological considerations. The shared guiding principles of the Argentine and Brazilian foreign policies, such as democracy, nonintervention, and nonalignment, required a renovation of continental geostrategy. Argentina and Brazil shifted their geopolitical pivotal area from the Plata Basin to the South Atlantic.7 A deep reorganization of, and a new role for, the armed forces were as necessary as the creation of solid mechanisms for their submission to the civilian power. Moreover, the economic crisis directly affected the armed forces through significant cuts to military budgets.8 Additionally, technological advance affected the military too. In the 1970s, the United States pushed for the Argentine and Brazilian armies to restrict their functions to internal defense and antiguerrilla fighting. Also, the United States refused to supply technologically sophisticated material. This left the armed forces in the two countries with obsolete equipment and common resentment toward the United States, and opened possibilities for bilateral cooperation. Given the high cost for the production of modern armaments, cooperative undertakings appeared an adequate form to guarantee supply to both armed forces.

2.2.2

Differences in authoritarian legacies and modality of transition

There are at least four elements against which the differences in the conduct of the military governments in Argentina and Brazil can be assessed: Foreign policy preferences and consistency, the economic and development models, the degree of violence and violation of human rights, and the transition process. The management of foreign policy in Argentina reflected the broader incongruity of the military administration. Internal conflicts between the three branches of the armed forces and the lack of a clear design of national

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development often resulted in erratic foreign policy. General Videla tried to balance declared anticommunism, cooperation with the Soviet Union, and ambiguous positioning toward the United States. General Galtieri invaded the Falklands/Malvinas islands with deleterious consequences while reiterating the anticommunist rhetoric and seeking alignment with the United States. On the Brazilian front, Videla immediately sought for rapprochement, but did not refrain from small political and economic disturbances to pursue the dispute over Itaipú. After the idyll of 1979 and 1980, Galtieri, distracted by the U.S. sirens, neglected Brazil for a while and then asked for its aid during the Falklands/Malvinas conflict. By contrast, Brazilian foreign policy was substantially coherent. National development was consistently the rationale for foreign policy preferences. Despite some adjustments and contingent deviations, namely Castello Branco’s pro-U.S. fervor, the military regime maintained a general continuity in the principles guiding its foreign policy: rejection of automatic alignment to the United States, ideological neutrality in the East-West confrontation, pragmatism in relations with the rest of the world, a leading role in the North-South dialogue, and the quest for technological autonomy. Many of these features were appropriate to face the international scenario of the mid-1980s. The economic policy record of the Brazilian military was mixed. On the one hand, they have to be credited for the economic miracle of the 1960s and early 1970s. On the other, one of the reasons why they took power was to halt inflation, which had risen to almost 90 percent by 1964.9 Yet in the last years of authoritarian rule inflation was well beyond 200 percent and had become a leading reason to hand over.10 Also, the military government, despite having the major responsibility for the accumulation of the foreign debt, largely used this to finance national development. Finally, the Brazilian military promoted an active national industry in the fields of informatics and aerospace, a positive legacy to compete globally. By contrast, the economic policy of the Argentine junta was a complete failure that caused a fall in industrial productive capacity and a general deterioration of all economic indicators. The Argentine military were responsible for contracting a huge foreign debt too, but unlike their Brazilian counterpart, they used it to finance imports in order to back their disastrous economic policy. No investment in high technology was undertaken except in the nuclear sector, which did not prove to be a particularly useful asset to face the problems of post-transition. The Argentine dictatorship will also be remembered for its gross violations of human rights and ample recourse to torture. Depending on the sources, between ten thousand and thirty thousand people were killed or disappeared between 1976 and 1983, out of a total population of less than thirty million. In Brazil, violations of human rights also occurred,

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but did not reach such high figures. It is estimated that between three hundred and five hundred people were killed or disappeared between 1964 and 1985, out of a population of around one hundred and twenty million.11 Finally, the different modalities of transition contributed to shaping the scenarios in which the newly democratic governments moved their first steps. In Brazil, the process of abertura started as early as 1974. Transition was negotiated between government and opposition, but also involved significant sectors of civil society, such as unions, professional associations, and the Catholic Church. Dialogue gradually prepared society for political management. In the administrative elections of 1982, the opposition won ten states out of twenty-seven. By 1983, the modification of the national security law, the increasing autonomy of the political parties, the pressures coming from the civil society, and the movement diretas já, for obtaining direct presidential elections, signaled that the democratization process was coming to maturity. When the military withdrew, they were granted impunity, and they maintained respectability and a prominent political role in newly democratized Brazil. The Argentine junta, on the contrary, did not prepare or plan any sort of transition but fell as a direct consequence of the defeat in the South Atlantic and popular protest. Also, the “dirty war,” conducted domestically to extirpate communism, dismembered Argentine society: political parties were banned, opposition activities prohibited, and social movements developed only as spontaneous forms of collective protest against the regime’s brutality. In the end, the Argentine military, defeated, despised, and discredited, were dismissed and tried in court. They left the country in economic and social disarray, politically and diplomatically isolated. Transition was very brief, and winners and losers were clearly distinguishable.

2.2.3 The Argentine perspective and international insertion strategy Looking back from the vantage point of 1996, Raúl Alconada Sempé, undersecretary of Latin American affairs in the Alfonsín administration, and a prominent member of the Unión Civica Radical (UCR), the ruling party, summarized in five points the international scenario the Argentine democratic diplomacy had to face on coming to power on December 10, 1983. First, Chile, Brazil, Paraguay, and Uruguay were still under military rule. Although undergoing different degrees of political liberalization, these governments looked with suspicion at the Argentine democratic process, and, most of all, at the opening of judicial procedures for human rights abuses. Second, the United States and the EEC were still outraged over the Falklands/Malvinas aggression, and were apprehensive of the

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Argentine nuclear programs. The outcome of democratic transition was not predictable at that stage. Third, Latin American countries, despite a general solidarity with the Argentine claims in the South Atlantic, maintained a cautious position. Fourth, East-West confrontation was the main preoccupation of the superpowers, which largely assessed regional issues and conflicts from this perspective. Fifth, the economic scenario appeared bleak, with debt, protectionism by industrialized countries, and deterioration of the terms of trade for developing countries.12 The main international concerns of the Radical administration were political rather than economic. It was believed that the scenario described by Alconada Sempé could have a negative impact on Argentine political stability.13 The strategy elaborated by President Alfonsín and his foreign policy team, led by Chancellor Dante Caputo, primarily aimed at the reshaping of the country’s image and the promotion of peace and human rights. The guiding principles on which the military had built their foreign policy were fully revised.14 Foreign Minister Caputo elaborated a basic definition of both what Argentina was and its fundamental and permanent foreign policy objectives. Argentina was a Western, nonaligned, and developing country.15 According to President Alfonsín, the West “is a historical configuration, the central values of which for us have to be respect for man, tolerance for diversity, freedom of opinion and belief, and equal enjoyment of civil and social rights.”16 Identification with the West consisted of values, beliefs, and lifestyles, and there was no contradiction between this and also being a non-aligned country; in fact, neither condition meant a strict affiliation with either superpower. The acceptance of its developing status rescued Argentina from the persistent chimera of identification with Europe and fostered the articulation of alliances within its geopolitical frame: Latin America.17 The main objectives of foreign policy were political independence, peace, and economic and social development.18 An effective political independence was to be achieved through rejection of isolationism and close association with those countries sharing the same problems and aspirations. The call for Latin American solidarity and integration was evident. The quest for peace was understood as a proactive commitment to promote peaceful settlement of conflicts, disarmament, justice, and respect of international law. Overall, the axis and final end of the whole Argentine foreign policy turned to be the consolidation of democracy.19 In one of the first meetings of the foreign policy team, it emerged that external clashes were likely to raise fascist and nationalist reactions within the Argentine society.20 Once the war in the South Atlantic was lost, there remained two hot spots, Chile and Brazil. The dispute with Chile over the frontiers in the Beagle Channel was perceived in Buenos Aires as a serious security problem, while differences with Brazil mostly concerned the economic sphere. Also, the conflict in Central America

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was believed to have possible repercussions for Argentine stability. At the beginning of 1984, these were the three main areas of concern within the Chancellery, which undertook significant initiatives, both at the bilateral and multilateral level, to address them. Bilaterally, the signature of the 1984 Peace and Friendship Treaty resolved the dispute with Chile over the Beagle Channel, leading to a gradual normalization of mutual relations. Then, the Argentine administration turned its attention to the other neighbors in the Southern Cone. The close historical links with Uruguay were further strengthened and early consultation on the debt negotiations and bilateral cooperation projects were launched. The start of negotiations with Brazil is the subject of the section titled “When? How? Whom?” in this chapter. Overall, President Alfonsín visited more than twenty-four countries during his first three years in office; he also promoted conferences and international gatherings focusing on democratization and human rights. At the multilateral level, Argentina was very active wherever there was an opportunity to pursue the objectives of its foreign policy. One of the first initiatives by the Alfonsín government was a common front with Brazil on debt rescheduling. In May 1984, Caputo traveled to Brazil, where he found a large coincidence of views between Presidents Alfonsín and Figueiredo on the main international issues of concern. Caputo recommended addressing a joint note signed by a large number of South American presidents to the G7. Minister Saraiva Guerreiro drafted the note, Colombia offered a venue for the formal signature at Cartagena de Indias, and in June the same year the declaration creating the Cartagena Consensus on foreign debt was signed.21 Even before taking office, the UCR had expressed its support for the Contadora Group, which was trying to broker peace in Central America.22 The Argentine national interest in Central America lay in the fact that an East-West skirmish in the continent could affect its own political stability. Additionally, this was an opportunity to remove the bad reputation derived from the Argentine military’s interventions in Central America, and also to reciprocate the solidarity received during the conflict in the South Atlantic. Argentina terminated all support to the Nicaraguan contras and redirected its aid toward the Sandinistas, while strengthening its rhetoric against superpower interference. However, after the “realist turn” of mid-1984, Argentina decreased its direct involvement. On the one hand, it was not wise to irritate the United States, whose support for a solution to the debt problem and for democratization was vital. On the other, excessive exposure in Central America was agitating the domestic right. The Argentine authorities then insisted on the need to reinforce the existing instruments for peace, and, on the back of successful political “multilateralisation” in Cartagena, convinced Brazil, Peru, and Uruguay to establish the Support Group.

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2.2.4 The Brazilian perspective and international insertion strategy The long and gradual Brazilian political opening resulted in a steady and gentle evolution of foreign policy. No radical revision of the traditional guiding principles was undertaken. Brazilian external projection proved to be durable rather than contingent.23 Foreign policy was not even an issue during the presidential election won by Tancredo Neves. Nonetheless, democratization added two important elements: the necessity for Brazil to create a new image of a peace-loving state and reliable democratic partner, and the consolidation of the new regime, although the latter was not as pressing a need as in Argentina. By practicing democracy domestically, Brazil could credibly advocate a major democratization of international relations, which was a traditional issue at Itamaraty. “Today we can advocate greater justice in the international order, the elimination of poverty and underdevelopment, the diminution of inequalities among countries, since the social dimension turned into an important element of our internal policies too.”24 Itamaraty’s plan of presenting Brazil to its neighbors as a guarantor of peace and democracy and as a global non-aligned trader was effectively pursued at the bilateral and multilateral levels, the new democratic regime adding new emphasis on the latter. On the bilateral front, president-elect Neves met thirteen heads of state in little more than two weeks before his inauguration. His successor, José Sarney, continued to attach great relevance to Latin American affairs. 25 In 1986, Brazil reestablished diplomatic relations with Cuba after twenty-two years. In 1987, Sarney visited Mexico, Venezuela, and Peru. Negotiations for cooperation agreements were initiated with Colombia, Bolivia, Ecuador, and Venezuela. Presidential visits were paid also to minor partners, such as Guyana and Surinam, attempting to reach political convergence. Also, for the sake of the democratic offensive, Brazil suspended the sale of arms to Pinochet’s Chile, formerly a close ally, and started to exert a certain pressure for political liberalization on military-led Paraguay. Warm relations characterized the interactions with democratizing Uruguay. Frequent political, military, and economic contacts as well as periodical consultations became a rule even before the formal association of Montevideo to the integration project undertaken with Argentina. What remained unsolved was the redefinition of relations with the United States. The latter was choosing Mexico as its new privileged interlocutor in Latin America due to geographical proximity and the unstable situation in Central America. The United States was also redirecting its industrial and financial investments toward Mexico. Moreover, divergent positions in Central America and trade controversies in the informatics and pharmaceutical sectors embittered bilateral relations. The break up

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of the paradigm of privileged alliance with the United States prompted in Brazil a renewed political and economic interest in South America, and Argentina in particular.26 Multilaterally, Brazil signed a number of international conventions signaling its democratic commitment.27 In October 1986, Brazil proposed and the UN General Assembly approved a motion for the creation of a South Atlantic Zone of Peace and Cooperation. Upon insistence by Foreign Minister Caputo, Brazil also accepted to sponsor the formation of the Group of Cartegena, although it continued to favor bilateral negotiations on debt and always opposed any claim of default. In 1985, Brazil affiliated to the Contadora Support Group. Brazilian economic and strategic interests in Central America had traditionally been low, and political visibility of the issue within Brazilian society was limited. Therefore, Brazil adopted a “reactive policy and discrete solidarity.”28 The Figueiredo government carefully avoided entering problematic situations during its final period in office. Upon insistence by Caputo, eager to foster Argentina’s international insertion, the Sarney administration finally gave its green light. The Brazilian role increased when the early goal of facilitating the peace process in Central America was broadened to include ensuring successful democratic transitions throughout the region.

2.2.5

The momentum for integration

Several factors created commonalities and compatibilities between Argentina and Brazil in the mid-1980s. The elimination of mutual threats to security, the increasing convergence of interests on multilateral issues, Argentine recognition of Brazilian political and economic power, and the almost simultaneous return to democracy facilitated political understanding. These were very propitious circumstances, but the outcome of political rapprochement was by no means discounted.29 The absence of economic interdependence seemed to be the major impediment rather than a stimulus to integration: Bilateral trade was languishing and concentrated on a few items; mutual investments were scarce. In 1984, out of 10,000 tariff codes, 6,000 were subject to restrictive measures or even prohibited in bilateral trade.30 The volumes of bilateral exchanges had declined sharply: from US$ 1.091.000 in 1980 to 547.000 by 1985.31 Also, the relative importance of bilateral trade as a percentage of the total trade of each partner had steadily decreased in the period 1979–1983. Argentina’s exports to Brazil fell from 11.3 percent in 1979 to 4.2 in 1983, while its imports decreased from 9.8 to 8.3 percent in the same period. Brazil’s exports to Argentina went down from 4.7 percent in 1979 to 3.0 in 1983 while imports fell from 5.0 to 2.2 percent of the total over the same period of time.32 Interdependence was negligible.

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This situation was determined by “a low level of mutual attention and trade policies which were dominated by short-term considerations.”33 Moreover, bilateral exchange was very imbalanced, Brazilian exports to Argentina were composed of 70 percent of manufactured goods and 30 percent of primary products, while Argentine exports consisted of agricultural and food produce for about 70 percent.34 Between 1980 and 1985, this resulted in consistent trade surpluses in favor of Brazil. So what concrete reasons made Argentina and Brazil opt for integration? What practical motivations lay behind the choice of accelerated political rapprochement and close economic cooperation? In the preamble to the July 1986 Acta de Buenos Aires, establishing the Programa de Integración y Cooperación Económica (PICE), two main motivations can be identified: the “consolidation of democracy as a system of life and government” and the pursuit of “growth and development with stability.”35 Integration was one of the tools to achieve these goals. As a corollary to the point on development, a third element can be added: the competitive insertion in the global economy, the importance of which would grow steadily to become a prominent consideration in the early 1990s. In Argentina, political and economic reasons matched perfectly, although the latter appeared subordinated to the former. Carlos Bruno, Argentine undersecretary for economic integration between 1985 and 1987, recalls that the priority of Alfonsín’s foreign policy was the consolidation of democracy.36 Integration with Brazil, and the consequential elimination of the hypothesis of conflict between the two countries, would diminish the room for military maneuvering in the political sphere.37 At the same time, the Argentine leadership observed a change in models of production at the world level. The creation of a regional space was inspired by the combination of these two considerations. Reacquired democracy and international credibility were an opportunity to establish closer ties with Brazil and take advantage of this association for economic reconstruction and redressing sectoral imbalances in bilateral trade. Indeed, the protocols signed under the PICE were far from being even-handed between the two parties; the logic of redressing imbalances favored Argentina in relative terms, but was accepted by Brazil, which had nothing to lose. Paradoxically, whereas limited economic interdependence could have been an obstacle to integration in a purely economic perspective, from a political point of view, the strong will to redress trade disparities turned out to be a powerful engine for bilateral integration. Also, Argentina had no economic or political option other than turning to Brazil. Politically, relations with the United States and the EEC were still tense following the Falklands/Malvinas episode. Commercially, U.S. agricultural and food produce were similar to those of Argentina, thus limiting exports to that market, while the EEC was a competitor in the world market of

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meat and cereals and offered them at subsidized prices. By exclusion, Brazil was somehow a forced option. Brazil, instead, was moved preponderantly by political motivations. It had little to gain from an economic association with Argentina. On the export side, the Argentine market was one of restricted size; on the import side, Brazil was mostly interested in wheat and oil, but Argentina had made it clear that it did not want to consolidate a disadvantageous exchange pattern of primary goods export versus manufactured imports. So what political motivations were so strong as to convince Brazil to accept an economic agreement with so little prospect of gain? Integration was understood in Brasília primarily as a strategy of international insertion.38 The reformulation of international economic relations between the mid-1970s and the mid-1980s left Brazil with considerable economic potential and little political weight to defend its interests as an exporting country. Brazil needed to gather the weight of the region to compete at the world level. But the rest of the continent had long perceived authoritarian Brazil as an aggressive player. Its economic expansionism and its association with Nixon and Kissinger had aroused considerable mistrust. In turn, Argentine democracy was gaining increasing popularity in the continent, and it represented a good opportunity to acquire renewed reputation and appeal. To have its main regional competitor as a preferential partner was a double asset for Brazil: It removed the only source of possible rivalry in the subcontinent and spread an image of a peaceful, cooperative, and fully fledged democratic country. Another strong, although slightly more controversial, political motivation for Brazil was the consolidation of democracy. It has already been remarked that this was not as pressing a need as in Argentina. However, José Tavares de Araujo, executive secretary of the Brazilian Customs Policy Committee at the Ministry of the Economy from 1985 to 1988, recognized that the need for checking possible military discontent or resurgence was present in Brazil too.39 Celso Lafer, ex-foreign minister of Brazil and eminent scholar of international politics, affirmed that the main rationale behind Argentine-Brazilian relations at that time was the strengthening of both regimes, also through the weakening of the military. Consequently, the decision to integrate emanated from both the deep forces and enduring interests of Brazilian foreign policy and the contingent element of democratic consolidation.40 Yet Ambassador Paulo Tarso Flecha de Lima, secretary general of Itamaraty between 1985 and 1990, concluded that integration was not primarily pursued “to strengthen the new regime, but to assert our position in South America.”41 This view is to be preferred also because it was so perceived in Argentina too.42 The observation of incipient globalization was also a common element in Argentina and Brazil. The two political leaderships understood

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the need to face international slumps and the proliferation of multilateral trade rules. Also, decision makers in the two countries sensed that the world was moving toward a process of competition between cohesive trade areas. Between 1985 and 1986, the European Community launched a process of strong consolidation, and the Association of South-East Asian Nations (ASEAN) was increasingly perceived as an area of influence of Japan. Francisco Thompson Flores, Itamaraty undersecretary general in charge of economic relations, announced at the end of 1986 that Argentina and Brazil would design a common defense system in relation to third markets.43 Also the entrepreneurial elites in the two countries expected the newly created bilateral integration to be able to face competition with the United States, EU, and Japan within ten years.44 However, at that time, concepts such as globalization and regionalization were not exactly defined, and often intermingled in the analysis of the Argentine and Brazilian leaders. Nonetheless, a Southern Cone regional scheme was seen as a means to face this new order and avoid being neglected on the world stage. So far, the explanations provided have been explanations “from within,” regarding either local development or the assessment Argentina and Brazil made of the international reality. However, there is one very important factor, genuinely “from without,” that made the ArgentineBrazilian integration, and later Mercosur, possible, and that is the position of the United States. The role and policies of the United States have been fundamental in shaping Latin American history through the twentieth century. Logically, the integrationist project in the Southern Cone had somehow to count on the U.S. green light in order to be successful. The rapprochement, and later the integration, between the two big powers of the region prompted a mixed reaction of concern and interest in the United States. Ambivalent feelings in Washington consistently accompanied the process, without major shifts. John Rosembaum, of the U.S. Trade Representative Office, expressed support for the ArgentineBrazilian integration program but, at the same time, feared possible trade discrimination toward third countries, and complained about the methodology of integration, which was, he felt, a possible impediment to trade expansion.45 More specifically, U.S. political and economic fears concerned the possible turn toward a revolutionary path of the newly democratized governments in South America, and the transformation of the process of rapprochement between Argentina and Brazil into an embryonic club of debtor countries. The first fear was fed by the anti-imperialist rhetoric and the activism in Central America that characterized the first phase of the Alfonsín administration. The realist turn in Argentine foreign policy, in 1984, and the adoption of the Plan Austral to stabilize the economy in 1985, reassured the North Americans. Regarding debt, soon after the meeting at Foz do Iguaçu with Sarney, President Alfonsín

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issued a statement on the deficiencies of the Plan Baker, raising concern in the United States. However, both Argentina and Brazil made it clear that debt was to be negotiated by each debtor individually, and Foreign Minister Caputo put it in the format of a very simple theorem, appealing to the United States: U.S. security could be guaranteed only by stable democratic regimes; the newly democratic administrations needed to tackle the problems of underdevelopment to achieve consolidation, and the debt gravely affected their capacity to address these questions.46 The integrationist project also attracted U.S. interest because it offered prospective political and economic gains. Argentine-Brazilian undertakings represented a factor of stability in the area, especially in a period of economic turmoil. Additionally, the ideological orientations of the newly democratic governments seemed to offer a secure bulwark in the fight against communism. From an economic point of view, a larger market with common regulations was deemed beneficial to the numerous U.S. corporations already settled in the area, as well as to a further increase in capital and industrial investment, and in U.S. exports. Overall, then the question of the U.S. attitude to Argentine-Brazilian integration is whether it was one of active consent or of mere acquiescence. In the first half of the 1980s, with the resurgence of the Cold War, U.S. policy toward Latin America prioritized Central America. This deflected U.S. attention from the Southern Cone, allowing more room for autonomous initiatives in the area. At later stages, the U.S. integrationist project with Canada and the initiation of the talks for the formation of the North American Free Trade Agreement (NAFTA) captured the attention of Latin America policy makers in Washington. The Argentine secretary of industry and trade Roberto Lavagna recalls that the United States did not pose any obstacles but was reticent visà-vis the program.47 Integration in the Southern Cone never became a significant issue in U.S. policy toward Latin America; moreover, its launch and implementation appear to have been made “possible by U.S. retreat.”48

2.3 When? How? Whom? Now that it has been established why Argentina and Brazil decided to integrate, there are still a large number of questions to be answered. When and where was the idea of integration, announced at Foz do Iguaçu, conceived? How was it put forward and circulated? Who took the initiative? Are the presidents, their foreign ministers, or their diplomatic services to be credited? And, in the case of Brazil, which president played a major role, the elected Tancredo Neves or his successor José Sarney, who took power after the illness of the former? The aim of this section is to shed some light on these issues.

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2.3.1 The asymmetric year (December 1983–January 1985) Raúl Alfonsín, the democratically elected president of Argentina, took power in December 1983. Tancredo Neves, democratically elected president of Brazil in January 1985, was due to take office in March 1985, but his sudden illness and death elevated his “running mate,” José Sarney, to the presidency. The one-year gap between the return to democracy of Argentina and that of Brazil did not hamper political dialogue on international issues between the two countries. However, diplomatic tact was required of Argentina during this period. In fact, it was not easy for the Brazilian military to maintain friendly relations with a government that was trying its armed forces for human rights abuses committed when in power. Foreign Minister Caputo actively worked to convince the Palacio Planalto 49 that Argentina did not intend to export democracy to its neighbors. In this context, Itamaraty, a highly professional and autonomous institution, took almost total charge of relations with Buenos Aires. This, together with the peculiar features of Brazilian transition, made it possible for Argentina and Brazil to initiate constructive talks about the reinforcement of bilateral cooperation even before the formal handover. On the one hand, it was acknowledged and accepted in the high political and diplomatic spheres in Brasília that the return to full democracy was only a question of time. On the other, since the signature of the Tripartite Agreement, in 1979, Brazil had paid great attention to the reinforcement of its Latin American dimension and to the need to strengthen relations with Buenos Aires. President Alfonsín had made rapprochement with Brazil one of the pillars of his foreign policy, and entrusted Foreign Minister Dante Caputo with the implementation of this visionary idea. Caputo was not only the main ideologist of Alfonsín’s electoral campaign but also a close friend of the president and one of the most influential voices in the strategic direction of the government. As Caputo was the one who conceptualized and designed Argentine foreign policy, he has also to be largely credited for the idea of integration with Brazil.50 Jorge Sábato, Argentine secretary of external relations, pointed out that Caputo repeatedly stressed that political cooperation and economic integration with Brazil were key factors in the creation of a democratic community in the Southern Cone.51 Most of all, during the first days of December 1983, an informal meeting between Brazilian Foreign Minister Saraiva Guerreiro and Dante Caputo took place in Buenos Aires. On that occasion, Caputo proved “to be very disposed to a practically immediate integration,” but the Brazilian minister warned him about the difficulties and the many efforts and patience that such an operation required.52 Indeed, Argentina began its first approaches to Brazil in 1983, as soon as the democratic government took office. In one of its first meetings,

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the Argentine foreign policy team informally established a small working group in charge of improving relations with Brazil.53 This working group readily initiated plans for a new agreement with Brazil within the Latin American Integration Association. Also, Argentina undertook some initiatives to relaunch the Argentine-Brazilian Coordination Special Committee, which had been paralyzed since 1979. The first Argentine diplomatic mission abroad was dispatched that same December, and Undersecretary of International Economic Relations Jorge Romero and Secretary of Foreign Trade Ricardo Campero headed for Brasília. Romero, a personal friend of Caputo’s, was very well suited for the mission, since he had worked as an entrepreneur in Brazil for eight years, and had a large network of contacts in the political and economic elites. As from the following January, Romero’s trips to Brazil became a routine. The year 1984 was a seminal one in the bilateral integration process. “It was in January 1984 that we started discussions with Itamaraty on the issue of economic integration. They were not so keen at the beginning [ . . . ]” Secretary Sábato recalled.54 Also Ambassador Paulo Tarso Flecha de Lima, who became secretary general of Itamaraty the following year, dated the beginning of bilateral talks about integration to 1984.55 At that time, Brazil was still in the transitional phase, and Itamaraty, despite its interest in negotiations with Argentina, had to be cautious and could not take major initiatives. However, talks continued. In April 1984, an Argentine-Brazilian meeting at ministerial level took place in Buenos Aires to discuss economic issues of mutual interest. Documents from the Itamaraty archive show that the Brazilian diplomacy at the highest level evaluated the outcome of that meeting as “promising results to open perspectives of enlargement of cooperation and integration between the two countries.”56 Although it is true that Latin American diplomatic summits often result in statements about continental integration as vague as they are pompous, this was not the case on this occasion. The evaluation is not contained in a public declaration but in a confidential correspondence between two Brazilian ministers. Also, the telegram specifically refers to bilateral cooperation and uses the word integration twice. The signatory of the message, Foreign Minister Saraiva Guerreiro, frankly acknowledged that the Brazilian delegation made an effort to respond positively to the Argentine initiatives but made both its interests and limitations manifest too. The latter are likely to be interpreted in the light of the limited political room for major undertakings the Brazilian government had in times of transition. Considering this genuine admission, the overall document looks reliable. This meeting and the corresponding documentation provide evidence that the idea of integration was already being discussed in the first half of 1984. In January 1985, after long delay suggested by political pragmatism, a presidential meeting between Figueiredo and Alfonsín took place. On

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that occasion, the reinforcement of bilateral political dialogue and economic cooperation was tackled.57 This confirms the fact that the political will for a decisive rapprochement was already present at this stage, despite regime differences. And actually, the Figueiredo administration transmitted the files regarding projects of closer ties with Buenos Aires to president-elect Neves. However, according to Rubens Ricupero, by now special advisor to the designated president, these files concerned general intentions of strengthening political and economic relations, but did not contain specific or structured proposals about the forms by which these objectives were to be attained.58 On the eve of re-democratization in Brazil, both countries had a strong interest in solid and enduring rapprochement. The idea of using some sort of economic integration to pursue it appears to have been born within the Alfonsín’s administration during 1984. Argentina proposed and Brazil was an attentive interlocutor. However, the Brazilian military presidency was not in a political position to take up the enterprise, while Itamaraty lacked the power to do so.

2.3.1 The recomposed regime dyad and the taking off of negotiations A major advance in integration talks occurred with the return of Brazil to democracy. “From then on, they [the Brazilians] expressed the opinion that a community linking Argentina and Brazil would protect democracy in both nations.”59 The initial restraint was reversed, and the new Brazilian government turned into a proactive interlocutor for what had begun as Argentine initiatives. With the civilian presidency in Brazil, there was no reason why the management of relations with Argentina should remain entirely in the hands of Itamaraty. The presidency started to play a central role in the negotiation process. Now, this turn raises questions about both the interactions between Itamaraty and the presidency in matters of integration, and the elaboration of the presidential strategy toward Argentina. Was President Sarney to be credited for the acceleration of negotiations with Buenos Aires? Or did he just follow the directions already laid out by Tancredo Neves? Let us start with this last issue. There are good reasons to believe that a project of economic integration with Argentina had already been envisaged under Neves. In February 1985, during his visit to Buenos Aires as president-elect, he had had the opportunity to converse twice with Alfonsín. The main topic of discussion between the two presidents was foreign debt and the related Cartagena initiative. They also reached a consensus on several international matters, namely the support for the Contadora Group, a more equitable international order and general disarmament. As usual in Latin

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American summits, the issue of Latin American unity and integration was also mentioned. In the press conference, Neves only briefly commented that Latin American integration had to be pursued within the framework of Latin American Integration Association.60 However, when pressed by the journalists’ questions, Neves and Caputo revealed that something was actually going on. The assessment of bilateral relations made during the visit introduced new elements. Neves not only declared that integration with Argentina would be a priority for his government, but he conceded that “we want specific agreements.”61 Furthermore, Dante Caputo, answering a question on bilateral trade, admitted that “we are thinking about the mechanisms to make bilateral trade more dynamic, and that is why this meeting is very important.”62 This amounts to an almost explicit admission that: (a) talks were already in progress; (b) concrete mechanisms were under consideration; and (c) the two presidents were closely following these negotiations and discussed them during their conversations. Finally, Caputo remarked that “practically the whole Southern Cone of America is ruled by democratic regimes, and we understand that this creates better opportunities for the whole process of integration.”63 However, Ambassador Ricupero, who was present at the meeting, proposed a more cautious reading of that conversation. He maintained that integration was actually debated only in broad terms of closer trade and political relations. It would be an exaggeration, he added, to understand discussion on integration in that context as an assessment of specific economic or legal schemes.64 Although more circumspect, this evaluation is not incompatible with the thesis of ongoing search for practical solutions. Instead, it adds credibility to the fact that, at this stage, the idea of integration was still diffuse and unstructured, and the highest political authorities agreed on exploring concrete mechanisms to implement close economic cooperation. The established fact that Neves had somehow planned to develop a bilateral trade scheme, or was perfectly aware that Itamaraty was doing so, does not exclude the original and invaluable contribution of President Sarney to the integration process. Sergio Danese, a member of the team of presidential advisers, would later maintain that, when Sarney took office, he did not have a set program of foreign policy, had not discussed the subject with Neves, and was not involved in the planning of Neves’ visit to Buenos Aires.65 Although it is true that foreign policy was not a priority in Neves’ platform, it appears unlikely that he would have omitted to inform his vice president about such an important issue. And in fact, Alberto Ferrari Etcheberry, who was special advisor to President Alfonsín, confided that Sarney personally told him that he had been informed by Neves about the conversation the latter had had with Alfonsín in February 1985.66 Moreover José Tavares de Araujo formed

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the impression that the original motion came from Neves, who discussed it with his vice president.67 Ambassador Ricupero, who continued as special advisor to President Sarney, reconciled the two positions commenting that whereas Sarney was aware of Neves’ guidelines in foreign policy, the latter had no time to elaborate a specific plan of integration.68 What is also likely is that Sarney brought in his own intuitive vision of the importance of South America. “I brought into the government these two basic notions: first, that there was a single South America, and, second, that Brazil had to have a non-hegemonic position, but had to exercise its specific weight in the region.”69 Personalities close to Sarney, and directly involved in the integration process, did not hesitate to acknowledge his own conceptual and practical contribution to integration, and stressed his independence from Neves’ legacy.70 Whereas Sarney maintained for almost one year the chancellor indicated by Neves, Olavo Setubal, and for almost three years Neves’ chief international politics advisor, Rubens Ricupero, he was also an innovator. In fact, it is possible that in the wake of recently reacquired democracy, Sarney took the initiative to inform Alfonsín that democratic Brazil was ready to follow up the informal diplomatic talks on integration.71 Actually, it is also possible that, in this phase, with a supportive new president, Itamaraty reached the conviction that the time to resume dialogue with Argentina had come, and that it consequently set out its own concept of integration, which was forwarded to Palacio San Martin.72 Finally, Sarney tried to regain a central role in foreign policy for the presidency through the establishment of a formal Diplomatic Consulting Unit within the presidency. Sarney himself, reportedly, provided an interesting explanation about his freedom of action in foreign policy. When, in 1984, he joined the opposition, Ulysses Guimarães, one of the charismatic leaders of the Partido do Movimento Democrático Brasileiro (PMDB), convinced the party to accept him as its vice presidential candidate in order to gain the support of the military sector.73 However, this step was undertaken reluctantly given Sarney’s past, and Guimarães and the PMDB exercised a sort of control upon Sarney on almost all the main political decisions.74 Yet foreign policy was of scant interest to Guimarães, while Sarney felt at ease and free from control in this field, in which he had a personal interest and his own ideas.75 Both Neves, for a very short period, and Sarney appreciated the importance of closer relations with Argentina. This continuity can be explained by two factors. First, opening to Argentina appeared to have become a firm state policy in Brazil. Normalization of relations with neighbors commanded a sort of national consensus among the political class, important sectors of the economy and civil society. Political and economic cooperation in the subregion met the Brazilian national interest and did not depend on the goodwill of a given administration.

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Second, there was a strong continuity in the personnel in charge of relations with Argentina. Ambassador Ricupero became the great coordinator of the Brazilian negotiating team, while the main inspiration and push toward integration continued to come from Itamaraty, which had presided over the first steps. This takes analysis back to the still pending issue of the relationship between Itamaraty and the presidency in this early phase of talks and brainstorming. Did the democratic presidency take the lead after March 1985 or did Itamaraty maintain it? Did Sarney instruct Itamaraty to proceed with integration or did Itamaraty convince the president to endorse and foster its own design? The picture is quite complex. When Sarney took office, talks between Argentina and Brazil had already started but must still have been at a very early stage. It is very likely that the president was able to sense what was happening and that Itamaraty briefed the new president on the strategy of the talks and their current state. It is also very likely that Sarney had his own idea of how to conduct foreign policy and of the role to be scripted for Argentina. The intuitions of President Sarney found theoretical rationalization and practical systematization in the work and visions developed at Itamaraty. These were adopted and actually recognized by Sarney as his own. On the one hand, the president, prompted by Itamaraty, gave impulse to the process blessing the advance of his foreign service, sponsoring the idea among ministerial cabinets and bringing discussion at the highest level through personal meetings and commitment with Alfonsín. On the other hand, Itamaraty received from the president further political directions and was instructed to foster integration. Indeed, Sarney took several personal initiatives to encourage the process, and was personally involved in the design of the integrationist project, to which he gave full commitment and support. Overall, interactions seem to have gone two ways. The president was at the same time stimulator, guarantor, and executor of integration, while Itamaraty remained the focal point of conceptualization, as well as of technical groundwork, on the Brazilian side. What happened next was that Presidents Alfonsín and Sarney officially met for the first time as Sarney took office. Given the mournful circumstances—Neves was dying and the event had a very packed agenda—it is unlikely that the two presidents could have talked at length about integration projects. However, following this event, negotiations dramatically accelerated. A first politically significant agreement, a huge sale of Argentine wheat to Brazil, was agreed between the two presidents on that occasion.76 A few days after the ceremony, Ferrari Etcheberry, at that time still president of the Cereals National Committee, was sent to Brasília to finalize the sale with one single instruction: to agree on any condition the Brazilians were demanding, as the sale was a political decision. In fact, in economic terms, this purchase did not make too

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much sense for Brazil, which could have concluded a better deal with the United States. The explanation was political, Brazil showed a sign of goodwill toward the reduction of the Argentine trade deficit. Tentative broadly political talks started more or less at the same time. When Ambassador Paulo Tarso Flecha de Lima assumed office as secretary general of Itamaraty in March 1985, he delegated the issue of negotiations with Buenos Aires to Francisco Thompson Flores, his deputy for economic affairs. The latter was one of the great enthusiasts for rapprochement with Argentina within the Brazilian Foreign Ministry. Informal conversations were conducted between Thompson Flores and Jorge Romero, without any written proposal or established agenda. The purpose was to explore possible areas of mutual interest to implement a dynamic cooperation policy.77 In this phase Samuel Pinheiro Guimarães, head of the Latin American Economic Department, was Thompson Flores’ main collaborator. In May 1985, Alfonsín met the newly democratic president of Uruguay, Julio Maria Sanguinetti, in Colonia. There they signed four treaties, one of which provided for reduction of tariff barriers. On his way back to Buenos Aires, Alfonsín told the Argentine press that he would attempt similar steps toward collaboration and integration with Brazil.78 Perhaps it was not a coincidence that, the same day, Brazilian foreign minister Olavo Setubal landed in Buenos Aires for his first official visit abroad. Setubal had a very personal view of integration, which he conceived as a means to overcome export problems, an issue with which he was very familiar as a member of the board of the Banco Itaú in São Paulo. Setubal later recalled that integration had been an important subject during his meeting with Caputo, and that the two chancellors had agreed to foster the process.79 The meeting between Caputo and Setubal was the “decisive event that put into motion the chain for integration” on the Brazilian side.80 Setubal was very impressed by the lack of balance in bilateral trade. Upon his return to Brasília, he talked to Sarney and urged the president to coordinate all the relevant Ministries, including agriculture, economy, energy, and industry, to give preference to Argentina in the purchase of wheat and oil.81 Sarney took up the advice, called for a meeting with all the ministers concerned, and gained them to the initiative. Itamaraty, which had always been favorable to the idea of integration, was instructed to unfold concrete mechanisms of implementation. In July 1985, at the inauguration of President Alan Garcia of Peru, Foreign Ministers Caputo and Setubal reached a broad political consensus. The decision to advance in the study of a “practical, direct, flexible and effective mechanism of economic integration” was taken at the foreign minister level.82 Also, the two chancellors, together with Iglesias, the foreign minister of Uruguay, decided to undertake a joint action of support for the Contadora Group. The Support Group was born. Less

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than one month later, Sarney traveled to Montevideo where he signed thirteen agreements of bilateral cooperation, covering the fields of industry, communication, science and technology, culture, and trade among others. The set of accords was very similar to the one Uruguay had concluded with Argentina just three months before. Negotiations then followed at a fast pace, almost fortnightly. Meetings were held in Brasília, Buenos Aires, and often in Rio de Janeiro, a convenient location for both delegations. By mid-November 1985 the diplomatic understanding for the presidential meeting in Foz do Iguaçu was finalized. Less than ten days before the summit, Minister Setubal anticipated in a statement to the international press agency ANSA that the official opening of the bridge Tancredo Neves, linking Puerto Iguazú in Argentina to Foz do Iguaçu in Brazil, would be “a political meeting of first magnitude in Latin America.”83

2.3.3

The formalization of bilateral integration: From the declaration of Iguaçu to the signature of the PICE

The diplomats of Argentina and Brazil had spent almost two years breaking the ice with discrete and subtle work. The advent of democracy in Brazil made plans for economic cooperation public and the time for integration ripe. Yet, in November 1985, the integrationist project was still diffuse and unstructured. Presidents Alfonsín and Sarney, who had enthusiastically embraced the plan of their diplomats, had brought the issue at the highest level, reached convergence on the objectives and scope of the commitment, and instructed their bureaucracies, and not only the diplomatic corps, to find a satisfactory implementation system. For these reasons, the presidential meeting at Foz do Iguaçu of November 29 and 30, 1985, can be regarded as “the political expression of the will to bind [Argentina and Brazil],”84 and therefore as the formal starting point of the integrationist project. The works at Foz do Iguaçu comprised talks at the presidential level and four committee meetings at ministerial level devoted to specific topics: Economy and Industry, Public Works and Infrastructure, International Issues, and Defense and Armed Forces. This one was a very interesting case as both governments were trying to script a new role for the military and to secure their compliance with the integrationist project. The initiative to include a military meeting in the work program came from Argentina.85 Brazil accepted the idea and incorporated in the presidential delegation top military personalities, including the head of the Casa Militar and secretary general of the National Security Council General Rubens Bayma Denys, the joint chief of staff Admiral José Maria do Amaral Oliveira, and the minister of the army General Leonidas Pires

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Gonçalves. The official committee meeting was presided by Argentine defense minister Roque Carranza, a civilian, and by General Pires Gonçalves. However, the real encounter between the armed forces of the two countries took place in parallel talks between the joint chiefs of staffs and between other high military authorities. The difference in attitudes of the military toward the integrationist project in Brazil and Argentina was remarkable, and so was the difference in attitude of the Brazilian armed forces before the summit and during the summit itself. In Argentina, the discredited military were allowed extremely limited space in political affairs and their chance of affecting the outcome of integration negotiations was negligible. The Argentine military did not offer any resistance to the process, first because they did not have the strength to do so, and second because of a sort of acceptance they had developed toward the inevitability of an accommodation with Brazil since the agreement on Itaipú and the Falklands/Malvinas conflict. In Brazil, the military had maintained a certain prestige and significant influence in the political arena. They managed their own affairs through three autonomous ministries, one for each force. Whereas the Navy and the Air Force had developed a quite competitive but frank position toward Argentina, the Army had remained skeptical. 86 This was understandable as land defense would be the most demanding security task in the event of conflict. Itamaraty secretary general Ambassador Flecha de Lima recalls that the military were “very mistrustful” and it was his task to reassure them that integration would not raise any concern for national security.87 Flecha de Lima repeatedly met General Pires Gonçalves in order to ensure an acquiescent posture of the military toward the undertakings with Argentina. The climate at Foz do Iguaçu, however, was very different. The meetings were cordial. “The discourse of both sides was to emphasize [that] we are on the same boat, that we are neighbors, to find out means of working together, cooperating in the best way. The language of the meeting was the most possible positive,”88 recalls Ambassador Castro Neves, who was present in almost all the military meetings in his capacity as undersecretary of the National Security Council and close advisor to General Bayma Denys. Understanding between the Argentine and Brazilian armed forces was facilitated by two factors. First, the Argentine armed forces saw an occasion for rehabilitation and were quite well disposed. Second, after the defeat in the South Atlantic, both political and military high spheres in Argentina acknowledged the superiority of the Brazilian industrial-military complex. During discussions within the Defense and Armed Forces Committee, fields of possible cooperation were identified in the organization of strategic meetings, the mutual training of pilots, the development of equipment that would serve both armed forces, and the exchange of scholars between the respective military academies. The

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military meetings and their subsequent developments were a confidencebuilding exercise, and represented a highly symbolic moment, as they brought together those sectors of the respective societies alleged to be most mistrustful of one another. The whole two-day event at Iguaçu bore powerful symbolic meaning since the venue itself was reminiscent of significant past clashes and rapprochement. The ceremony for the inauguration of the bridge Tancedo Neves, which occasioned the summit, signaled as such the firm will of the two countries to tighten their ties. The visit of President Alfonsín to the hydroelectric power plant of Itaipú was the climax of this symbolic imagery. The initiative was taken by President Sarney himself.89 Outside the program, and against his advisors’ opinion, Alfonsín accepted Sarney’s invitation and visited Itaipú. As Sarney later commented on the episode, “it was just a picture, but it buried the war of the Paraná waters.” 90 The committees’ work and the presidential talks resulted in two documents. The first was a Joint Declaration on Nuclear Cooperation that established a mutual guarantee of the peaceful use of nuclear power. It also provided for the creation of a working group on nuclear energy, composed of representatives of the respective national atomic agencies and chancelleries. Finally, the declaration envisaged cooperation in a large range of nuclear issues. As a confidence building measure, “while nuclear cooperation did not guarantee the success of economic integration efforts, it was a necessary step that allowed integration to proceed.” 91 The second document, known as Declaration of Iguaçu, comprised a set of joint positions on international issues, statements on the reinforcement of bilateral political and economic cooperation with a view to the enlargement of the enterprise to Latin America, and the creation of a high-level bilateral commission. This was to be in charge of preparing concrete proposals for Argentine-Brazilian integration within six months. The Commission was to be composed of ministerial representatives as well as of delegates from the entrepreneurial sectors, and was to be chaired by the two foreign ministers. The works of the committee were divided into four priority areas, each assigned to a subcommittee: economy and trade, transport and communication, energy, and science and technology. The definition of the scope of integration inevitably entailed an enlargement of the governmental bodies and agencies involved in the process. Negotiations maintained their political essence for a while, but their economic connotation required new technical expertise. The phase from 1983 to Iguaçu had been invariably led by the chancelleries, with the active support of the presidents. The new phase spread, to a certain extent, competences and decisional power, thus calling into play new decisive actors. In Argentina, the advance of integration prompted two imperative needs. The first was to consolidate integration as a policy of state; the

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second to create a bureaucratic structure able to deal effectively with the new task. Until that moment, the opposition peronista party, also known as justicialista, had regarded the integration undertakings fairly favorably, but the Radical government aimed at a permanent and proactive consensus, thus holding the opposition co-responsible for the achievement or failure of the process. The direct involvement of peronista party members in negotiations would make the government action more representative and legitimate, and would also increase congressional support for ratification of international commitments. The most suitable peronista candidate for governmental appointment was the economist Roberto Lavagna. He had a good relationship with the governmental economic team, had been at university with some of them, and had already informally collaborated with the incumbent administration for the elaboration of the anti-inflationary plan, the Plan Austral. President Alfonsín had tried to include Lavagna in the government soon after that achievement, but the latter did not want his nomination to be used for electoral purposes, and the campaign for the November administrative elections had already been launched. After the victorious November ballots, the president once again approached Lavagna, and this time the economist gave his consent, on condition of being in charge of an important economic department. This condition, which appeared at first as a big hurdle, actually allowed the government to kill two birds with one stone. Whereas the post of minister of economy was already occupied by Juan Sourrouille, and the creation of another ministry for Lavagna was impossible for constitutional constraints, this request offered the government the possibility of creating a new structure to deal with integration and, at the same time, satisfy Lavagna’s request. The fusion of the Secretariat of Foreign Trade, depending on the Foreign Ministry, and the Secretariat of Industry, depending on the Ministry of the Economy, resulted in the creation of a new figure, the secretary of industry and trade. Although not formally a minister, Lavagna was granted by decree all the prerogatives of a full minister, including the power to present bills to Congress. The new Secretariat, attached to the Ministry of Economy, but enjoying a large degree of autonomy, was in charge, among other things, of running economic negotiations with Brazil.92 Lavagna brought along his own team. The peronistas Jorge Campbell and Luis Garcia were appointed, respectively, undersecretary of foreign trade and undersecretary of industry. Beatriz Nofal, the only Radical undersecretary within the Secretariat of Industry and Trade, was in charge of Industrial Policy and Development. This team assumed a prominent role in bilateral negotiations from January 1986 onward. Until then, negotiations had been entirely managed by the Chancellery. In particular, Minister Caputo, Secretary Sabáto, Undersecretary Romero, and

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his advisor Carlos Bruno had been those who had conceived the idea of integration on the Argentine side and undertaken preliminary talks with Brazil. Caputo, who was keen on the strategic points, never came close to the implementation phases, although he carefully monitored the process, and even before the meeting at Iguaçu, he devoted himself to other priorities, such as Central America and relations with the United States, Spain, and Italy.93 Undersecretary Romero became the chief negotiator within the Foreign Ministry, while Roberto Lavagna was the head negotiator from the Ministry of Economy. Minister Sourrouille never showed great interest in the issue of integration, as he had to deal with urgent matters such as inflation, unemployment, and a general macroeconomic instability.94 In Brazil too, new actors came into play. From the return to democracy to the summit of Iguaçu, Itamaraty and the presidential staff had managed independently the question of integration. As from 1986, when negotiations started to be centered on economic instruments, the Ministry of Economy and the Banco do Brasil provided the required technical expertise. Minister of Economy Dilson Funaro was extremely interested in, and enthusiastic about, the issue of integration, and he was probably the only minister personally involved in negotiations and cabinet discussions.95 Minister Funaro’s special economic advisor Luiz Gonzaga Belluzzo pointed out that Itamaraty’s political strategy combined well with the cepalista 96 vision inspiring Minister Funaro, and prevailing also among his staff.97 Also within the Ministry of Economy, the executive secretary of the Customs Policy Committee José Tavares de Araujo proved to be one of the people most committed to the process. The Carteira do Comercio Exterior, CACEX, incorporated in the Banco do Brasil, was the governmental agency responsible for trade policy and regulations. Its influential director Roberto Fendt, who enjoyed a sort of ministerial status, took part in all the relevant negotiations that led to the signature of the PICE. Itamaraty remained the pivotal center of conceptualization and coordination of integration on the Brazilian side. Little changed after February 1986, when Foreign Minister Setubal resigned to run for the post of governor of the state of São Paulo. He was replaced by another paulista coming from the entrepreneurial sector, Roberto Sodré Abreu. While Minister Setubal had shown a watchful interest in integration, although largely delegating the issue to his staff, Minister Sodré, though favoring the process, never appeared enthusiastic or particularly involved.98 This reinforced the initiative and decisional powers of the Itamaraty bureaucracy. Work to implement the political directions outlined at Iguaçu started in early 1986. However, the high-level public-private bilateral commission and the four subcommissions envisaged in the Declaration of Iguaçu did not play as important a role as had been intended. Secretary Lavagna

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explained: “The whole negotiation was done through informal meetings; a topic of this nature, which was highly strategic and which was to be handled directly by the presidents, would not be resolved within a commission. The real negotiations were done through separate channels.” 99 Brainstorming meetings were then conducted in a very reserved and informal way between small unofficial delegations. Three plenary sessions, held between April and June 1986 and attended by delegations of some thirty people per side, were the key events that shaped the structure of the integration agreement that the Argentine and Brazilian presidents eventually signed in July 1986. The first of these sessions took place on April 5 in Los Nogales, a farmhouse in the hamlet of Don Torcuato, not far from Buenos Aires. Date and venue attest the confidential and informal nature of the gathering. It was over a weekend, so that the massive absence of top officials from their government offices remained unnoticed by the press, and the premises were not state property but belonged to an Argentine entrepreneur, Alberto Hoffman. High-level officials from both governments took part in the assembly, but no minister was present. Also, instructions received from higher political levels were extremely limited, and some of the delegates were working together for the first time, even within the same delegation. José Tavares de Araujo, a member of the Brazilian delegation, pointed out that he had not received any particular instruction. Moreover, he recalled that the night before the meeting, Francisco Thompson Flores, the head of the delegation, addressed the delegates saying that they were embarking on a new adventure, the results of which were unknown, but he felt they were going to change the course of events. Thompson Flores just recommended his colleagues to be very open-minded.100 The meeting therefore turned out to be a preliminary exchange of ideas. The only clear thing was the goal: integration. All the rest was very spontaneous, ideas and proposals flowed, and there was no set agenda. The fact that the officials were present privately and not as representatives of their departments or governments made discussion more open.101 At first, the Brazilians reiterated their major interest in the import of food and oil and in the export of manufactured goods. The initial idea the Argentine delegation put forward was a free trade area targeting all sectors, but the Brazilians were not in favor of a general agreement. As a consequence, discussion shifted toward a sectoral approach, and the first agreement was reached on a system of protocols, which, although excluding a massive opening, was suitable for later upgrade and expansion. Since Brazil was disposed to liberalize the capital goods sector, as it felt its industry was competitive, the Argentine delegation assessed this option and concluded that a two-way opening could be a fair deal. Argentina would increase its imports of Brazilian machinery, but it could also count

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on some competitive advantages, such as the high quality of its labor force and of its batch production. Within the same sector, each country could specialize in the production of specific items: the idea of economic complementation was emerging. From the institutional point of view, in Don Torcuato it was decided that the integration scheme would not have supranational institutions. This was deemed appropriate for the level of political and economic development in Argentina and Brazil.102 The second plenary meeting was held in the secluded venue of Itaipava, not far from Rio de Janeiro, on May 3, with the same format and informality as in Don Torcuato. After one month’s reflection on the respective positions and proposals, the first sketches of the agreement were drafted on this occasion. Discussion was resumed on capital goods and extended to the protocol on wheat. Negotiations went into more depth and detail, and some rules and principles were established, such as the concentric conformation of protocols, annexes, and lists. That is to say—the protocol established the free trade agreement in a given sector, the prohibition of barriers, subsidies, and so on; annex I showed the universe of goods falling under the scope of the protocol; subsequent annexes contained the lists of specific items that were or were not to be incorporated in the agreement. The third plenary session was organized in Buenos Aires on June 20 to ratify and finalize the agreements reached during the previous months. In this phase, negotiations were extremely cordial. Not only had the two presidents established a relationship of mutual sympathy and friendship, but so also had the other officials, to some extent. The rapport between Caputo and Sodré was described as “formal but good,” and routine contacts at all ministerial levels as “very good.”103 During the three plenary sessions, “there was not an Argentine delegation negotiating with a Brazilian delegation, it was a group of individuals together drafting such schemes as could be implemented.”104 When sensitive topics came into discussion, the atmosphere nonetheless remained constructive. Relations within the delegations were also generally good, despite some inevitable friction due to the different institutional interests each member brought into discussions. In Argentina, there was no particular cleavage between ministries or other governmental agencies, although, of course, certain sectors were more linked to protectionist interests. In Brazil, especially in the early stages, the CACEX acted in order to protect the interests of the Brazilian industry and guarantee a favorable trade balance. Also, the Ministry of Agriculture was committed to protect the rising and subsidized wheat production in the Southern states. The Customs Policy Committee, instead, sponsored integration as a means to reform and open up trade policies.105 On July 29, 1986, in Buenos Aires, Presidents Alfonsín and Sarney formally signed the PICE between Argentina and Brazil. This was

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the climax of a process that marked a break with previous attempts at regional integration in Latin America. First, the main motivations were political rather than purely economic.106 Second, the two governments had, as one commentator put it, “adopted a socio-economic concept of national security, to replace the old geopolitical one.”107 Third, unlike other regional (Latin American Free Trade Area or Latin American Integration Association) or subregional (the Andean Pact) attempts, the project rested on a firm consensus about its economic fundamentals. At least in principle, coordination of macroeconomic policies was seen as an essential precondition rather than a desirable consequence of integration. Fourth, as a corollary of the third point, the features of the process were as pragmatic as possible in order to allow the participants to remain committed to the project without foreswearing the adoption of emergency measures to tackle economic crises. Following this rationale, the PICE established a number of principles for its implementation. First, implementation had to be gradual and flexible. Second, it had to include, in each phase, a number of integrated projects. Third, it did not have to cause economic specialization in specific sectors. Fourth, it had to pursue a progressive balance by sectors and by productive segments through trade expansion. Fifth, it would aim at technological modernization and a more effective resource allocation through preferential treatment toward third markets and harmonization of economic policies. The implementation of the PICE relied on the system of sectoral protocols designed at Don Torcuato and Itaipava, and twelve of them were signed by Ministers Caputo and Sodré on this occasion in Buenos Aires.108 In the course of another six presidential meetings organized between July 1986 and April 1988, the total number of protocols was increased to twenty-four.

2.4 Conclusion Long-term factors, both at the national and international level, provided a favorable climate for Argentine-Brazilian understanding in the first half of the 1980s. Differences in the style of military rule and the transition to democracy in the two countries created discrepancies that, instead of inhibiting cooperation, generated compatibility of interests and objectives, which eventually resulted in the decision to integrate. This was prompted in Argentina by the imperative need to secure the fragile democratic regime, and by the desire to modernize the economy as a part of a broader political project. In Brazil, integration with Argentina was primarily a means to improve international projection in South America and beyond, with consolidation of democracy as a strong second motivation. The absence of active U.S. policy in the Southern Cone facilitated the smooth conclusion of the PICE and its development. Despite having large recourse to economic instruments, the PICE was clearly a political

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undertaking, stemming from essentially political rationales. Also, the economic aspects were actually closely related to broader views of society and development, thus being, in their essence, political too. The idea of integration was born in Argentina, as the Radical administration was trying to prevent external tensions from having repercussions internally so as to tame military resurgence and secure democratization. Ironically, the idea circulated in both countries during a period of regime asymmetry, Brazil being still under military rule. However, this should not be overemphasized, since the Brazilian transition was imminent, and Itamaraty was already planning international insertion strategies suitable for the forthcoming democratic administration. Be this as it may, even though most of the literature credits either the military or the democratic dyad for the genesis of bilateral integration, the first diplomatic contacts on the subject actually took place in early 1984. In that context, Itamaraty was unable to undertake major commitments, and the return of democracy in Brazil was fundamental to this respect. Democracy brought to the process a striking quantitative and qualitative acceleration. Under democratic regimes, mutual cooperation became not only politically opportune, but a response to logics of common values, as well as political and economic interests. At this stage, Brazil conceptualized its own vision of integration and did not merely react to Argentine solicitations. Most likely, the two countries, in this phase, developed simultaneous and parallel integrationist plots, which originated in a logical and rational observation of reality and mutual interests. Overall, there is a striking temporal coincidence between democratization and integration. With the return of Argentina to democracy, talks started. With the return of Brazil to democracy, negotiations took off. The intention to integrate was announced only nine months after the reestablishment of the democratic dyad, and the PICE was formally concluded within fifteen months. It appears sensible to wonder if, besides coincidence, there is also some sort of logical, if not causal, relation between democracy and regionalization in the South American Cone.

CHAPTER 3

The Genesis of Mercosur (1986–1991)

3.1

Introduction

Following the signature of the Programa de Integración y Cooperación Económica (PICE), political and societal reactions were mixed. Domingo Cavallo, Argentine economist and future minister of foreign affairs under President Menem, considered the capital goods protocol dangerous for many Argentine companies. Leading journalist Alcides Lopez Aufrac stressed the differences between Argentine and Brazilian industry.1 The range of reactions was pretty similar in Brazil.2 Still, a wave of enthusiasm pervaded the incumbent administrations and supportive segments of society. The press in both countries covered the numerous meetings held between government officials to give implementation to the PICE extensively. Also, newspapers reported the growing enthusiasm of the business sector and the desire of the armed forces to work together.3 This enthusiasm lasted for about another year. The first part of this chapter will explore how and why the fortunes of the PICE model of integration fell as rapidly as they had risen. Attention will be devoted to the expansion of the scope of the protocols and the pursuit of nuclear cooperation as a confidence building exercise to back economic integration. The exhaustion of the process will be analyzed in depth, targeting international and national factors and highlighting changes and shortcomings within the process itself that undermined its development in the absence of innovation. Once again, it will be argued, times of crisis provided the basis for the revitalization of the integration process. The final integrationist legacy of Alfonsín and Sarney was a commitment toward a common economic space. This must not be confused, as it has happened, unintentionally and at times deliberately, with the concept of common market. While the latter concept was introduced at this stage more as an aspiration than as a defined goal, its formal design and tentative implementation took place under the neoliberal

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governments of President Carlos Menem of Argentina and Fernando Collor de Mello of Brazil. The second part of the chapter will investigate under what circumstances Argentina and Brazil constructed their bilateral common market, and, almost in a parallel effort, made it quadrilateral. Emphasis will be put on the international changes in the very early 1990s. Whereas the beginning of bilateral integration and the launch of the PICE was mainly driven by domestically born considerations and concerns, the creation of Mercosur owes much more to systemic forces and consideration for international developments. These exogenous factors were translated into national economic and foreign policy conduct and then transmitted on to the approach to integration. Alterations in the economic and security vision of regionalization raised questions about the degree of change and continuity of the integration process. These questions will be dealt with in the concluding remarks.

3.2

The Road to Bilateral Economic Common Space 3.2.1

The expansion of the protocols

Bilateral negotiations intensified in the months between July and December 1986. Large delegations, comprising representatives from the ministries and the other public agencies concerned with integration, met in October and November 1986 in Rio de Janeiro and Buenos Aires, respectively. During these meetings, the lists of goods to be annexed to some of the protocols were drafted. In this phase, the coordination of negotiations on the Brazilian side remained with Itamaraty. Although the main political objectives came from the president and the ministers, Itamaraty appeared to have a pivotal role in selecting the appropriate delegates to, and setting the agenda for, bilateral meetings. The military were constantly kept informed, and representatives of the National Security Council were often invited to sit in discussions at the national level. In Argentina, the leadership of the process remained dual, as chancellery, represented by Jorge Romero, and the Secretariat of Industry and Trade, headed by Lavagna, shared the responsibility for the PICE’s implementation. The result of the intense diplomatic activity was a new presidential summit held in Brasília between December 8 and 11. On that occasion, it was agreed that for a number of capital goods items all barriers and restrictions would be lifted from January 1987 onward. Within protocol No. 2, on wheat, another big sale by Argentina to Brazil was finalized. Also, the statute of the Argentine-Brazilian Centre of Higher Economic Studies was established. In the energy sector, a cooperation agreement between the public hydrocarbon companies, Petrobras of

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Brazil and YPF of Argentina, provided for the joint exploration and use of new oil-fields and for technological exchanges. Additional protocols were signed too, covering land and maritime transport, and communication. Finally, Protocol No. 17 identified a number of areas for cooperation in the nuclear sector. In Brasília, all the agreements were signed by Foreign Ministers Dante Caputo and Roberto de Abreu Sodré; but, additionally, and unexpectedly, the two heads of state wanted to initialize the documents personally, and added by their own handwriting the word cúmplase, literally: let it be implemented.4 Such was the atmosphere of positiveness and determination. The summit also resulted in the adoption of two joint declarations. The Acta de Amistad ArgentinoBrasileño, Democracia, Paz y Desarrollo reiterated profound trust in representative democracy, based on the supreme respect for the rule of law and the popular will. The Joint Declaration on Nuclear Policy stressed the increased degree of cooperation in the nuclear field between the two countries. Also, it made clear that nuclear cooperation aimed to enhance mutual confidence and to enlarge the respective technological capabilities. Another presidential summit took place in July 1987 in the Argentine towns of Bariloche and Viedma, the latter designated to become the new federal capital.5 This meeting was one of the most fruitful, and brought considerable advance in areas such as the expansion of the protocols, the creation of a common monetary unit, and nuclear confidence building. The list of capital goods subject to preferential regime was enlarged, the Brazilian commitment to purchase Argentine wheat was extended until 1993, and five hundred new customs codes were added to protocol No. 4 on trade expansion. Operating procedures were established for the binational investment fund and for biotechnological cooperation. A new protocol on public administration defined priority areas for reform, decentralization, and training of human resources. This protocol was strictly related to Argentine interest in Brazilian experience of moving the federal capital. The integrationist project was also complemented by a cultural dimension. In the past, mistrust had often been due to a lack of mutual knowledge and understanding. The cultural protocol principally aimed at filling this gap. Initial projects concerned the circulation and commercialization of films and the coproduction of television programs. Each party committed itself to selecting three national literary works a year, which the other party would translate and circulate. Also, it was decided to create a free circulation system for the works of living artists, to support orchestras and theaters that performed pieces written in the other country, and to devote more resources to the cultural institutes. Finally, the signatories expressed their will to promote university exchanges through scholarship and fellowship programs.

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In Viedma, Protocol 20, establishing a common monetary unit, the gaucho, was also signed. Although the press on some occasions referred to it as a common currency, the gaucho was not a common currency but just a common monetary unit. It was conceived by Roberto Lavagna and his team as a remedy to persistent bilateral trade imbalances.6 The idea was to create a bilateral monetary unit that penalized its possessor, encouraging disposal by the purchase of goods from the other country. The gaucho was intended for commercial transactions only, and other uses typical of regular currencies were not contemplated at that time. However, the gaucho was never adopted. The reasons are to be found in macroeconomic urgencies and in a lack of interest in following up the initiative. The father of the project, Lavagna recalled that, once he and his team resigned, nobody within the Argentine government was in charge of the file, and the following administration decided to freeze it.7 The scope of integration was widening, but this trend seemed to be only partly related to a self-propelled spillover effect. Whereas the addition of new annexes may be seen as a natural necessity for the full accomplishment and correct functioning of the agreements, the strategic choice of adding new fields to the PICE looked more dependent on political determination to foster integration rather than on needs prompted by the expansion of cooperation. Argentine and Brazilian decision makers meant to spread cooperation to as many sectors as was convenient to their design of national development and consolidation. But they never lost control over the integration process, the driving force of which was political direction and not economic or functional rationale.

3.2.2

The support of economic integration through confidence building in the nuclear sector

Argentina and Brazil had consistently reiterated their right to develop independent nuclear capability since before the return to democracy. However, in the mid-1980s, Brasília and Buenos Aires imperatively needed to reassure each other that the respective nuclear programs did not represent a security threat. At the same time, the international community had to be convinced of the peaceful nature of the nuclear programs, since international political and economic support was indispensable to democratic consolidation. The Iguaçu Declaration of November 1985, purposely issued to coincide with the launch of the integrationist process, stressed the exclusively peaceful purposes of nuclear development, and the demand for bilateral cooperation on all aspects of the use of nuclear energy. This was the first step in nuclear confidence building measures. Later on, PICE Protocol No. 11 established a duty of immediate information and reciprocal assistance in case of nuclear accidents and radiological emergencies. Protocol No. 17, signed in Brasília, in December

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1986, defined priority areas of nuclear cooperation. Finally, the Joint Declaration on Nuclear Policy, issued in Viedma in 1987, once again reiterated the commitment of both nations to peaceful uses of nuclear energy and reaffirmed the confidence building nature of the process of nuclear rapprochement. The boldest initiative undertaken in the nuclear field occurred during that same presidential meeting of July 1987. President Alfonsín invited President Sarney to visit the uranium enrichment plant of Pilcaniyeu. This step aimed at reinforcing the confidence of both the most skeptical sectors in Brazil and the international community. President Sarney, following the visit, declared: “[A]n uranium enrichment plant is by nature a secret site. This step shows the extent of today’s relation between Brazil and Argentina.”8 It appears that the original idea of a presidential visit to a power plant was put forward by President Alfonsín himself.9 Itamaraty reacted positively, whereas the Brazilian military remained mistrustful, possibly fearing a duty of reciprocation.10 However, General Bayma Denys, secretary general of the Brazilian National Security Council, which oversaw the Nuclear Energy Council, maintained that the armed forces played no part in the decision concerning the nuclear opening of 1987–1988, and that the responsibility for such an initiative entirely rested upon the civilians.11 Despite stemming from presidential inspiration, the visit to Pilcaniyeu was not an improvisation but was prepared by diplomatic negotiations. The working group on nuclear issues, established at Foz do Iguaçu in 1985, had discussed and promoted proposals of exchanging presidential visits to the respective nuclear facilities.12 Moreover, the account of these events by Pinheiro Guimarães seems to suggest that the visit to Pilcaniyeu was not an isolated event, but had a direct link to the visit Alfonsín was later to pay to the nuclear center of Aramar, in the state of São Paulo.13 Yet presidential advisor Rubens Ricupero denied that, at the time of Pilcaniyeu, where he accompanied Sarney, there was any preliminary agreement of reciprocation. The decision to invite Alfonsín to Aramar was made at a later stage.14 Eventually, Alfonsín attended the inauguration of the Brazilian uranium enrichment plant of Aramar, at Iperó, in April 1988. On the occasion, Alfonsín explicitly commented that it was “a reciprocation of the visit President Sarney paid to me in Bariloche,” and added that this was “a proof that there is nothing to conceal or to be suspicious of, between Argentina and Brazil.”15 The Joint Declaration on Nuclear Policy issued at Iperó reiterated the inalienable right of Argentina and Brazil to develop nuclear technology for peaceful uses, the strengthening of mutual confidence, and the possibility of extending cooperation in nuclear matters to other countries in Latin America. Whatever the relation between the various steps characterizing nuclear opening, confidence building in the nuclear sector appears as a

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clear strategy rather than as a sequence of single episodes. Nuclear rapprochement was an additional means to consolidate democracy through the elimination of politically relevant spheres of prominence of the military.16

3.2.3

Integrationist acceleration in times of crisis

In April 1988, during the presidential summit of Brasília, the same that occasioned the visit at Iperó, Presidents Sarney and Alfonsín concluded another two important protocols on the automotive sector and the food industry, and further expanded the existing ones. Most of all, at the Brasília meeting Alfonsín officially announced the intention to systematize and lock the several acts of integration through the signature of a comprehensive treaty. Sarney accepted the proposal, and instructions were given to the two chancelleries accordingly. Caputo expressed the will to conclude the envisaged treaty before the end of the year, and Alfonsín emphasized how integration was the only option for Brazil and Argentina to find a way out of the economic crisis. However, the presidential statement seemed pervaded more by anxiety rather than hope. By the same token, Caputo’s haste disclosed more concern than ambition. Indeed times were changing. The initial enthusiasm was vanishing. Expectations of gains from integration had grown, probably disproportionately, and so had disillusionment. Between 1983 and 1985, when the integration idea was born and debated, the macroeconomic frame at the international and the national levels was not particularly favorable to such an undertaking. Strong political will and determination went some way to overcome objective difficulties. However, integration in the Southern Cone was actually launched, and proliferated, under a conjunction of improved and relatively more stable political and economic conditions.17 Politically, the positive impact of restored democracy conferred great prestige and legitimacy upon the presidents and their governments. Economically, re-democratization attracted international attention to the area, and economic support, including investment flows, followed political sympathy. Furthermore, apart from the EEC, at that time the world did not offer many examples of structured regional integration, and the Argentine-Brazilian scheme, with its enlarged market, attracted potential investors. Finally, at the domestic level, when integration was implemented in 1986, both countries were enjoying the first positive effects of their respective stabilization plans, which reduced inflation and facilitated economic recovery in the short run. By 1988, all these favorable factors had been exhausted. Neither administration could count any more on the sort of unconditional support that derived from democratic legitimacy alone. Inability to tackle economic and social problems debilitated the presidents and their

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parties, and disagreements emerged within the ruling coalitions too. Destabilizing maneuvers against the democratic governments, including possible coups, were not just a remote risk. Internationally, other regional undertakings overshadowed the Argentine-Brazilian enterprise. The EEC was marching determinedly toward the consolidation of the internal market; and Canada and the United States had initiated negotiations in May 1986 and concluded their bilateral free trade agreement in October 1987. Most importantly, the economic record remained poor. In July 1987, William Rhodes, director of the Debt Rescheduling Commission for Latin America, explicitly complained about the lack of results of the Cruzado Plan in Brazil and the limited achievements of the Austral Plan in Argentina.18 The worsening economic situation directly affected integration. In a climate of economic expansion, entrepreneurs are keen to invest, compete, and open markets; on the contrary, in a climate of economic depression, protectionist attitudes prevail. Economic instability was one of the main causes undermining industrial complementation. Last but not least, the PICE itself was showing clear signals of tiredness.19 Its very approach was questioned and some of its creators left to take up different positions. The sectoral approach, with its corollaries of gradualness and flexibility, had favored the initial smooth implementation, but was now obstructing further progress. In fact, manipulation of annexes and lists provided space for business resistance, with lobbying generating a growing number of exceptions. Once the “easy” sectors with an interest in integration had come to an end, lack of entrepreneurial commitment made it difficult to draft lists of specific products subject to the elimination of trade barriers and the inclusion of new sectors became problematic. Despite a significant degree of continuity in the personnel managing integration, several key actors left the program between 1987 and 1988. Just before the presidential meeting of July 1987, Secretary Lavagna resigned over disagreements with the government on macroeconomic choices. All his staff resigned with him, and only Undersecretary Nofal was reappointed. Jorge Romero left in April 1988 to take up a top-level position at the Inter-American Development Bank; Secretary Sábato had become minister of education in 1987. In Brazil, Ricupero left his post in October 1987; the same year, Minister Funaro and his staff, the director of CACEX Roberto Fendt, and Undersecretary Castro Neves quit their positions. José Tavares de Araujo left in February 1988. However, some of the main personalities involved in the negotiations since the very beginning remained at their desks or had moved up the hierarchy. Carlos Bruno, Romero’s deputy, replaced the latter as undersecretary of economic affairs at the Palacio San Martín. In 1988, Francisco Thompson Flores left Itamaraty to take the post of ambassador to Buenos Aires, and was replaced as undersecretary general by Ambassador do Rego Barros,

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former head of the Economic Department, who in turn was replaced by Samuel Pinheiro Guimarães. This blend of change and continuity had a dual effect on the integration process. On the one hand, the turnover meant that the sense of solidarity and enthusiastic mutuality that marked the initial undertakings started to blur, and so did those personal links established in years of repeated interactions and confidence building. This, together with economic problems and the objective weariness of the sectoral approach, resulted in a loss of inspiration. On the other hand, the implementation of the PICE had already started and enough of its progenitors remained involved to guarantee a high degree of commitment and seek a solution to the stalemate. In 1988, political concern for the future of bilateral integration was amplified by the forthcoming presidential elections of 1989 in both countries. The general political, economic, and social climate was unfavorable to the incumbent administrations. Little was known about the opposition’s intentions regarding integration. In Argentina, the Peronist Party’s rhetoric on Latin American integration was not a sufficient guarantee of commitment at the practical level. In Brazil, competition for nominations had not produced a stronger candidate yet. At the official level, there was the fear that the PICE would be left to one side as part of a rejection of the previous administrations’ policies, and so the need to reaffirm integration as a state policy became imperative. The integrationist scheme then was pushed forward during an apparently unpropitious period, and once again objective difficulties turned into additional motivations to reactivate the process. These adverse changes in the political and economic environment provided the stimulus for the proposal by Alfonsín and Caputo in April 1988, and this initiative eventually resulted in the signature of the Treaty of Integration, Cooperation, and Development, in November 1988. “The final objective of the [T]reaty is the consolidation of the process of integration and economic cooperation” between Argentina and Brazil.20 This treaty appears to have been less a consequence of the success of the PICE than a defensive strategy to protect integration against potential challenges. To this purpose, the 1988 treaty brought two innovations: ratification by national parliaments and introduction of the concept of common market. The first point will be dealt with in chapter four. As far as the second point is concerned, a set of three misinterpretations, or oversimplifications, has arisen around the actual creation of the common market and its time frame. The first is the claim that the 1988 treaty actually provides for the formation of a common market. The second maintains that the alleged common market was to be in place within ten years from the signing of the 1988 treaty. The third misunderstanding, as a consequence of the second, claims that Presidents Menem and Collor (who replaced Alfonsín and Sarney in 1989 and 1990, respectively) when

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signing the 1990 Buenos Aires Act merely reduced the ten-year schedule down to five years. The interpretations suggested here, instead, maintain first that the 1988 treaty provided for the creation of a free trade area while the common market remained a long-term project. Second, that the alleged common market was not to come into force within ten years but that initiatives for its gradual realization were to be started ten years after the signing of the 1988 treaty. And third, that Presidents Menem and Collor did indeed reduce the period for the creation of a common market, but from a period of time indefinitely longer than ten years down to a certain deadline of five. Evidence supporting these interpretations emerges from the literal wording of the treaty as well as the testimony of the direct protagonists. The text of the 1988 Treaty of Integration, Cooperation and Development is by itself sufficiently clear, and there is no provision for either the establishment of a common market or a date for its achievement. What the treaty actually provides for is a common economic space, a quite wide and admittedly ambiguous definition. The treaty envisaged two phases for the attainment of its objective. In the first, “the removal of all tariff and non-tariff barriers to trade of goods and services in the territories of the two Parties will be achieved gradually, within a maximum term of ten years, through the negotiation of additional protocols.”21 This undertaking was to be accompanied by the harmonization of those policies, such as customs, trade, agricultural, industrial, and other policies necessary to make the tariff elimination effective. In the second phase, once the first had been accomplished, “the harmonization of other policies necessary to the creation of a common market” would be “gradually pursued.”22 In the treaty, the creation of a common market appears more as an aspiration than as a legal commitment, and there is no scheduled timetable for such a step. According to the literal wording of the treaty, the necessary policies for the constitution of a common market were to be undertaken, gradually, after the conclusion of the first phase, which would take approximately ten years. Put differently, the treaty clearly said that actions to create the common market would not be undertaken before ten years had passed, and not that the common market was to be achieved within that period of time. Also, there is the question of what was to be achieved within ten years. Certainly not a common market, nor even a customs union, as no mention of common external tariff was made. The term of ten years refers to a free trade area, which is the elimination of all tariff and nontariff barriers to intra-area trade, and the harmonization of those policies indispensable to make the removal effective. And even this interpretation was only mildly incorporated in the treaty since a peremptory deadline of ten years was established only for the removal of tariff and nontariff barriers,

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while no time limit was set for the coordination of customs, trade, or other relevant policies, which were to be harmonized gradually, without final commitment. The 1988 treaty can accordingly be viewed either as a masterful example of legal caution and loosely binding commitments, or, alternatively, as a clumsy, superficial, and ill-drafted attempt to achieve unrealistic and unviable goals. The first interpretation is to be preferred, and reflects the understanding of those who were directly involved in the negotiation of the treaty.23 On the Argentine side, Undersecretary of Industrial Policy Beatriz Nofal, who personally contributed to drafting several sections, recalled that she cancelled from the draft proposals all mention of common external tariff, because there were strong doubts about the capacity and will of the two countries to harmonize their trade policies.24 On the Brazilian side, Ambassador Francisco Thompson Flores, head of the Itamaraty negotiators, recalled that the achievement of the common market was a dream for both countries. However, pragmatism indicated that the first reasonable step was to open up the borders. It was necessary to begin with a cautious opening as a sudden undertaking could have awakened the mistrust of the military and caused negative repercussions on the economy.25 Ambassador Samuel Pinheiro Guimarães, who personally contributed to the drafting, defined the treaty as “cautious, much more cautious than the Mercosur Treaty.”26 Moreover, at this stage, the pursuit of a free trade area, rather than a common market, was consistent with the allegedly inspiring model of the 1988 treaty. Since 1987, Argentines and Brazilians had felt the need to look for a more general and comprehensive approach to integration, which could potentially overcome the constraints of the protocol system. Undersecretary Nofal traveled to Canada to study the U.S.-Canadian free trade agreement, as the Canadian position vis-à-vis the United States was deemed to bear similarities to that of Argentina vis-à-vis Brazil. The Argentine Foreign Ministry passed the report on to Itamaraty. Undersecretary Nofal recalled that Argentina favored a free trade area, with a long transitional period, also on the back of the lesson drawn from the North American experience. Nofal stressed that the United States and Canada had opted for a free trade area for political and economic reasons. Despite the fact that more than 60 percent of Canadian exports were destined for the United States, and the latter had a customs duty of only 12 percent, a transitional period of ten years had been established. In the case of Argentina, the percentage of export to Brazil was much smaller, and the tariffs imposed by the two countries were close to 100 percent on certain products. Besides that, the U.S. and Canadian economies enjoyed a high degree of stability and this was not the case in the South of the hemisphere.27 For all these reason, a common market was not deemed viable at that stage, and a free trade area was a logical start

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to pursue the dream of a common market, which remained as such until Presidents Carlos Menem and Fernando Collor de Mello made it a reality two years later.

3.3

New Circumstances and the Creation of the Common Market 3.3.1

International changes

By the beginning of the 1990s, the prominent features of the international system had dramatically changed. Major political changes had had important repercussions in the economic realm too. The fall of the Berlin Wall and the break-up of Soviet power terminated the “long peace” bipolarity had assured after World War II.28 The United States, and its political and economic system, appeared to emerge as the overwhelmingly dominant model throughout the world. The international agenda concentrated heavily on the spread of democracy and market economics. The consequences for Latin America were of unexpected magnitude. The attention of the international community shifted away from the continent, which risked international marginalization. The end of the Cold War robbed military regimes committed to fighting leftist subversion of any meaning and sapped support for them. In 1989, Paraguay and Chile, the two remaining authoritarian administrations in South America, recovered democratic status. However, this wave of democratization did not rescue South America as a whole from a curious paradox. Since the mid-1980s, reacquired democracy had been the main political capital of the area, but, toward the end of the decade, ironically, this became almost counterproductive. The new international agenda prioritized those countries setting up democracy in other parts of the world and neglected those that had already done so yet still needed support for consolidation. On the economic side, things were no better. Latin American efforts to stabilize and gradually open their economies were failing to attract international investments, which were instead heavily diverted to countries where market economy had to be built from scratch. The specter of a division of world trade in cohesive regional blocs and the virtual paralysis of the General Agreement on Tariffs and Trade (GATT) by 1990 gave reasons for further concern to Latin American leaders.29 Globalization, which had already been sensed by Argentine and Brazilian elites as a reason for integration, displayed its full features and effects from the beginning of the 1990s. On the domestic front, debt, capital flight, stagnation, and dreadful hyperinflation completed the gloomy picture of Argentina and Brazil. Such was the situation in the early 1990s that drastic remedies were to be found at the international and the national levels. As the North

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American model of open market economy was the dominant paradigm, solutions tended to take this direction. In 1990, during a conference organized by the U.S. Institute for International Economics, the economist John Williamson illustrated a set of economic principles defining the lowest common denominator of policy advice being addressed by the Washington-based institutions to Latin American countries from 1989. Hence the phrase Washington consensus. The original formulation included fiscal discipline, redirection of public expenditure priorities, tax reform, interest rate liberalization, competitive exchange rates, trade liberalization, elimination of restrictions to foreign direct investment, privatization, deregulation of barriers to entry and exit, and secure property rights. Nothing was said about the right mix of these measures or their timing and intensity, and later on Williamson claimed that his study had been distorted and misused.30 The implementation of the Washington consensus and its model of open economy, both at the international and the national levels, entailed a rethinking of regional grouping models too. In a context of increasingly free circulation of goods, services, and capital within states as well as among them, development and wealth had to be pursued through competitive insertion in the international trade system and not through artificial protection from it. Both central and peripheral countries saw a growing convenience in the formation of regional blocs as instruments to face global challenges. Especially weaker countries saw in the regional space a compromise between closed economy and complete unilateral opening. At the national level too, the new international logics informed and transformed, though at a different pace, the Argentine and Brazilian economic models. This shift had a dramatic impact upon the bilateral integration project too. The newly elected administrations in Argentina and Brazil have often been identified with neoliberal adjustment and proximity to U.S. positions; however, while they adapted their strategies and programs to the changing international order, neither came to power as a result of it nor were they empowered with a clear electoral mandate to drive their respective countries toward the neoliberal paradigm.

3.3.2 The Argentine perspective and international insertion strategy Carlos Menem was elected president of Argentina in May 1989 and took office in July.31 His election was no surprise to anyone. Since mid1988, it had appeared clear that Menem was the favorite candidate to succeed Alfonsín.32 The electoral disaster of the Unión Civica Radical was due to the inability of the incumbent administration to manage the economic crisis, and in particular to halt hyperinflation. Yet globalization, economic opening, and neoliberal policies were neither in

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the electoral agenda nor in Menem’s electoral platform.33 When Menem took office, his image was still that of an “emblematic leader of Peronist populism.”34 During the electoral campaign, he had promised to pursue a “revolución productiva,”35 to raise the minimum salary and to stick to the traditional foreign policy of justicialismo, characterized by autonomy and commitment to the Non-aligned Movement. Yet as soon as he took office, Menem appointed Bunge y Born corporation managers to run the economy, chose consultants from entrepreneurial associations for public posts, and concluded alliances with the liberal right. What immediately became clear was the strong emphasis the Menem administration put on economic issues. 36 When Alfonsín took office, the international context had been characterized by the recrudescence of the Cold War, the debt crisis, the Central American conflict, and the prevalence of authoritarian governments in South America, while the internal agenda had been dominated by the quest for public liberties and human rights as well as by economic issues. All these international and national factors were read by the Radical administration as a threat to political stability. In such a context Alfonsín made the protection and consolidation of democracy the central objective of his action, including foreign policy. When Menem took over, the Cold War was coming to an end with a clear winner, the crisis in Central America was largely solved, and external debt was being rescheduled in multilateral forums; internally, economic concerns monopolized debate. The most serious threat to democracy moved from the military to the economic realm, and, in such a different context, the Menem administration defined Argentine national interest, and its foreign policy priority, essentially in economic terms.37 When this salience of economic issues, coupled with a strong realist stance toward the world, encountered the big international changes of 1989 and 1990, a peculiar theoretical and practical synthesis emerged. Attracted by this deep but still unstructured rethinking of Argentine politics, a community of intellectuals, academics, economists, diplomats, and politicians gathered around the menemista circle. They started a critical analysis of Argentine history in order to make sense of the country’s present situation and design policy guidelines to return Argentina a primary status at the world level. The reasoning was that Argentina was a geographically peripheral country, strategically irrelevant to the center. Also, the country had experienced its golden age in a privileged relationship with the dominant power of the time, Great Britain. Import-substitution industrialization was inherently responsible for the subsequent isolation and decay of the country. Now the point was to search for a new privileged association, and the early post–Cold War international system provided a straight answer: the United States. These considerations were incorporated in the theory of “realismo periférico,”

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which served as the theoretical background to Menem’s foreign policy throughout the 1990s.38 Despite this pursuit of privileged political relations, economic transactions with the United States never took off.39 The reason for these poor results has to be found in the fact that the respective agricultural and food productions were scarcely complementary and even competitors. The March 1991 convertibility law establishing the parity between the Argentine peso and the U.S. dollar ended up over-evaluating the Argentine currency, discouraging export and instead fomenting imports. Argentina turned to Brazil to find an outlet for its production.40 As had already happened in the mid-1980s, Argentina, internationally disillusioned, had to seek for a further rapprochement with its neighbor to make its program of economic development sustainable. Overall, the Menem administration was a real watershed for Argentina’s foreign and economic policy. Integration in the South American Cone could not but be largely affected too.

3.3.3 The Brazilian perspective and international insertion strategy Fernando Collor de Mello was elected president of Brazil in two rounds of elections between November and December 1989, and took office in March 1990. Unlike Carlos Menem, he was an outsider, and his victory was largely unanticipated. Like his Argentine contemporary, he had not explicitly declared what his economic program would be during the electoral campaign.41 However, his foreign policy platform had generated three types of expectations: modernization of the international agenda of the country; moderation on the conflictive issues with the United States; and reduction of the terceiromundista (“thirdworldist”) approach to international relations.42 During the Collor administration, neoliberalism inspired all public policies, including foreign policy.43 The analysis of the international context and the relative position of Brazil in the world resulted in the reformulation of the available options of external conduct. The increased cost of autonomy forced Brazil to put aside traditional foreign policy patterns and to adapt itself to new internationally prevailing imperatives, such as nuclear nonproliferation, opening to import of goods and services, environment, active participation in multilateral regimes, and avoidance of conflictive relations with the hegemon and its agenda. As in the case of Argentina, there was a strong coincidence between the internal and external agendas. Brazilian foreign policy pursued economic opening and favorable access to credit, markets, and technology to support internal reform. The departure from identification with the developing world has to be understood in terms of a reinforcement of bargaining power

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vis-à-vis the industrialized world. Under Collor, foreign policy agenda and objectives tended to coincide.44 Important elements of both change and continuity characterized Collor’s foreign policy. On the one hand, traditional positions, such as autonomy on international questions, nuclear development, a firm stand toward the United States, and the protection of national economy, all became more elastic; also, the nature of Brazilian international presence shifted from the essentially political to the essentially economic, as did the definition of national interest.45 On the other hand, Brazil never aligned itself automatically or uncritically with the United States. Although national interest was increasingly perceived in terms of economic modernization, national development remained the rationale behind choices of international relevance. Within the constraints of the new international framework, Brazil preserved a developmentalist sensitivity and a broadly North-South vision of international relations. The results of Collor’s administration were not positive. His economic policy was a failure: the privatization program was not implemented, the economic opening was more rhetorical than effective, the economy entered recession in 1991, and inflation reached 440 percent in 1991 and 1,000 percent in 1992.46 Collor’s foreign policy, overall, was not successful either. He put strong emphasis on accession to the first world, which was reflected in his official visits abroad. His intention was to promote his governmental project and style among top politicians and businessmen in developed countries. His presidential diplomacy tended to identify his personal commitments and views with those of his country, so that when he lost respect and credibility, so too did the major initiatives he had proposed.47 Perhaps, the major achievement of the Collor administration was integration in the Southern Cone. This, too, was redesigned according to the new vision and objectives informing Collor’s political and economic action.

3.4

The Change of Approach to Integration

In the mid-1980s, despite a generally unfavorable framework at the international and the national levels, Argentine-Brazilian integration had taken shape and got started. Indeed, this had been a response to the adverse circumstances. In the early 1990s, by contrast, international circumstances favored integration in the Southern Cone and almost pushed its pace. Argentina and Brazil still perceived their geographical, political, and economic position in the world as a structural constraint to their development. However, regionalization was no longer a defensive posture, but instead an assertive instrument of competitiveness at the global level. The pace of integration reflected the changes occurring in the international arena, and its progress was parallel to the adaptation of

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national strategies to the international agenda. When Menem took office, his counterpart in Brazil was still President Sarney. Modality of international interconnectedness and the balance of world power were about to change but had not quite done so yet. Integration proceeded on established lines. When the international modifications displayed their effects, Menem found President Collor to be a man with whom he had many political affinities. Each perceived the need to modernize his country, and most of all its economy, to face the new global order. Accordingly, the design of, and approach to integration was rapidly modified.

3.4.1

Menem, Sarney, and the continuity of the original model

Menem’s populist reputation as a governor of the province of La Rioja had reached Brazil long before he became president. Also, it was not clear what his attitude toward Brazil was. Menem had placed strong rhetorical emphasis on Latin American integration and shown firm personal commitment to it. This posture was rooted in Peronist thought and tradition. Yet in Brasília perplexity remained about both his genuine friendliness to Brazil and his actual integrationist will.48 To reassure Brazil about his intentions if elected president, Menem entrusted José Octavio Bordon, secretary of international relations of the justicialista party, with a personal letter to Sarney. Bordon traveled to Brasília in the summer of 1988. Menem was extremely confident that the opinions he expressed in the letter would be soon attributable to the next Argentine head of government.49 Menem reiterated the “true and profound vocation” for Latin American integration of the justicialista thinking. And he stressed that his party has “always thought that Argentine-Brazilian integration constitutes a fundamental pillar” for any attempt at continental integration.50 From the letter, it is also possible to detect how, in this phase, traditionally developmentalist elements intermingled with new global concerns in Menem’s thought about integration. The governor made reference to three types of need: “not to act alone in the face of the big units defining today’s international framework”; “to preserve our freedom of action in front of the economic concentrations running world finance and trade”; and “to pool our scarce resources to face technological challenge . . . [A]nd to attain a reasonable degree of welfare.”51 Menem concluded his message with the pledge that if elected to form a government, he would continue to support bilateral integration. In his reply, Sarney expressed “great satisfaction” for the reassuring words by Menem yet Brazilian caution did not disappear.52 Also during the transition, Alberto Kohan, one of Menem’s closer aides, and later secretary general to the presidency, frequently traveled to Brazil to

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promote the issue of integration.53 Indeed Brazilian prudence was fed by the unfolding of the menemista program of economic and foreign policy, from which it appeared that the continuity of integration depended on its compatibility with the internal reform plan.54 Moreover, Domingo Cavallo, now foreign minister designated, had been very critical of the sectoral methodology of integration when this had been launched. The Argentine administration promptly undertook a set of reassuring steps, which culminated in Menem’s visit to Brasília, his first official working mission abroad. Foreign Minister Cavallo stated that his earlier criticism had concerned the methodology of integration, and that he had not questioned its political value. Furthermore, he added that on the eve of presidential elections in Brazil, it was important to give a strong signal of continuity and support, and Argentina had decided to stick to the existent methodology in the immediate future.55 Yet until the new Brazilian administration entered Palacio Planalto, Argentine-Brazilian integration was to experience an odd six months. The product by product approach was not compatible with Menem’s plans of a fast opening up of the economy. His administration, and especially Foreign Minister Cavallo, sponsored a new and bolder approach to integration, but political pragmatism suggested they should put aside the plan at least until the presidential elections in Brazil. The Sarney government, instead, wanted to stick to the methodology it had helped to create, which still fitted its developmentalist approach to national and international economics. Although the Brazilian incumbent administration had already lost much credit and support internally, Sarney still appeared as the guarantor of the integration process, and Menem as the newcomer; therefore negotiations continued according to the old pattern. At this point, bilateral integration was an established state policy in both countries, and the new international circumstances argued for its reinforcement rather than its debilitation. The visit of President Menem to Brasília in August 1989 therefore was far from being confrontational; on the contrary, it was characterized by cordiality and a collaborative attitude. During the three-day summit, continuity with past practice was evident, not only in the sectoral approach. President Sanguinetti of Uruguay, as usual, was invited for joint discussion, and the three presidents released a statement in which they reaffirmed their commitment to integration. Another significant trait of continuity was the reference President Menem made to the common will to strengthen democracy and promote the growth of Latin American peoples. Concern for the Argentine trade deficit, and Brazilian willingness to cooperate over this was an established pattern too. Also, at this stage, positions on nuclear issues still reflected the traditional autonomous and developmentalist approach: Menem declared that joint nuclear development was an answer to external pressure in this field, and

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official Argentine and Brazilian sources stressed how cooperation in this area aimed at a greater political and strategic independence vis-à-vis third parties.56 Perhaps, the most innovative element of the meeting was the charismatic presence of President Menem himself. He took the initiative to propose the enlargement of the project to other countries in order to create a bloc on the model of the European Union. This proposal could hardly be considered a novelty, but certainly highlighted Menem’s resolve in pushing for his own agenda. Also, Menem tried not only to reassure the Brazilians about his commitment to integration, but acted as the new guarantor of the process. When meeting the candidates for the Brazilian presidency, he insisted on the issue of integration and the candidates committed themselves to supporting the undertaking if elected. A reversal of positions was taking place. By winter 1989, Argentina appeared as the major supporter of the modernization and strengthening of the process. Cavallo spoke out in favor of a more vigorous, extensive, and effective integrationist project.57 The incumbent Brazilian administration bore the burden of impasse, and the incoming administration would have to prove itself able to cope with the renewed momentum.

3.4.2

The Menem-Collor entente and the change of approach

Similarities between the programs of Menem and Collor were particularly strong, especially regarding the intention to open the economy and reduce import tariffs. Argentina had started its process of economic liberalization in 1988, under Alfonsín, but it was not until 1990 that the Menem administration dramatically lowered customs duties. At the same time, Collor announced a four-year plan to reduce customs tariffs. In both countries, the reduction program envisaged a general approach, which affected the entire customs regime. This change robbed the integrationist principles of selectiveness and gradualness of much of their meaning, as many products, regardless their geographical origin, would soon be able to enter the territories of Argentina and Brazil with a very low duty. The integration commitment had to be upgraded and adapted to this new reality if it was to retain a minimum of political and economic meaning. The 1988 Treaty of Integration, Cooperation and Development had provided for the creation of a free trade area within ten years. But by 1990 this objective was already obsolete. In a free trade area without a common external tariff but with low levels of import tariff, third country products could compensate for disadvantages derived from customs duties by relative advantages in quality and price. Moreover, with uncoordinated tariff reductions and a free trade agreement, only a very

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complex and sophisticated system of rules of origin could avoid unfair competition between ports and other stations receiving incoming goods. Almost necessarily, the project of a common market, including a common external tariff, became a topical issue. The first big change concerning integration decided by the Menem and Collor administrations derived directly from the strong emphasis they gave to the commercial aspects of economic policy. Even before deliberating on the future form or legal evolution of the free trade area, which was to be achieved by 1998, it was decided to proceed with a bilateral commercial liberalization program through tariff reduction. This exercise would be universal, in line with the national programs, and automatic, that is, with a scheduled timetable for application not subject to sectoral negotiations. It is now important to investigate how and when this thinking was put into practice, and who took the main relevant decisions. Negotiations between the Menem administration and Collor de Mello started as soon as the Brazilian electoral results became known. In January 1990, Collor traveled to Buenos Aires in his capacity of president-elect, and, together with President Menem, endorsed the common will to proceed with bilateral and Latin American integration. On March 16, the day after the inauguration of President Collor, Argentina and Brazil issued a joint declaration on the integration process, in which the two administrations announced the creation of a Committee of Implementation of the 1988 Treaty of Integration Cooperation and Development. The joint declaration emphatically defined this step as historical for relations between the two countries. Probably it was not, but it certainly gave a strong signal about the intention to relaunch the integrationist project. In June 1990, Francisco Rezek, Brazilian foreign minister, traveled to Buenos Aires. Conversations with Domingo Cavallo focused on the idea of launching the common market before the ten-year period that had been envisaged in 1988 for the creation of the bilateral free trade area.58 Also, the two ministers analyzed prospects for the extension of integration to other countries. A certain reserve at diplomatic level about this meeting spread a general impression that something big was under preparation for the Menem-Collor summit scheduled the following month. An additional clue in this direction was given four days after this meeting, when Cavallo met Uruguayan chancellor Gross Espiel, and diplomatic sources referred to talks to include Uruguay, Paraguay, and Bolivia in the Argentine-Brazilian undertaking.59 The presidential meeting between Menem and Collor took place in Buenos Aires on July 5 and 6, 1990. This was a milestone in the evolution of integration in the Southern Cone. Outstanding commitments detailed in the original protocols were decidedly fostered: in the food sector, the number of products included in the common lists was doubled

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and bigger quotas were granted to a significant number of other products. The common lists of capital goods were also remarkably expanded. Provisions to implement the agreement in the automotive sector were finally activated. A social security convention on pension schemes and contributions was signed. The statute of binational enterprises, granting national treatment to companies with 80 percent or more of their capital in Argentine and Brazilian hands, was finalized. Most of all, the Acta de Buenos Aires of July 6, 1990, signed by Presidents Menem and Collor, incorporated, and gave a juridical frame to all the views and thinking that led the two administrations toward the change of approach to integration. In its preamble, the acceleration of integration is indicated to be the “adequate response” to international changes, such as the “consolidation of the big economic spaces,” the “globalization of the economic scenario,” and the importance of an “adequate international insertion” of the two countries.60 The new feature of the integrationist project was given the form of a common market, to be completed by the end of December 1994. To this purpose, the two governments committed themselves to undertake all the necessary measures, and in particular, the coordination of their macroeconomic policies, the general, linear, and automatic reduction of customs tariffs, and the elimination of all nontariff barriers. A binational working group, called the Common Market Group, was entrusted with the formulation of proposals to the two governments for implementation of the provisions of the Acta. The mantra of general, linear, and automatic tariff elimination is easily explained. It required reduction to be applicable to all customs codes, to be regulated by a calendar of preset and progressive reductions, and to proceed without further negotiation. This formula was perfectly compatible with the timing of internal liberalization, especially with the Brazilian schedule, which was to be completed by the time of entry into force of the common market. Additionally, despite the short time available, the fact that the deadline for the formation of the common market fell within the mandate of both administrations reinforced the credibility of the political commitment.61

3.4.3 From the bilateral common market to the Treaty of Asunción Negotiations for enlarging the common market immediately started. The only formal condition was the membership of the Latin American Integration Association (LAIA). However, given the main political aim with which the bilateral association had started, that is to say preservation of democracy, there was a second stringent condition: that new members be democratic states. This was not a formal rule; according to Secretary Lavagna, nobody at the time thought it was important to make

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it explicit since it was a de facto condition.62 The situation was clearly illustrated by the cases of Uruguay and Paraguay, the economies of which were highly dependent on the big neighbors. Since 1985, democratized Uruguay was regularly invited to Argentine-Brazilian summits and later associated to some of the bilateral protocols; authoritarian Paraguay was never invited. The changes of the early 1990s affected this aspect of integration too. Chile and Paraguay returned to democracy in 1989 and the new international system and its growing division into blocs urged a prompt enlargement of the bilateral agreements into a larger regional association. Despite growing rumors and rising expectations about enlargement in the summer of 1989, it was only with the meeting Cavallo-Rezek of June 1990 and the subsequent signature of the Acta de Buenos Aires that Argentina and Brazil started a vigorous diplomatic campaign to recruit new members. The two chancelleries meant to expand the common market first toward Chile and Uruguay, and later toward Paraguay and Bolivia. Chile was the first priority, as announced by Minister Cavallo soon after the Buenos Aires summit.63 The association of Chile with the enterprise had three considerable advantages for Argentina and Brazil: access to the Pacific, added value in reputation for solid economic management, and political representation of the whole Southern Cone. However, Chile was not inclined to enter into any commitment without a net benefit for the country. Santiago was fearful of the chronic macroeconomic instability of the other associates, and additionally saw its lower level of customs tariffs as an obstacle to joining a customs union. Both Minister Cavallo and President Menem traveled to Chile in August, but the integrationist enthusiasm showed by President Aylwin was more than counterbalanced by the skepticism of the powerful Chilean economic technocrats. After Menem’s visit, it remained clear that Chilean reservations were hard to overcome. Uruguay had participated in the Argentine-Brazilian integration process as an observer since the very beginning. In 1988, it decided to be formally associated to some of the PICE protocols, but the same year declined the opportunity to accede to the Integration, Cooperation and Development Treaty. However, its economy was largely linked to that of its big neighbors. In 1990, 37 percent of Uruguayan foreign trade was made with Argentina and Brazil.64 Also, an Economic Complementation Agreement (CAUCE) had been signed with Argentina as early as 1975. The following year a Protocol of Trade Expansion (PEC) was concluded with Brazil. In March 1990, President Alberto Lacalle took office in Montevideo, and his economic orientations had close similarities to the programs of Menem and Collor. In June 1990, soon after their meeting in Buenos Aires, Ministers Cavallo and Rezek undertook working meetings with the Uruguayan chancellor Gross Espiel, and one of the main

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issues discussed was the incorporation of Montevideo to the ArgentineBrazilian integration. After the signature of the Acta de Buenos Aires, Uruguay voiced its will to join the common market and asked for the elimination of the 1988 Treaty clause impeding the accession of new members until 1993.65 With the return to democracy, and the election of General Andrés Rodriguez to the presidency, great expectations rose in Paraguay about the country’s participation in the Southern Cone integration. In summer 1989, an external consultant, hired by LAIA at the request of the Paraguayan government, delivered a report on the positive and negative aspects of a prospective Paraguayan accession to the ArgentineBrazilian scheme. The report recommended the adoption of a “different treatment” approach, grounded on the size and the different degree of development of the country.66 However, Argentina and Brazil, reversing a long accepted LAIA tradition, did not recognize the “different treatment” principle and stressed that, if the common market had to be enlarged, this would be done among equals, sharing gains and burdens of the enterprise. Toward the end of August 1990, Paraguay accepted this condition, as 35 percent of its global foreign trade was with Argentina and Brazil,67 and the price of exclusion was by far higher than that of accession. Eventually, Paraguay ended up gaining also a long list of concessions. The application of Bolivia could not be accepted because it was a “member of the Andean Pact and therefore predisposed towards another common market.”68 Besides the existence of an undemocratic regime, what Minister Rezek defined “double allegiance” was another condition of ineligibility to membership of the incipient common market.69 At the end of August 1990, Argentina and Brazil invited the governments of Uruguay and Paraguay to participate in the project of common market envisaged in the Acta de Buenos Aires. On October 1 and 2 the delegations of the four countries met in Brasília to start negotiations for a quadripartite integration treaty. The text discussed on the occasion was accepted by the parties “in principle,” 70 as consensus was reached about objectives and general principles of the treaty, but the provisions regarding the institutional features and the transitional phase remained pending. The Paraguayan delegation proposed Asunción as the venue for the formal signature of the common market treaty. At this stage, early October 1990, parallel negotiations were being conducted for the bilateral common market and for the quadrilateral one. The Argentine-Brazilian Common Market was finalized and formalized in the so-called Economic Complementation Agreement No. 14 (ACE-14) of November 1990, which systematized in a single document all the concessions Argentina and Brazil had made to each other since 1962 in the framework of LAIA. Now, it is important to understand the different levels of negotiation in order to grasp the relation between the

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PICE, the Acta of 1990, the ACE-14, LAIA, and the future quadrilateral treaty. Upon notification, LAIA provides members with the possibility of creating geographically limited preferential tariff regimes, departing from the general rule of generalized tariff concessions. This provision had made Argentine-Brazilian early integration possible. The PICE protocols involving tariff concessions had been notified to LAIA in the form of economic complementation acts. The ACE-14 incorporated all the previous economic complementation acts negotiated between Brazil and Argentina. Also, the ACE-14 gave implementation to most of the principles formulated in the Acta. The Acta was a political commitment that did not contain tariff concessions, which were instead established in the ACE-14 according to a general, linear, and automatic scheme of import duties reductions. Quadrilateral negotiations continued. A sensitive point concerned the degree of institutionalization of the future common market. Argentina and Brazil wanted to retain a certain degree of control over the process and opposed the creation of supranational organs. Félix Peña, Argentine undersecretary of economic integration since January 1991, recalled that Uruguay and Paraguay were conscious of the fact that Argentina and Brazil were the main actors, in terms of size and economic volumes, but debate over the text of the treaty was genuinely quadripartite.71 The absence of special tensions or particularly unpleasant moments during the final phase of negotiations was also due to the fact the real negotiation had been that of the ACE-14.72 Once provisions for the bilateral common market were defined, the quadrilateral agreement largely followed the same scheme. The designation Common Market of the South, proposed by the coordinator of the Paraguayan delegation to the Common Market Group Ambassador Antonio López Acosta was chosen because it incorporated two concepts: the final goal of the association was indeed the creation of a common market, and it allowed prospective enlargements to other LAIA countries.73 The acronym Mercosur was reportedly coined by the Argentine undersecretary of foreign trade Raúl Ochoa.74 On February 18, 1991, the last round of technical negotiations to prepare the text of the Mercosur Treaty and its annexes was launched. After three days, the final version was initialized by the representatives of the four countries. On March 26, 1991, the presidents and foreign ministers of Argentina, Brazil, Uruguay, and Paraguay signed the Treaty of Asunción, formally establishing Mercosur. The treaty incorporated in its preamble all the principles inspiring the Acta of 1990, and confirmed the aspiration to Latin American integration. Its three pillars were, first, the free circulation of goods, services, and production factors, as well as the elimination of all tariff and nontariff barriers among the member states; second, the creation of a common external tariff and the adoption of a common

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trade policy toward third countries as well as a common position in international economic forums; third, the coordination of macroeconomic policies.

3.4.4

Nuclear policy and inter-institutional relations

The change of approach to economic integration was accompanied by a conceptual change in nuclear cooperation too. Under Alfonsín and Sarney, nuclear cooperation had a primarily bilateral goal: to enhance confidence between the two countries in the highly sensitive field of security. This exercise was meant to diminish security concerns and, as a consequence, to lessen resistance to the implementation of the economic integration program. It was only as a secondary dimension that nuclear cooperation was meant to reassure the international community, securing its indispensable political and economic support. The whole design had as a final goal the consolidation and preservation of democracy. Under Menem and Collor, this approach was reversed in two respects. First, nuclear cooperation now had a primarily international goal. It was essentially a token of trustworthiness and reliability to international partners.75 It followed the logic of alignment with the international predominant creeds, and nuclear nonproliferation was one of these. Argentina and Brazil were expected to match certain standards in matters of nuclear safeguards if they wanted to be partners of the first world club. Second, nuclear cooperation became more related to the economic rather than the political sphere. On the one hand, it was detached both in conceptual and practical terms from the political design of integration, and rather responded to the need to rationalize state resources and provide a quid pro quo to international partners and investors. On the other hand, it was not considered an instrument to consolidate democracy but almost an accompanying measure to national economic development. As with economic policy and integration, the first steps of the new administrations were cautious in the nuclear field too and did not depart substantially from traditional stances. In 1989, Minister Cavallo declared that the Menem administration was not thinking of signing either the Treaty of Non-Proliferation (TNP) or the Tlatelolco Treaty, which hade made Latin America a nuclear-free zone. However, he added that this posture could be reversed if the requested safeguard mechanisms could be administered by Latin Americans, meaning Argentina and Brazil, themselves.76 Deliberate or not, this proved to be an early indication of what would happen in the years to follow. Actually, both Argentina and Brazil had nuclear plants that did not meet international safeguard standards. This created suspicions within the international community that the two countries might be developing nuclear power for military purpose. That was not the case77 but the price

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for mere suspicion was denial of advanced technological equipment and transfer of knowledge regarded as indispensable for national development. Whereas some technical and bureaucratic sectors in both countries opposed the opening of the nuclear plants to international inspectors on the ground that nuclear development had been achieved without any external help, Presidents Menem and Collor understood that, having nothing to hide, the price of pride was unsustainable. Given the circumstances, Minister Cavallo was disposed to consider signing the TNP, but this was perceived by other branches of the government, and by Brazil, as a discriminatory treaty, which allowed only certain countries to develop nuclear power to the detriment of the others. A second solution was explored: an Argentine-Brazilian bilateral treaty that provided the same safeguard standards as the TNP. But the guarantees offered by the bilateral solution did not satisfy the North Americans and the Europeans. A further possibility was the signature of the Tlatelolco Treaty. However Argentina and Brazil, as the only nuclear powers in Latin America, opposed an inspection system led by other Latin American countries that lacked the expertise for such a sensitive task. Since the North Americans and the Europeans would be satisfied with the guarantees provided by the Tlatelolco inspection system, in 1990 Argentina and Brazil thought of introducing modifications to this treaty so that inspections could be carried out by the International Atomic Energy Agency (IAEA). Additionally, Argentina and Brazil noticed that in the European inspection system the IAEA delegates inspections to the European agency, Euratom. The two countries then suggested to Hans Blix, the head of IAEA, that they would set up an Argentine-Brazilian Agency for Accounting and Control of Nuclear Materials (ABACC) to carry out inspections in their territory on behalf of IAEA and under its supervision. This solution would guarantee IAEA standards without hurting local pride or sensitivity. Once Blix gave his consent, Argentina and Brazil consulted with the North Americans and the Europeans, who endorsed the proposal. The complex design envisaged four steps: the creation of the ABACC; a four-party agreement between the IAEA, the ABACC, Argentina, and Brazil; the modification of the Tlatelolco Treaty to allow IAEA inspections; and the signature of the modified Tlatelolco Treaty by Argentina and Brazil. The whole scheme was designed and negotiated during 1990, and culminated in the Declaration on Nuclear Cooperation signed by Presidents Menem and Collor on November 28, 1990. Argentina and Brazil committed themselves to the creation of a Common System of Account and Control on all nuclear materials and plants in their territories, the initiation of negotiations with the IAEA to conclude a full-scope safeguard agreement that would legitimize the common system of accounting and

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control, and the adoption of measures leading to the ratification of the Tlatelolco Treaty. The Declaration marked a clear departure from past assertions of right to nuclear development, and replaced rhetorical assurances of peaceful use of nuclear power with a solemn commitment to abide by international verification procedures. Finally, it is worth exploring if and how Menem and Collor introduced new patterns in their mutual relations, and in relations between themselves and their respective administrative machines, in the management of integration issues, as compared to the Alfonsín-Sarney period. The large recourse to presidential diplomacy was deepened. This attitude was applied to integration too. However, the personal relationship of empathy and friendliness linking Alfonsín and Sarney remained unique. There was not such a privileged personal relation between Menem and Collor.78 The two shared similar views of international relations and had a common program of economic modernization, in which synergy was indispensable to enhance the international attraction of both countries. In their dealings much depended on the compatibility of the internal and external agendas, and mutual interest prevailed over common ideals. Internally, hierarchical discipline and relations between government agencies were strengthened. The new general, linear, and automatic character of integration centralized the decision-making process, more clearly defining roles and competences and reducing the space and need for autonomous negotiation at the lower diplomatic and technical levels. In Argentina, at the beginning of integration, Alfonsín trusted Caputo to find a practical form of implementation of his visionary rapprochement with Brazil to pursue peace, cooperation, and democratic consolidation. By the same token, if “the father of the political creature Mercosur was President Carlos Menem, the father of the content, of the public policies was Domingo Cavallo, the Chancellor.”79 Menem was a man of limited academic education, but with extensive administrative and political experience. He was not keen on the details but was interested and directly involved in the general lines of actions of all governmental policies, from health to justice, from economy to foreign affaires.80 In particular, he had a strong interest in the international position of Argentina and a clear inclination toward Latin American integration.81 In Brazil, hierarchical relations at the beginning of integration had been more problematic, the initiative stemming from both presidential intuition and diplomatic pragmatism. Under Collor, this complex interaction persisted. According to Sergio Danese, former advisor to Sarney and later minister councilor at the Brazilian Embassy in Buenos Aires, Collor found an ongoing process, to which he gave support but not leadership.82 Danese also suggests that Collor was at the right place at the right time, but that the real inspiration and determination came from the bureaucracy.83 However, Celso Lafer, foreign minister in the last days of the Collor

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administration, affirmed that the impulse to the new approach clearly came from the presidency and found in Itamaraty a devoted coordinator and executor.84 The impact of the new presidencies was felt also at the level of chancelleries, including their principals. Palacio San Martín, as in the previous phase, was the coordinator of negotiations on the Argentine side, but the process was now much more centralized, as Cavallo reincorporated the Secretariat of Industry and Trade into the Foreign Ministry. Cavallo can be considered the ideologue of the reshaping of the integration scheme, as this was part of his plan of economic opening and competitive international insertion.85 However, two points have to be highlighted. The first is that decisions concerning integration, although inspired by the political vision of President Menem and the economic design of Domingo Cavallo, were discussed and endorsed by the whole administration.86 The second is that Cavallo saw integration as a tool to pursue his economic design, which is not to say that he was particularly keen on Mercosur. Indeed, there are those who considered Cavallo, and later his successor Guido Di Tella, lukewarm in their support for Mercosur, and reckoned that President Menem was more genuinely inclined to integration than his team.87 In Brazil, Foreign Minister Rezek appeared closer to the process than many of his predecessors, and Celso Lafer, his successor, attributed the main decisions concerning integration to both the president and the foreign minister.88 Both Collor and Rezek were in favor of integration, and they understood the Argentine-Brazilian strategic alliance as a multiplication of power rather than merely a sum of it.89 Yet Itamaraty bureaucracy maintained a considerable degree of autonomy within the process, and continued to provide a strong and qualitative source of input to integration. Finally, the role of the military, already secondary in the first phase of integration, now diminished further. As democracy was consolidated, civilian administrations felt less need for consultation. Additionally, the increasingly commercial emphasis of the enterprise, to the detriment of its relevance for security, further reduced the interest of the military. In Argentina, Menem successfully implemented a rigid policy of military subordination to the civilian power.90 His initiatives were reinforced by two factors: privatization and rationalization of the state led to the abandonment of most of the military development programs, and the explicit U.S. support to the presidential military policy strengthened his action. As far as integration is concerned, Alberto Kohan, secretary general of the presidency, recalled that the military accompanied the process, and were part of it with joint meeting of the joint chiefs of staff and joint military exercises.91 In Brazil, the military evolved into a “democratic corporation,” accepting the basic rules of the game and standing up for their interests when these were affected.92 Such was the case when

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President Collor attempted to reinforce military submission to the civilian power, announcing a reduction of military technology programs and the incorporation of the three military ministries into a single Ministry of Defense under civilian control. Issues such as economic integration were not of primary importance to the military, and, accordingly, these were neither particularly involved nor showed warm feelings in favor of or against the process.93

3.5

Conclusion: The Two Approaches to Integration, Change or Continuity?

Presidents Menem and Collor brought elements of novelty into the foreign policy of their countries and the process of integration. At least in the field of integration, however, it is possible to debate to what extent those changes occurred in a framework of substantial continuity and to what extent they actually departed from past patterns. For example, the construction of the common market has a controversial paternity. According to Roberto Lavagna, the methodology adopted in 1990 “does not violate the intention of what was established in 1986–1988. What is altered is the temporal sequence, and consequentially, the final result.” 94 Three types of criticism have been advanced against this interpretation, concerning the intentions, the sequence, and the methodology. First, in 1988, the objective was to achieve a free trade area within ten years and not a common market; indeed, the concept of common market was introduced only as an aspiration in the long run, and its construction was not to be started until the full completion of the free trade area. Reportedly, President Collor, during the lunch offered at the Brazilian Embassy in Buenos Aires for the signature of the 1990 Acta, told Beatriz Nofal that he was continuing the undertaking she had started, but Nofal replied that actually he was going to change it.95 Later on, Nofal recalled that in the 1988 treaty there was no mention of customs union or common external tariff, which constitutes one of Mercosur’s pillars. Second, Menem and Collor altered the scheduled temporal sequence of integration only in a very broad sense, as in 1988 there was no deadline for the establishment of the common market. Some observers have argued that the 1990 Acta reduced the transitional period for the creation of the common market from ten to five years.96 But the ten-year deadline set in 1988 concerned the creation of a free trade area. It was Menem and Collor in fact who introduced the creation of the common market as a concrete objective of integration and they set an entirely new deadline of five years for this achievement.97 The crucial point is that Menem and Collor indeed reduced the duration of the transitional phase, but the two transitional periods, and their respective deadlines, concerned different instruments of integration.

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Third, the methodology chosen by Menem and Collor implied the abandonment of some of the principles previously inspiring integration. A general, linear, and automatic tariff reduction was hardly compatible with a selective and gradual project of sectoral industrial complementation. Although Mercosur allowed a significant degree of flexibility to implement its commitments, its timing and methodology exposed it and its creators to criticism of “utopianism and excess of optimism” and “precipitateness.” 98 This said, the overall impression is that the process of ArgentineBrazilian rapprochement and cooperation has evolved in a linear trajectory between 1979 and 1991. Notwithstanding the fundamental changes introduced by Presidents Menem and Collor, especially in the trade and nuclear areas, the two phases of integration, 1985–1989 and 1989–1991, appear a natural continuation of one another.99 According to Jorge Campbell, who served both in the Alfonsín and Menem administrations, each phase reflected “the process appropriate to the historical, political and economic circumstances of that moment.”100 The basic rationale for Argentine-Brazilian integration did not change significantly throughout the years. Putting aside for a moment the question of regime consolidation and common values, the main interest of Argentina in the association was intimately related to the maximization of its return in terms of economic growth, that is to say that integration with Brazil was considered as a chance to increase economic performance. Brazil’s core interest was instead related to the increase of its political weight in the world through the aggregation of regional associates, and integration with Argentina was primarily considered as an instrument to enhance Brazil’s political performance. But this mutually utilitarian and complementary scheme was only part of the story. The most important trait of continuity between the two phases of integration lies in the fact that “the associates, at no moment, lost the affinity derived from the existence of shared objectives and values.”101 The commitment to integration up to the constitution of Mercosur was kept because the members perceived their basic similarities, in the realm of politics with the affirmation of democracy, and in the realm of economics with the necessity of modernization and international insertion. In the first phase, under Alfonsín and Sarney, the preservation of democracy was the major political priority, and strategies of international insertion, including integration, were essentially subordinate to this goal. First, the formalization of a diplomatic alliance diminished the possibility of conflict between the two countries, and this reduced the room for political maneuver by the military. Second, a closer association between the two countries was deemed likely to raise their international profile and relative weight, increasing the prestige, legitimacy, and international ties of the ruling elites. Third, the planned involvement

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of societal sectors, namely business, in the integrationist commitment would encourage the participation of civil society into politics. Finally, it was felt that the creation of a larger market and the pursuit of joint economic modernization would enhance economic performance, stabilizing both regimes and reducing discontent. In the second phase, under Menem and Collor, integration shifted from the eminently political to the eminently economic; integration was still pursued as conducive to political and economic stability, but the main goal appeared to be economic competitiveness in a globalizing world. The democratic creed was reiterated more discretely but never went lost. Presidents Menem, Collor, and also Lacalle of Uruguay, since they took charge of the integration process, repeatedly asserted that democracy was the basic guiding value underlying integration.102 The second part of the book aims to clarify the actual place of democracy in the process of integration in the Southern Cone. One of the tasks ahead is to discover whether we are witnessing a case of powerful political rhetoric and propaganda, which is certainly part of the story, or whether there were mechanisms, procedures, or properties through which democracy indeed facilitated or encouraged the integration process.

Part II

Political Investigations and Theoretical Analysis

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CHAPTER 4

Domestic Institutional Setting and Regionalization

4.1

Introduction

The historical investigation has suggested that democracy may have been significant for the regionalization project in the Southern Cone. It is therefore important to establish clearly what the term democracy means, since what often occurs with the word democracy is the same that occurs with the word culture: its meaning can be so broad that it may contain anything, which almost equates to nothing. A return to the original political meaning of democracy is indispensable to understand contemporary political systems defined as democratic. These are liberal democracies, and it is appropriate to distinguish and define the democratic and the liberal components. Different combinations of these two elements result in different regime models within the democratic type. By the same token, the term liberalism has to be understood in its original political meaning too. Due to the repercussions of the extensive economic reforms of the 1990s, in most of Latin America the adjective liberal has acquired a negative connotation, associated with the economic sphere. Here the concept refers to the existence of a political and institutional culture of separation of powers and checks and balances. This chapter argues that to study the relationship between democracy and integration the appropriate model of reference is not democracy tout court but liberal democracy. Upon return to democracy, Argentina and Brazil adopted a liberal democratic form of state. The literature has identified a number of limitations in the South American variants as compared to fully functioning Western liberal democracies. The lack of appropriate institutional checks and balances, the scarce or absent political participation of civil society, and the privileges still granted to specific society segments, such as

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the military, represent the constitutive elements of a species of democracy peculiar to the countries under investigation in a specific historical period: limited liberal democracy. It is understood that Argentina and Brazil, upon return to democratic rule, were clearly political democracies, although they lacked some of the political liberal elements characterizing fully-fledged liberal democracies of the Western type. Three main democratic variants, affected by limitations of different degree and nature, have been identified: limited democracy itself, delegative democracy, and technocratic democracy.1 The synthesis of these three approaches configures the model that I have labeled limited liberal democracy. A mere procedural selection of representatives can hardly have any sort of impact upon integrationist choices and devices; consequently, this second part of the book looks primarily at the liberal elements characterizing liberal democratic systems. It is hypothesized that liberal democracy, as compared to authoritarian rule, involves a larger number of political and social actors in the decision-making process. If these actors newly brought on the stage by democracy somehow favored and encouraged integration, then a first possible link between democracy and regionalization would be established. Whatever the conclusion, this will not pretend general theoretical validity but will claim explanatory power limited to this case study. In particular, this chapter will try to discover if the relationship between democracy and regionalization can be explained by, or partly related to, the institutional setting that democracy brought about in Argentina and Brazil after the military period. This means that analysis has to consider the existence of liberal democratic regimes, but has also to be aware of their limitations, as both aspects may have had repercussions on the integration project. Analysis proceeds as follows. After defining the limited liberal democracy species, explanation of how it applies differently to general state organization and foreign policy will be provided. Relations between the executive and the legislature in Argentina and Brazil will be examined with specific reference to the role played by the two institutions in the construction of regional integration. Investigation of the role of state technocracies in the negotiations will follow. The concluding remarks will challenge the view that integration, as an essentially governmental exercise, represents an abuse of the constitutional order in Argentina or Brazil or a geographical anomaly peculiar to this part of the world. However, if a link between democracy and regionalization can be established through the existence of a specific institutional settlement, the properties of which may have favored integration, such a link seems related more to the deficiencies of that institutional setting than to its correct functioning, thus tempering, rather than strengthening, the fanfare surrounding democratic cooperation.

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What Kind of Democracy Are We Talking About? Political democracy versus expanded democracy

The concept of democracy today has assumed a multifaceted and almost all-encompassing meaning. This is partly due to the fact that the word democracy has lost its original restrictive meaning and is now intermingled, and often confused, with a vague, abstract, and ideal concept of modern values broadly defined as democratic. Democracy “is by now a name for a civilization or, better, for the political end product (to date) of Western civilization.”2 The word democracy is a compound noun deriving from the Greek terms demos and kratos. The combination of the former (people) and the latter (rule or power) gives democracy the meaning of rule of the people. The term was therefore coined as a political concept, but today the term democracy is generally associated with nonpolitical institutions and practices, such as social and economic equality or respect for human rights. This association tends to blur two very important differences. First, the thing as such is distinct from the conditions for its practicability and effectiveness. Second, the thing as such is certainly different from the outcome one would like it to produce. The true meaning of democracy has to be political and should be kept distinct from other qualifications. A first step to identify the mechanisms and procedures qualifying a political democracy is to define what political democracy is not. “Democracy is a system in which no one can choose himself, no one can invest himself with the power to rule and, therefore, no one can arrogate to himself unconditional and unlimited power.”3 A set of mechanisms to transfer these negative prescriptions into positive procedures allowing the rule of the people has to be found. As in today’s large and complex communities direct self-government and full participation are impossible to achieve, it is acknowledged that democracy, in its political restrictive meaning, is representative democracy. The only practicable way to distinguish between democratic and nondemocratic political systems is to establish elections as the watershed. Yet elections as such are not sufficient. There must be some additional qualifications for an election to confer a democratic character to a political system. A democratic system should allow a free, fair, periodic, and competitive electoral process. Free means universal suffrage and that no one is forced to vote in a particular way. Fair means that the counting of the votes is honest. Periodic means the regular repetition of the operation to remove or reward the representatives. Competitive means at least the possibility for the opposition to win. This may appear as a very basic and rough standard, but still this is political democracy. The conditions to make it work properly and the desired outcomes of such a system are something different from the system itself. The next two sections

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will suggest that conceptualizations of what democracy ought to be, in the two dimensions of conditions for political democracy and outcome of political democracy, are linked to a particular model of democracy: liberal democracy.

4.2.2

The encounter between democracy and liberalism

The concept of liberalism has experienced a historical trajectory similar to that of the idea of democracy. Born as a political concept, it has lost its original restrictive meaning and has become associated or even confused with several issues ranging from the economic to the social fields. Furthermore, as from the late nineteenth century, liberalism has been inescapably blended with democracy, giving rise to the modern liberal democratic state. Both in political and everyday language, democracy has largely prevailed over liberalism, even though the essence of the combination absorbed far more from political liberalism than from political democracy. Contrary to what happened to democracy, liberalism is now sometimes perceived in a rather negative meaning, being frequently, and in truth unfairly, reduced to the bleaker aspects of economic liberalism and capitalism. Yet the most eminent exponents of classic liberalism, from Locke to Constant, from Montesquieu to Madison, conceived it as a very restrictive idea of the rule of law and the constitutional state. The original aim of the classic liberals was to enfranchise citizens from the absolute power of the monarchy and they pursued this objective through a system of limitation of power, in which deregulation, also in the economic realm, was a key instrument. The constitutional state and the safeguarding of the rights of the individual were based on concepts such as checks and balances, the freedom of speech and worship, as well as the freedom of association, which constitute the essential heritage of liberal thought. The encounter between democracy and liberalism may be described as the relationship between equality and freedom. The result concerns more the political dimension of democracy, understood as popular sovereignty, than its egalitarian aspirations in terms of social and economic standards. Popular sovereignty can be effectively exercised only if the majority of citizens are equally granted the right to participate directly and indirectly in the decision-making process. This is a fundamental point because it establishes a significant link between democracy as it is and democracy as it ought to be. Liberalism provides both the conditions for an effective democracy and the theoretical framework for part of the expected results of the system. The two-way relationship between liberalism and democracy can be described thus: “a) the procedures of democracy are necessary to safeguard those fundamental personal rights on which the liberal state is based; and b) those rights must be safeguarded if democratic procedures are to operate.”4

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109

Limited democracy or limited liberal democracy? The South American variants

Theory of democracy has dealt more with the definition of liberal democracy than with democracy as such. Scholars have inferred general theoretical conclusions from the observation of specific characteristics common to the models observed. It is worth noting that almost all the contemporary observable cases either are or tend to belong to the same political family: liberal democracy. The overall result is good as far as the advancement in the understanding of contemporary liberal democratic regimes is concerned, but it overflows the boundaries of political democracy as such. In the case of South America, some of the major theories of limited democracy in fact do not deal with the sphere of political democracy but rather with that of political liberalism. Also, a sort of identification between liberal democracy and democracy as it ought to be is taking place in the literature on limited democracy and perhaps not only in this specific one.5 Several definitions and theories are meant to uncover the allegedly questionable democratic character of the newly democratized South American regimes. These allegations however tend to shift attention from the thing as such to the thing as it ought to be, and, as a result, from democracy tout court to liberal democracy.

4.2.3.1

Limited democracy

The starting point of Mario Sznajder’s conceptualization of limited democracy is an extensive definition of democracy, which exceeds the restrictive political meaning of democracy as such and rejects a merely procedural definition. A democratic system is defined as follows: “appointment to office by free and regular elections, under universal suffrage, in the context of a functioning civil society, which is politically informed and capable of sustaining an active group life.”6 The first part of the definition is procedural, and is a necessary but not sufficient condition. The second links the electoral method to a particular context of respect for civic liberties and sociability, which clearly originates from the liberal tradition. Sznajder then proceeds to list those aspects that make the South American regimes only imperfect democracies. In the first place, economic exclusion limits the counterweight civil society is requested to exercise toward the state. When poverty and hunger do not allow large sectors of society to define and pursue their interests, civil society is represented, and led, only by the middle and upper classes. Civic values and liberties are the heritage of liberal rather than democratic thought, and Sznajder himself clearly recognizes that “in the liberal democratic view civil society provides a necessary counterpoise to the state.”7 Furthermore, political democracy does not ensure social equality, and it is not requested to

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do so. Social and economic improvements are the desirable outcomes of a political system but they do not define it as such. Also other arguments used by Sznajder appertain to liberal democracy. The neglecting of human rights in some South American countries configures more a limitation to liberal than democratic values. The constitutional privileges granted to the military created a scarcely uniform application of the principle of the separation of powers and the rule of law. Though this is highly regrettable, it is not directly linked to the democratic character of the system. If, on the one hand, the institutional mechanisms have worked properly and independent state powers have voted in favor of these provisions, there is nothing undemocratic in that. If, on the other hand, this outcome is the result of a deficient system of checks and balances, we return to the liberal side of the question. The concept of limited democracy has the merit of highlighting the weakness of the rule of law and civil society. It also brings to prominence the institutional privileges favoring the military and granting the presidency a large power over the other constitutional actors. In limited democracy, it is liberalism, rather than democracy, that is curtailed.

4.2.3.2

Delegative democracy

The most influential example of limited democracy is Guillermo O’Donnell’s model of delegative democracy.8 The delegative element lay in the transfer of a high degree of power to the president as head of the executive, which in turn is scarcely accountable to other state institutions. The author’s explicit intention is to theorize a new species of democracy, which bears significant similarities with other models but shows substantial differences as well. The first step in the argument is to reject the characteristics of the preceding authoritarian regimes and/or the vicissitudes of transitions as the decisive factors shaping the type of democracy taking place. Instead, O’Donnell focuses on “various long-term historical factors, as well as the degree of severity of the socio-economic problems that the newly installed democratic governments inherit.” 9 The pivotal points of the argument are then of a cultural and economic nature. The interaction between the two aspects draws a clear line separating modern representative democracies from delegative democracies. From the cultural point of view, history matters. Attitudes and convictions die hard and delegative democracy echoes some of the characteristics of the previous authoritarian tradition. “The president is taken to be the embodiment of the nation and the main custodian and definer of its interests.”10 The president presents himself as independent from parties or other organized interests, and accountability to other constitutional institutions rather represents an obstacle to the exercise of the full authority conferred upon the president by democratic election. The social and economic crisis interacts significantly with the cultural

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factor. The harshness of the economic problems and the social exclusion of large segments of the population reinforce the belief in the need for a strong guide for the nation. This strengthens practices leading toward a delegative exercise of the authority rather than toward a share of political power typical of representative systems. Delegative democracy is strongly majoritarian and, as O’Donnell admits, is more democratic than liberal.11 O’Donnell also defines another important factor characterizing delegative democracies: their technocratic imprint. Some of the problems the nation faces are presented as requiring highly technical solutions and technocrats have to be protected by the president against the criticism of society. Similarities with bureaucratic authoritarianism, which O’Donnell himself had delineated in the 1970s, are apparent but under delegative democracy, the parliament, the parties, and the press are at least free to express their criticism.12 The substantial difference between delegative and representative models of democracy has to be found in accountability. Whereas delegative systems are characterized by strong vertical accountability and a very weak horizontal accountability, in representative systems both dimensions operate effectively. The horizontal dimension presupposes the existence of a liberal mechanism of checks and balances, with autonomous powers and institutions. The vertical dimension manifests itself through the ballot, allowing the electorate to reward or remove the president, to whom most of the decisional power is delegated. O’Donnell looks at delegative democracy but he seems to measure it against an ideal that is more liberal than democratic. In later reflections, he explicitly concedes that the liberal qualifier becomes the distinctive passage to link procedural considerations on political democracy with broader requisites defining contemporary effective liberal democracies.13

4.2.3.3 Technocratic democracy Since the 1960s, in almost all Latin American countries, a growing number of technical experts, especially in the fields of economy and finance, have taken crucial posts within the decision-making process. These technocrats have been largely involved in the attempts at “developmentalism” in the 1950s and 1960s and also in the construction of the bureaucraticauthoritarian regimes in the 1970s. From the 1980s and onward into the 1990s, this trend has steadily increased. The association of these elites of experts with the democratic rules and mechanisms of representation has suggested the rise of a new kind of political entity: technocratic democracy.14 Technocrats do not claim their right to rule from a particular kind of political support, popular or authoritarian. Instead, they derive legitimacy and credibility from their expertise and knowledge, thus positioning

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themselves above the logic of social and political struggle. Their influence then accompanies a tendency to “technify” social and political problems, the solution of which is reduced to the adoption of technically correct policies, thus detaching the issue from its broader context and limiting debate about the possible alternatives.15 While the role of bureaucracy is generally confined to policy implementation, technocratic elites enjoy greater autonomy and directly affect policy formulation by both setting the range of available alternatives and selecting the most appropriate and viable solutions. It has now to be established what preferences technocrats translate into political processes. They share similar intellectual backgrounds, notably studies in advanced economics with a degree obtained in the United States or Western Europe, and familiarity with international issues and perspectives. These common experiences shape their values: “prioritisation of economic growth over social development, an acceptance of the need for political order, and a reluctance to challenge the social order.”16 This ideological framework contributes to their definition of national problems and priorities. The technocratic argument is very persuasive and concerns all the models of liberal democracy, not only the limited ones. In technocratic democracies, elected representatives still retain the final power of decision but the alternatives they are called to select have largely been defined by the experts. Besides that, the issues are sometimes so complex that even informed debates are virtually impossible. The appropriate functioning of institutional checks and balances of the liberal tradition is called into question. Delegation doesn’t go necessarily in the direction of populism and “organicistic” leading of the nation, but rather confers upon technical elites the power to decide about highly complex matters, which are often not properly understood by the general public, but the consequences of which, in turn, largely affect the life of the population. The analysis of the three models suggests that the liberal component is both the decisive element to define contemporary democratic systems and the major feature to identify limitations and shortcomings within these systems. Accordingly, democratic regimes in Argentina and Brazil, at least between 1983 and 1991, will be regarded as limited liberal democracies. This broader definition takes into account their undeniably democratic nature as well as those aspects still limiting their status of advanced liberal democracies. Among those aspects, in this chapter, emphasis will be placed on the preponderant role of the executive and the key position of technocrats in the decision-making process. Chapter five will focus on the alleged weakness of civil society, and in particular on its limited participation to policy formulation by analyzing the role of business during the formative years of Mercosur.

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In other words, this chapter and the following one will review Schmitter’s neo-Kantian argument that democracy makes governments accountable to citizens and that the latter favor international cooperation, thus connecting democracy and integration.17 On the one hand, citizens would favor cooperation over confrontation with other states because they would pay the highest price in case of violent conflict. Accordingly, this chapter will verify whether Congress as an expression of popular sovereignty took a proactive role to promote integration. On the other hand, under democratic rules, citizen would be free to develop profitable exchanges with their neighbors. Accordingly, chapter five will assess whether the business sector welcomed and championed integration. If these hypotheses proved to be true a plausible explanatory link between democracy and regionalization would be established.

4.3

The Congresses and Integration

The attentive scholar may ask how the specific features of limited democracy operate in the realm of foreign policy, since the latter is per se a traditional prerogative of the executive and since presidential systems even tend to reinforce this imbalance. Also, it is interesting to assess the relations between limited democracy, foreign policy, and practices of “cupola diplomacy,”18 involving in international summits and negotiations only state representatives at the highest level. It is reasonable to assume that the degree of democracy in a political system as a whole increases to the extent that the legislature enhances its ability to intervene in political decision-making processes and to control the executive.19 However, in foreign policy, the relation between the executive and the legislature is by definition, and generally by constitutional prescription, imbalanced. 20 In this sphere, the preponderance of the executive over the legislature is a pattern common to all regime types, including advanced liberal democracy, and therefore does not in itself constitute good evidence of limited democracy. To detect limited democracy in the domain of foreign policy more restrictive and selective criteria have to be set, such as patent constitutional abuse or intentional denial of congress prerogatives. While in foreign policy congressional powers and functions may be essentially reactive and ex-post, these are not necessarily merely passive or subordinate. Only if it is demonstrable that these competences, no matter how residual or minimal, were improperly bypassed and disregarded, may the democratic limitations characterizing the Argentine and Brazilian political systems said to have affected regional integration in the Southern Cone. The aim of the next sections is to investigate whether, and how, this may have occurred.

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4.3.1 Integration and executive-legislature relations in Argentina The role of the Argentine Congress during the integration process was invariably limited since integration belongs to the sphere of foreign policy, and is therefore a prerogative of the executive. The Argentine Constitution establishes that the direction of foreign policy appertains to the executive, which concludes and signs treaties and other negotiations to maintain good relations with international organizations and foreign nations. Also, the executive formulates guiding principles for the conduct of the international affairs of the nation. However, Congress is not powerless in matters of foreign policy. The Constitution entitles Congress to endorse or reject international agreements concluded by the executive. This means that the initiative in foreign policy belongs exclusively to the executive, and the legislature does not intervene, at least formally, in the drafting of international acts. But this also means that congressional agreement is indispensable to the entry into force of international commitments. Hence, at least a minimal degree of congressional support for the government’s international action has to be secured. Moreover, in the Argentine system there exists a “principle of cooperation between powers” to avoid constitutional impasse.21 This imposes upon the executive a duty to inform the legislature. In cases where discretion is needed to safeguard national security, prestige, or relations with friendly countries, the Congress is called to provide guarantee of reservation; the executive can release information through informal channels, such as congressional secret sessions or reports to selected Congressmen. Argentine observers from different backgrounds and perspectives, government officials, legislators, business representatives, all agree that Argentine-Brazilian integration and Mercosur were invariably governmental processes and that civil society and parliaments were scantly involved.22 However, the concept of involvement may have different degrees, which may be perceived by different actors in different ways. Congress in fact is not requested to be involved in the formulation of the integration process, but is expected to be kept informed about it, to support the government’s strategic decision and to endorse the acts concluded by the executive. The analysis proceeds accordingly. First, was the Argentine Parliament informed about the government integrationist initiatives? Federico Storani, president of the Foreign Affairs Committee of the Chamber of Deputies from 1983 to 1989, and vice president from 1989 to 1991, maintains that Congress was informed about all the major steps undertaken by the executive with Brazil, and that formal and informal channels of communications operated throughout the process.23 According to Storani, Congress had been informed

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about the ongoing negotiations for the 1986 Programa de Integración y Cooperación Económica, the 1988 Integration Treaty, the change of approach to integration introduced by the 1990 Acta de Buenos Aires, and of course the 1991 Treaty of Asunción. In his capacity as president of the Foreign Relations Committee, and influential member of the ruling party Unión Civica Radical, Storani enjoyed a privileged position and perhaps knew more than the average congressman. However, what appears revealing about executive-legislature relations is that, reportedly, Congress was also informed about the nuclear policy carried out by the Alfonsín administration.24 In this sphere, it is very likely that the government circulated the information to the parliament in a very selective and reserved form, but this is in line with constitutional provisions regarding situations where national security is at stake. Inter-institutional channels of communication were varied. Senator Adolfo Gass, president of the Foreign Affairs Committee of the Federal Senate during the Alfonsín years, even concedes that Foreign Minister Dante Caputo inaugurated a new era of executive-legislature relations.25 Caputo established an open dialogue and consulted with Congress about relations with Brazil, and on several occasions he took the initiative to go to the Congress and make himself available for an exchange of views. Also other high officials of the Radical administration, such as Deputy Foreign Minister Jorge Sábato and Undersecretaries Alconada Sempé and Jorge Romero, frequently reported to Congress. It was not infrequent either for members of the Congress to take part in meetings at the Chancellery.26 The second question concerns congressional support for the integration policy carried out by the executive. Congress was aware of the executive’s plans, but were these backed by the legislature or imposed upon it despite reticence or disapproval? According to Federico Storani, the Chamber of Deputies firmly supported Alfonsín’s foreign policy. 27 The country was going through a foundational phase, the priority of which was the attenuation of regional conflicts. Integration with Brazil was understood in this frame, and enjoyed such a large political consensus to constitute a state policy rather than a mere government one. The Peronist opposition essentially endorsed the integration policy. Only minority sectors of the party, linked to conservative and nationalist interests, opposed the initiative. The Peronist José Octavio Bordon, vice president of the Foreign Affairs Committee of the Chamber of Deputies during the Alfonsín years, acted constructively as a liaison between the government and the congressional opposition. His role is fully acknowledged also by his political opponents, 28 and perhaps it is not a coincidence that Bordon himself, in his account of those years, recognizes that while presidential leadership was essential to achieve integration, so was the function of debate and control exercised by the parliament.29

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Thirdly, and finally, there remains the question of approval through formal ratification. Congress was informed of the government’s integrationist policy and backed it, but did Congress vote largely in favor of ratification of the integration agreements? Was there a harsh or a smooth committee and plenary discussion? Here surprises begin. The 1985 Iguaçu Declaration by which Argentina and Brazil committed themselves to bilateral integration was certainly more a political statement than a formal accord, and as such did not require parliamentary endorsement. But the 1986 Buenos Aires Act establishing the Programa de Integración y Cooperación Económica (PICE) formally and substantially was an international treaty, and as such required congressional approval. Yet it was implemented without parliamentary ratification. How was that possible? And why was Congress deprived of, or refrained from exercising, such a fundamental competence? The PICE implementation, though without congressional ratification, was fully lawful. The Argentine and Brazilian executives decided to incorporate that instrument under the rules of the Latin American Integration Association (LAIA). Having ratified the 1980 Montevideo Treaty establishing LAIA, Argentina could internalize some of the agreements concluded under the LAIA framework through administrative regulations, without formal congressional vote. However, the PICE was an act of such a magnitude, and arguably such an unusualness in LAIA’s activity, that congressional endorsement would have been at least politically appropriate. Why then did the executive decide to bypass the legislature? Pragmatism as well as limited liberal democracy played a role. Support for rapprochement with Brazil was more formal than substantial. While the need to lessen tensions with neighboring countries and the rhetoric of cooperation were widely accepted across the Argentine political spectrum and civil society, specific measures, such as industrial complementation, encountered reticence in the affected sectors as these feared the higher competitiveness of the Brazilian industry. Segments of the parliament were receptive to these fears, while others may have exploited the situation opportunistically. The government sensed that reticence, and tried to prevent a massive and widespread discussion about the convenience of an economic opening with Brazil.30 Considering integration a priority for democratic consolidation, the government wanted to avoid any resistance potentially undermining or delaying the plan. The government position was deliberate and to a certain extent understandable, but did Congress passively accept this situation or try to react? The Peronist MP Diego Guelar requested that the integration protocols be submitted to congressional ratification.31 Another Peronist MP Marcos Raijer criticized the executive for “having deprived the Congress of such an important decision” and not having promoted preliminary

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consultation with the political and social forces.32 At that time, the Radical party had the majority of seats only in the Chamber of Deputies. Yet protest never grew enough to affect the government decision or to raise a proper and informed debate about the political opportunity or the constitutional appropriateness of that choice. The executive appeared so powerful, the president so legitimized by the democratic vote, and integration so important that dissent rapidly passed to oblivion. Congress lacked both the strength and the will to resist. Subsequent integration agreements were all submitted to Congress for ratification. However, it was at a moment of stalemate in integration that the two governments decided to secure the irreversibility of the integrationist commitment through parliamentary endorsement. Undersecretary Bruno explained the change of approach stressing that congressional approval would make integration so strong that not even a coup could reverse it.33 The 1988 integration treaty was ratified without delay. The 1990 Buenos Aires Act, providing for the creation of a bilateral common market also passed congressional scrutiny without difficulty; the now Peronist majority were eager to ratify their own administration’s contribution to the cause of integration, while the Radical opposition endorsed the Act as a matter of continuity with Alfonsín’s policy. The Treaty of Asunción prompted limited debate and was ratified within a few months from its signature. Overall, the Argentine executive informed the Congress about integration sufficiently to satisfy constitutional requirements. These do not call for parliamentary participation in the formulation of foreign policy. Therefore the leading and exclusionary role of the executive in that phase does not represent an abuse of constitutional procedures. Where this abuse may be detected is in the lack of congressional endorsement of the PICE. On that occasion, concern for national security understood in terms of democratic consolidation prevailed over political and, arguably, constitutional appropriateness. Technically, the approval procedure was fully lawful but such behavior constituted a tenet of limited liberal democracy.

4.3.2 Integration and executive-legislature relations in Brazil In the field of foreign policy, since the Imperial age, Brazilian constitutions, including the 1988 reform, have attributed the great majority of functions to the executive. The president concludes international acts and treaties, declares war and peace, and decides about the passage of foreign troops through the national territory; Congress ratifies or rejects these decisions. Negotiation of all these acts remains a prerogative of Itamaraty.34 This means that the Foreign Ministry enjoys largely

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discretionary power in the phases of “definition of the problem, identification of alternatives, decision and implementation,” while the competence of Congress is limited to ratifying or vetoing the international activity of the government.35 Integration is a constitutional commitment in Brazil. The 1988 Constitution explicitly states that “The Federative Republic of Brazil shall seek the economic, political, social and cultural integration of the peoples of Latin America, viewing the formation of a Latin-American community of nations.”36 One would expect the Brazilian Congress, having adopted this commitment, to have played an active part in the practical construction of integration with Argentina and later on with Paraguay and Uruguay. In fact, the record is mixed. While integration as an aspiration was extensively discussed by the constituents, the concrete ongoing bilateral process with Argentina was clearly conducted and perceived, also on the Brazilian side, as an essentially governmental exercise.37 The degree to which the Congress was informed of the executive’s integrationist steps was quite low. From the government side, Itamaraty secretary general of the time, Ambassador Paulo Tarso Flecha de Lima, concedes that the government did not consult with the parliament during the process. This was applicable to decisions and acts of the Sarney presidency as well as to the creation of Mercosur under Collor.38 From the Congress side, João Hermann Neto, long-time member of the Foreign Relations Committee of the Chamber of Deputies, maintains that the parliament was not incorporated in the process leading to Mercosur. Neto, who was a member of the Brazilian delegation that traveled to Buenos Aires for the signature of PICE, recalls that the position of the Congressmen was one of curiosity.39 This seems to confirm that information about the project and its features was rather low among parliamentarians. A slightly different picture is portrayed by Estevão Rezende Martins, professor of politics at the University of Brasília and consultant to the Brazilian Senate. Congress was informed about the government’s plans, but information was released through informal channels, resting more on friendly personal relations and goodwill rather than on institutionalized mechanisms, which did not exist. Also, the participation of members of Congress in the presidential delegations did not entail an active role.40 The interest and support that Congress gave to integration is also mixed. During the 1985–1989 legislature, the majority of parliamentary speeches were favorable to Argentine-Brazilian integration. However, the number of speeches on the issue was lower than that observed during the 1979–1984 legislature, and only sixteen speeches addressed bilateral relations with Argentina in plenary session in the years 1985–1989, as compared to the fifty-nine in the period 1979–1984.41 This would suggest

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that democratization did not prompt as such a larger debate about bilateral integration within the Brazilian society. Indeed, the participation of the legislature in the process was reactive rather than proactive.42 This makes clear that, despite general parliamentary backing, there was no push from Congress to pursue Argentine-Brazilian integration. The method of ratification of integration agreements was the same as in Argentina. The Sarney government internalized the PICE under LAIA rules thus removing it from congressional debate and vote. This step was intended to avoid implementation delays due to potential tensions among the sectors and regions affected by integration. It was with great fanfare that the executive announced submission of the 1988 Integration Treaty to the Congress in order to strengthen and democratically legitimize the integration effort. Arnaldo Prieto, the reporter at the Chamber of Deputies, reckoned that the executive formally and explicitly acknowledged the importance of the legislature in the conduct of foreign policy, and that this was a landmark in the executive-legislature relations in matters of foreign policy.43 Yet congressional acceptance of the executive’s deeds and manners was not always so enthusiastic. Even after the 1988 Treaty, MP Victor Faccioni deplored the marginalization of Congress in important questions related to integration,44 and MP Amaury Muller complained about the lack of “capillarity” between the executive and the legislature, stressing the undemocratic and disrespectful treatment of the legislature by the executive.45 This dissent did not impede the prompt ratification with little or not debate of the 1990 Buenos Aires Act establishing the bilateral common market, and the 1991 Asunción Treaty creating Mercosur. Three main explanations account for the marginal role of the Brazilian Congress, both before and after 1988. First, Congress was deeply engaged in the domestic agenda, which mobilized parties and parliamentarians.46 This entailed a lack of attention by civil society and its representatives to the integration process, giving governmental negotiators a large degree of freedom to drive integration according to their own conceptions. As a corollary, between 1987 and 1988 Congress was fully engaged in the constitutional reform and was invariably forced to neglect other issues. Also, parties are interested in the electoral return of the issues they deal with. Not catching public attention, at least initially, integration was not perceived as important in the parties’ programs. It is not a coincidence that as integration progressed, and affected a growing number of constituencies, Congress and party attention grew accordingly. It is not by chance either that members of Congress elected in the South, the area most directly affected by integration with Argentina, were the most sensitive to the topic. Second, the material outcome and impact of integration were difficult to foresee. When its consequences started to affect large productive sectors, these raised political attention and called

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for parliamentary intervention. Third, it was felt that the formulation of foreign policy was not a prerogative of Congress but belonged to the government and in particular to Itamaraty. Echoing the Argentine case, the Brazilian Congress was hardly involved in the formulation and implementation of the integration process. Although it seems that the parliament in Brasília was kept less informed than the one in Buenos Aires, the degree of support for integration was generally solid. The leading and exclusionary role of the executive does not represent an abuse of constitutional procedures. The lack of parliamentary ratification in the adoption of PICE did not represent a benchmark of good democratic practice but was lawful. All subsequent integration agreements promptly and smoothly passed Congress scrutiny. Yet peculiar institutional arrangements and a poor culture of checks and balances helped the ostracism of the government. Overall, it appears that the Brazilian government carefully scripted the degree of congressional involvement in the process with two objectives. First, in order to secure congressional support for and approval of integration negotiations, the government calculated the appropriate amount of information to be released to gain parliamentary acquiescence without raising concern. By the same token, congressmen’s participation in the presidential delegations was intended somehow to hold Congress co-responsible as a witness but without the power to affect negotiations. Second, a calculated involvement of Congress in the process was meant to progressively strengthen democratic culture and practice domestically without allowing internal debate to jeopardize or delay the use of integration as a major engine of democratic consolidation.47

4.3.3

The role of the parliaments in the integration treaties

The role scripted for parliaments in the institutional frame of integration confirms the asymmetry between executive and legislature within the process. The PICE did not establish a proper institutional structure presiding over the implementation and development of integration, which was conducted in that phase through intergovernmental dialogue and making use of the existing structures within the two executives.48 When these decided to formalize integration into a proper organic treaty, rather than a set of sectoral protocols, and to create an ad hoc institutional structure for the management of integration, a Joint Inter-parliamentary Committee (JIC) was also included in the 1988 Integration Treaty. The primacy of the executive in the process was by no means affected. Article 8 of the Integration Treaty stated that the Committee had a mere consultative role and that it could only issue recommendations to the Treaty executors, that is, the governments. While the Committee

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opinions had no mandatory force, they played an obligatory and indispensable role in the adoption of decisions. The main function of the JIC was to assess specific integration projects designed and negotiated by the governments before the proposals were submitted to congressional scrutiny. The JIC was convened and met one time only before the 1990 Buenos Aires Act radically transformed the institutional structure of integration with a view to the bilateral common market. Neither the 1990 Buenos Aires Act nor the original project for the Mercosur treaty prepared by the negotiators of Argentina, Brazil, Paraguay, and Uruguay provided for a parliamentary body in the common market structure. The Mercosur draft project had only a marginal reference to the parliaments, providing in article 24 just a general duty of the executives to inform the legislatures regularly about the evolution of the common market. The final version of the Asunción Treaty was amended at the last minute under the pressure of the presidents and members of the parliamentary Foreign Relations Committees of the four countries who were accompanying their heads of state to the Asunción conference and who realized that there was no mention of the legislature in the treaty draft.49 To this extent, it can be said that finally, at the very last step of the process, members of the legislature could affect the outcome of government negotiations. But this does seem a very poor achievement, and the practical result was disappointing. The JIC of Mercosur (JICM) was included in the general provisions in the last article of the Asunción Treaty. Formally, the JICM is not an organic body of the institutional structure outlined in the Treaty of Asunción. The amended version of article 24 just states that the committee is established to facilitate the implementation of the common market, and merely reiterates the duty of information already envisaged.

4.4

The Technocratic Argument

In technocratic models of liberal democracies, elected representatives, such as the presidents, retain the final power of decision. However, the available choices and the most appropriate solutions have already been defined by the experts. As a result, technocrats directly affect policymaking. The technocratic argument is intimately related to the delegative one, not only because both of them represent features of the same model of limited liberal democracy, but, most of all, because presidents themselves are in a sense victims of the delegation mechanism. Technocratic empowerment can in fact be seen as a “second degree” delegation, which follows delegation to the president by the electorate. According to the technocratic model, domestically the absence of significant institutional or societal constraints allows greater room for

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the design of technical solutions responding to the executive priorities. Technocrats must justify their proposals only to the president or his top advisors. Because they are disconnected from an electoral logic, these experts may be more inclined than politicians to impose short-term heavy costs on large sectors of the population for the sake of supposed longterm benefit. At the international level, examples of integration such as the European Union suggest that the expansion of the process induces an increasing empowerment of technocrats. It has now to be assessed to what extent it is possible to establish a logical and coherent explanatory link between the technocratic argument as a defining feature of the limited liberal democratic model and integration in the Southern Cone. It has been argued that the large recourse to technocrats facilitated integration negotiations by creating a sort of identification and direct relationship between governments, their staff, and the achievement of integration, thus reinvigorating the existing political will.50 Because technocratic language can constitute a lingua franca facilitating communication, even high degrees of cultural and political heterogeneity can be overcome by shared technical backgrounds.51 The first problematic point is the very definition of technocrats. Since the initial phases of formulation of the Argentine-Brazilian integration, inter-bureaucratic networks under the coordination of the foreign ministries were established in both countries. However, Argentine undersecretary of economic integration Carlos Bruno recalls that technocrats in a proper sense arrived at a later stage.52 Arguably, until the signature of the PICE, negotiations were absolutely political in nature. All negotiators were invested with a political mission, regardless of the technical expertise they may have had and the degree of technicality required by the setting up of the protocols. The technical part followed, and adapted to, the political conception. In fact, the technocratic argument appears to have a more powerful explanatory value for later stages of integration, especially during and after the adoption of the universal, linear, and automatic approach from 1990 onward. The spreading of the neoliberal paradigm prompted a coincidence between external strategies of openness and liberalization, and internal strategies of development and macroeconomic policy.53 This convergence entailed common objectives between the “técnicos hacia adentro” (technocrats working on domestic policies) and the “técnicos hacia afuera” (technocrats working on external policies).54 In other words, experts essentially concerned with internal matters began to see eye to eye with their colleagues principally concerned with international economic relations. It has to be stressed however that the key point of this aspect of the technocratic argument is more concerned with internal than international negotiations. It is possible and likely that neoliberalism eased international negotiations because it was the common

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inspiring paradigm of all negotiators and of the economic policies undertaken in the countries involved. But, most of all, this process of convergence facilitated regionalization in that internal resistances weakened as those bureaucrats in charge of internalizing integration rules by now supported them. A second problem relates to the actual autonomy technocrats enjoyed during negotiations. For the technocratic argument to have had a major impact on the integration process, it has to be proven that technical views and priorities could actually be fully displayed during negotiations and even prevail over other concerns. Otherwise, technical understanding may have facilitated agreement, but its overall influence over the outcome of negotiations would be largely mitigated by the importance of political orientation and indications from above. There is agreement among the key protagonists of bilateral negotiations that technocrats were subject to political instructions and clear boundaries. It is true that within those boundaries experts could exercise decisional autonomy but they could not affect or overcome the political design and restrictions. Especially in the early phases of the process, the results of each meeting were reported to and checked with top political authorities, at the ministerial level or even with the president himself. On the Argentine side, there was “no degree of technical freedom during discussion” because even one single mistake in the technical management could have hampered the project.55 Each little advance was reported to and assessed with the presidents in both countries.56 The pattern seems to have only slightly changed under the Menem and Collor administrations. According to Ambassador Cisneros, former deputy chancellor of Argentina, President Menem incorporated a number of technical experts in his staff and relied upon them to the extent that they could translate his political vision of integration into practical measures. Within these limits, the president gave the experts total political backing.57 Alberto Kohan, secretary general of the Menem presidency between 1989 and 1991, confirmed that technical negotiators had all the necessary powers but these had to be strictly exercised within the political directions received.58 A third and final critical issue is the actual existence of common backgrounds and shared visions among the technical experts and the extent to which this alleged commonality facilitated negotiations. Relations between Argentine and Brazilian técnicos were very good, there was a climate of mutual confidence and respect and a high degree of professionalism.59 On the Argentine side, Alberto Kohan reckons that at the technical level there may have been similarities in educational background and perhaps even economic approaches, but their importance for the outcome of negotiations was negligible as the key strategic decisions had already been taken at the political level.60 Argentine undersecretary

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of industrial policy Beatriz Nofal, a former lecturer in theory of economic development at MIT in the United States, stresses that postgraduate degrees abroad were not such a frequent and distinctive characteristic among negotiators. Where this feature existed it enhanced confidence in mutual technical competence and qualities, but this occurred to Nofal only during the negotiations on capital goods.61 Also, despite general backgrounds in economics, negotiators did not necessarily have the same vision of integration, and this discrepancy rested more on differences in political objectives and motivations than in technical understanding. On the Brazilian side, the picture is even more contradictory. Luiz Gonzaga Belluzzo, special secretary of economic affairs, maintains that several negotiators from the economic ministries on both sides shared a cepalista 62 vision of integration, that is to say with strong “developmentalist” orientation and, at least until 1990, a protectionist rather than opening function. This common vision facilitated technical understanding.63 But according to Roberto Fendt, director of CACEX and key protagonist of the early phase, there was no common background among technocrats and consequently this argument has to be discarded as a facilitator of integration. The majority of the Argentines were not inspired by a cepalista vision; they were more favorable to integration and commercial opening than the Brazilians, whose protectionist attitude died hard.64 Overall, there is not sufficient and consistent evidence of a strong technical impact upon the integration process. “Technification” of problems may have facilitated consensus on the measures to be implemented, but this technical consensus seems more the product of strong political indications and commitment rather than autonomous technical evaluation or common backgrounds. Also, the technical imprint was not a decisive element in the process and did not represent a more peculiar feature of limited liberal democracy than in any other part of the world where modern liberal democracies are engaged in highly technical international negotiations.

4.5 Conclusion The limited democracy model and its delegative and technocratic arguments in particular stress that the executives and their technical staff act with a relative insularity from the rest of the institutional system and its potential checks and balances. The scant involvement of Congresses in the formation of the bilateral and quadrilateral integration in the Southern Cone was due as much to deliberate manipulation by the executives as to peculiar constitutional features and congressional self-restraint. While this validates the delegative argument, the technocratic argument applies only in so far as technical experts, acting under the aegis of governments,

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were screened from institutional and societal scrutiny, but they never bypassed boundaries and indications dictated by the executives. In the formation of the Argentine-Brazilian integration and Mercosur the executives were by far the major players. Arguably, this does not simply reflect constitutional imbalances in the two countries, but is embedded in a tradition of functionality that attributes the determination of foreign policy to the executive. Delegative democracy “has not proven a source of serious inter-branch conflict or challenges to democratic rule.”65 And one may actually ask to what extent the preponderant role of the executives in foreign policy observed in the case study represents: (a) an abuse of Argentine and Brazilian constitutional rules and procedures; (b) a departure from rules and practices established in fully-fledged liberal democracies; and (c) a geographical anomaly as compared to other cases of integration. First, the behavior of the Argentine and Brazilian governments was lawful and respectful of national constitutional procedures. In the Argentine presidential system, the Congress does not determine foreign policy, it can endorse or reject it, and its role is reactive and not proactive, “it is the natural functioning according to the constitution and to the political system.”66 The same applies to Brazil where the preeminent role of the president and the executive derives from the very presidential nature of the system and not from its distortion. While the system may arguably confer too much power upon the president, this does not equate to a peculiar weakness of Brazil or Argentina.67 Second, the primacy of the executives and their heads in the management of foreign policy is a widespread feature common to different political cultures and forms of state organization. In the United States, a presidential system, the Constitution attributes to the president, with the advice and consent of the Senate, the power to make treaties. In 1936, the U.S. Supreme Court made it explicit that the president is the only federal body with full and exclusive competence in international relations.68 In France, a semi-presidential system, the 1958 Constitution states that the president of the Republic negotiates and ratifies treaties and that he shall be informed of any negotiations for international agreements not subject to ratification. The parliament is co-responsible for ratification. In Italy, a parliamentary system, the prime minister conducts and is responsible for the general political and administrative policies, including foreign policy. The parliament assents, with the president of the Republic, to the ratification of international acts. Third, the pattern of the executive’s domination of negotiations for integration schemes is not alien to other experiences, such as the European Union. It has to be stressed that this work is specifically concerned with the antecedents to the integrated unity and not with its subsequent developments. Therefore, it makes sense to compare the period

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1985–1991 under analysis here for Mercosur to the period 1952–1957 for the European Union, at that time European Economic Community. By the same token, and with the due proportions, the ArgentineBrazilian bilateral scheme can be compared to the European Coal and Steel Community (ECSC) in that both were sectoral schemes preceding attempts at full-scale economic integration. Also, France and Germany were the bigger powers initiating the European experiment as Argentina and Brazil were in the South American case. Robert Schuman and Jean Monnet were the true architects of French policy in the negotiations for ECSC. They acted “keeping Parliament entirely in the dark” over their plan for integration.69 Moreover, they “guarded the monopoly of participating in the negotiations until the very last stages of the eleven-month process.”70 In Germany, “the delegation led by Hallstein and Blankenhorn, both senior civil servants, was able to function with almost the same autonomy as its French counterpart.”71 In the case of the ECSC, high-level government officials were in charge of reserved negotiations, of which the parliament had little or no notice. The interest of the French and German parliaments in integration in the following years was not very significant either. “In the five years following ratification, neither chamber of the French Parliament has held a full-dress debate on ECSC.”72 This is sufficient evidence to show how early steps of integration hardly raise congressional interest, even in advanced liberal democracies. What made a significant difference between the European and the South American case was not the support of the legislature, arguably stronger in South America then in Europe,73 but the fact that in Europe integration agreements were submitted to congressional ratification from the very beginning. This makes a strong case for reconsidering the weight of limited liberal democracy as a facilitator of Argentine-Brazilian integration. Congressional debate and scrutiny may delay or even call into question international agreements deemed strategic by the executive.74 Despite a reasonable expectancy of congressional support, the Argentine and Brazilian governments decided to avoid any risk of that type by adopting the PICE via administrative regulations of adaptation to LAIA, thus bypassing the parliaments. The distinctive element of this procedural trick was the acquiescence of the legislature and the bravado of the government in such an important act. This situation certainly configured a case of limited liberal democracy, which was already partly evident in the constitutional imbalance of powers, but that, most of all, emerged from bold practices at the edge of liberal democratic principles and, perhaps, political correctness throughout the integration process. All this was possible for the limited culture of institutional counterweights and the imperfect functioning of checks and balances.

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While the overall behavior of the Argentine and Brazilian governments was not a patent abuse of constitutional rules or a geographical anomaly, and therefore does not represent a disruption of democratic functioning, a paradox arises. Given the marginal role of Congress in the integration process, the original hypothesis, that institutional actors neglected or silenced under the military and brought on the stage by democracy may have actively sponsored integration, thus establishing a link between the former and the latter, has to be discarded. Still, in a quite peculiar form, democracy, or better said limited liberal democracy, may have helped integration. The strong popular legitimacy given to presidents by democratic elections broadened their room for political action and decision while, at the same time, the weakness of Congress and institutional checks and balances screened presidential action from congressional scrutiny and criticism. Ironically, it was precisely the limited nature of the Argentine and Brazilian liberal democracies that allowed the executives to pursue an exclusionary and insular foreign policy that speeded up the integration process.

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CHAPTER 5

Government-Business Relations in the Construction of Mercosur

5.1

Introduction

The analysis of the institutional setting brought by democracy has led to the paradoxical yet interesting consideration that limitations to liberal democracy may have actually favored the integrationist project. Another line of research, drawn from the neo-idealist paradigm, with its emphasis on citizenship, is to ask whether civil society (or significant segments of it) was involved in the process and what its attitude was. The research hypothesis of this chapter is the following: Democracy allows a greater freedom of expression, especially toward decision makers, than authoritarian regimes. As a consequence, economic and societal actors have increased possibilities to making themselves heard. Therefore, should certain economic and society sectors have been supportive of integration, the enhanced capacity to promote their interests in a democratic environment might provide for a possible explanatory link between democratization and regional integration. Put this way, this research hypothesis may seem to place too much emphasis on bottom-up dynamics in the context of a clearly state-led process. To check possible criticism on this ground, it is enough to say that there is no reason why a top-down process may not be accompanied and even supported by a bottom-up movement. Representative and participatory democracy are not mutually exclusive. Additionally, if one accepts that integration was driven by the governments’ desire to fortify democracy, then it has to be conceded that the role that the political class scripted for business in the project was intended to enhance the prospect of success of the project itself but also to be somehow conducive to the reinforcement of democratic institutions. This chapter accordingly focuses on business response to government plans. Business was the segment of civil society for which governments had scripted in principle the largest involvement in the integrationist

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enterprise, and analysis of government-business relations in Argentina and Brazil during the formative years of Mercosur is essential to test the research hypothesis. Two parallel investigations have to be conducted: (a) the extent to which business segments have actually been active players, deliberately or reluctantly, in the constitution and shaping of Mercosur; and (b) whether or not business position was in favor of regional integration. Only if there is sufficient evidence that both conditions were fulfilled will the research hypothesis be proved. This chapter will also attempt to clarify the distinction between the theory and practice of integration. In theory, both the declarations of Argentine and Brazilian political leaders and the literal wording of the integration treaties attributed a central role in the process to the private sector. As theory and practice often diverge, investigation will target three aspects of the practice of government-business relations in Argentina and Brazil. First, the positions and objectives of government and business in the two countries on the eve of integration highly influenced the practical unfolding and outcome of the process. Second, in principle, the sectoral approach to integration was intended to favor business participation, but the latter was limited in practice. Third, the universal and automatic approach to integration further reduced business influence over integration. The major motives behind the pattern of government-business relations will be further analyzed and this will allow for a brief discussion of the role of the big conglomerates. The concluding remarks will argue that, in a democratic context, some accommodation between government plans and societal claims is necessary, and will assess whether or not this is enough to establish a link between democracy and regionalization based on the participation of civil society.

5.2

Government-Business Relations in Theory 5.2.1 The private sector in the political discourse of integration

Between the start of the Argentine-Brazilian integration process in November 1985 and the signature of the Programa de Integración y Cooperación Económica (PICE) in July 1986, a flurry of diplomatic activity took place. Presidents, ministers, and other authorities issued numerous statements clarifying the role of the private sector in the undertaking. Whether those statements were mere declarations or concrete political plans, which were later frustrated, is debatable. What is certain is that theory and practice followed different courses; both politicians and businessmen soon realized the existence of a gap between the enthusiastic political discourse of the early days of integration and the patient and tortuous bargaining over its implementation.

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One month before the signature of the Argentine-Brazilian PICE, the Argentine undersecretary of foreign trade Jorge Campbell explained that “the inclusion of businessmen in the bilateral negotiations will be cautious and gradual in order to avoid friction between industrial groups in the two countries.”1 According to political planning, entrepreneurs were to be involved in the international governmental negotiations between Argentina and Brazil. Business should thus have participated not only domestically, to define national strategies for integration, but also in international discussion. Following the signature of the PICE, at the end of July 1986, a wave of enthusiasm, perhaps driven by the necessity of overcoming the already perceptible skepticism of some business sectors, pervaded political declarations. President Sarney remarked that “this program depends on the essential participation of entrepreneurs, workers, and all other sectors of our societies.”2 Alfonsín observed that “governments can provide the framework [. . .] but [the agreement] will still have, of course, to be implemented through the private sector.”3 So on the one hand, civil society, and business in particular, was granted a leading role in the integration process, partly because the prevailing rhetoric of democracy suggested that societal participation both energized and legitimized democratic institutions. On the other hand, it is clear from Alfonsín’s words that governments were to take the political decisions and design a scheme that would be implemented, but not substantially influenced, by the private sector. This already appears as a step backward as compared to Campbell’s position of the previous month. On the same occasion, the chief Argentine economic policy makers confirmed their intention to work in close association with the private sector. Yet, the willingness to pursue a model of integration designed from the top but dependent on business for its implementation contained contradictions and prospective clashes of interests. Juan Sourrouille, Argentine minister of economy, expressed his willingness to involve the business sector in the integration process. The Argentine secretary of industry and foreign trade Roberto Lavagna stressed that “there is no doubt that the entrepreneurs will know how to value the great advantage of competing under the same rules of political economy.”4 Sourrouille’s position seems to confirm the genuine intention of the political class to involve the private sector in the integration process. Lavagna’s statement appears to be prompted not only by the necessity of making the process appealing to industry but also by objective economic considerations. However, Sourrouille may have underestimated the difficulties of elaborating mechanisms of consultation and effective participation of civil society in the sphere of high politics. This raises the question of the extent to which business was actually involved in the conceptualization and/or implementation of bilateral integration. Lavagna may have slightly

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downplayed the motives informing the entrepreneurial attitude, inspired more by concern for possible losses than by appreciation of potential gains. This raises the question about how supportive of integration business actually was, if indeed it was actually involved in its development. One thing remains clear: in principle, political leaders perceived the need to involve business in their integration plans. The Argentine and Brazilian political leadership believed that the active participation of the private sector would deepen the process and confer more legitimacy upon it. However, it was also clear that the rapid consolidation of integration as a means to secure democracy was priority number one. Actors who did not embrace the cause, obstructing or delaying the process, would have invariably been marginalized. The desirability of business partnership was subject to this logic.

5.2.2

The legal framework is what the signatory parties make of it

At the presidential meeting of Foz do Iguaçu in November 1985, Argentina and Brazil agreed to a bilateral commission to study concrete measures to launch bilateral integration. This joint committee was originally designed to comprise government and private sector representatives, meaning that forms of inclusion of business in international negotiations were initially considered. However, Roberto Lavagna recalls that the idea of a crowded bilateral public-private committee raised doubts as to whether this attempt was just another wishful manifestation of intentions without concrete consequences.5 Too often in the past the rhetoric of Latin American integration had led to large assemblies with little power and few concrete proposals. Jorge Campbell, when asked about this bilateral mixed commission commented: “No; mixed no; what is this mixed?!,” and promptly added: “The real truth is that the negotiation table was strictly governmental . . . [O]fficials and businessmen of the two countries never sat together.”6 The mixed public-private commission never met, or better, it met in plenary session three times, but only public officials were involved in the bilateral meetings. Although the initial political plan foresaw the inclusion of business representatives, excessive membership would have obstructed the works of the commission. The number of the members was reduced, to the detriment of the private sector. This robbed the mixed nature of the body of any meaning. Negotiations for integration took on a frenetic pace in the first half of 1986 and alternative forms of consultation were set out at the national level. The text of the PICE contains interesting provisions on the role of the private sector in the integration process. Article 2 states that the implementation of the program will count on the active participation

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of the business community, thus ensuring its effective implementation in the framework set by the government. From a very first reading, this provision appears to reserve a distinctive and defined role for business within the PICE, the effective implementation of which would rest on the proactive contribution of the private sector. However, from a more careful analysis, it is clear that only the implementation phase was to involve business. It is also evident that the role of business in the implementation of the program was to fall under the government direction. The room for the private sector to intervene in the process was very limited. Article 3 established a Program Implementation Committee, and article 4 defined its composition. The Committee was to be composed of governmental authorities and entrepreneurs from the two countries. Despite leaving the responsibility for coordinating the agenda and activities of the Committee with the government, the treaty does not contain other restrictions on business having a say, at least on the implementation of the PICE. As often happens, theory and practice were to be very distant. Making explicit reference to article 4 of the PICE, the Brazilian association of capital goods industries, ABIMAQ, jointly with the corresponding sectoral union, SINDIMAQ, requested that the government include its representative in the Implementation Commission to defend their interests. The file was processed at the Ministry for Industry and Commerce. A report sent to Ambassador Sebastião do Rego Barros, the undersecretary of economic and trade affairs of Itamaraty, indicated that the industrial claim was in full conformity with article 4. Yet it was argued, “in the present phase of implementation of the PICE, the composition of the Committee has still to be strictly governmental.”7 The “present phase” was in this case almost two years after the signature of the PICE. Furthermore, it was recommended that Committee meetings take place at ministerial level only. It was feared that the acceptance of such a request could give rise to similar claims from other sectors affected by the signed protocols. This would excessively enlarge the Committee, thus jeopardizing its operation. Argentina too feared an over-expansion of the Committee. The attitude of business toward integration was in the early stages quite negative,8 and the two governments did not want sectors with viewpoints contrary to the agreements to acquire excessive weight. With intellectual honesty and the benefit of hindsight, the entrepreneurial representatives also recognized that if the executives “had consulted about all the steps to be undertaken, they wouldn’t have achieved anything.” 9 Perhaps in order to minimize risks of unwanted interference, and certainly with intentional design, Argentina and Brazil further reduced the formal involvement of the private sector in subsequent integration instruments. The Treaty of Integration, Cooperation and Development

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of 1988 also provided for an Implementation Committee. However, in this case, the composition of the Committee was strictly limited to ministers and high officials. Any reference to business participation was suppressed. The Treaty of Asunción created a new institutional structure. The organ responsible for the implementation of the treaty was the Common Market Group. Article 14 states that it is composed of members representing the Ministry of Foreign Affairs, the Ministry of Economy, and the Central Bank. When elaborating and proposing new measures, the Common Market Group may consult with representatives of the private sector, if deemed appropriate. The business sector was excluded from the institutional structure of Mercosur and its consultation depended on the appreciation and discretion of a governmental body.

5.3

Government-Business Relations in Practice

5.3.1

Positions, expectations, and fears on the eve of the PICE

So far, this analysis has targeted two preliminary aspects of government-business relations in the construction of Mercosur. First, declarations emanating from the political level acknowledged the necessity of an accommodation between government plans and business interests. Second, the legal provisions on the inclusion of business in the negotiations made clear that the political class wanted to keep firm control over the integration process. Both declarations and legal provisions (or derived practices) made clear that governments did not favor direct business participation in international forums. There remains the national arena, and its two dimensions, formulation and implementation. This does not exclude business influence over international discussions, but this had to be exercised only indirectly through national authorities. So what was the real weight of business in the integration process? How open to business views were the democratic administrations? Did the private sector manage to affect governments’ plans? What strategies did it adopt? To what extent was it successful? To answer these questions, it is necessary to pass from the theoretical intentions expressed in political declarations to the practice of government-business relations. It is then important to look at how and to what extent the political class established a constructive dialogue with the private sector at the national level. At this stage, a concise methodological digression is required. It is quite difficult to define attitudes and reactions of the business sector as a whole. The same is valid for the level of participation. As far as possible, oversimplifications will be avoided, situations peculiar to specific sectors will be illustrated, and salient sectoral examples will be provided.

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However, to make some sense of the practice of government-business relations, some generalization is inevitable. The reader should be aware at least of the major variables creating cleavages within the industrial community. The sectoral format, the forecast of advantages and disadvantages from integration, the variety of sectors involved and the timing of their inclusion, the size of the firms, and the shifts in the economic cycles, all influenced the response of the private sectors to government plans. On the eve of the formal commencement of integration, the Argentine democratic government had reason to be cautious about the involvement of the private sector in negotiations with Brazil. Entrepreneurs had always shown a low propensity to agree on trade concessions and a strong inclination to protectionism. Argentine entrepreneurs also had their reasons to look at integration with a certain degree of suspicion, as the Argentine economic system overall was much less competitive than the Brazilian one. As early as 1980, following the agreements between Generals Videla and Figueiredo, Argentine industrial sectors had expressed their concern about the government’s economic liberalization policy, which, they claimed, would expose national producers to excessive competition with the Brazilian economic power. At the Ministry of Economy, officials were concerned with the defensive and fearful attitude of the Argentine industry even in the framework of CAUCE, the commercial agreement including quotas signed with Uruguay a few years earlier. In October 1985, one month before the presidential meeting at Iguaçu, the diffidence of the executive toward business increased. Roberto Favelevic, president of the Argentine Industrial Union (UIA), expressed preoccupation about the renewal of the mutual trade concessions agreement with Brazil.10 This renewal should have been little more than routine for trade diplomacy, but the UIA position raised concern within the government in the view of the more important steps that were to be undertaken shortly. Still, the government fully shared the motives behind Favelevic’s declaration. The Argentine trade balance with Brazil was negative and the qualitative difference was striking: two-thirds of Brazilian exports to Argentina were manufactured goods whereas twothirds of Argentine exports to Brazil were raw material or unprocessed primary products.11 Rectifying these trade imbalances was one of the major Argentine economic goals of integration with Brazil. This is only one example of the large coincidence between the government’s designs and the business interests. The reasons why Argentine entrepreneurs faced integration with anxiety were sensible. The private sector was reluctant to accept negotiations because it didn’t know exactly the content and consequence of the agreements and because of a limited knowledge of its own market and the potential offered by the Brazilian market.12 Argentine entrepreneurs

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viewed Brazilian industry as much more powerful and they initially underestimated the prospective gains from integration. Not only was the size of the Brazilian economy daunting, but also the attitude of the Brazilian government toward its entrepreneurs was perceived to be more favorable than that of their own government. In Argentina, there was a conviction that Brazilian administrations, at local and national levels, had a higher degree of acceptance of proposals emanating from business, and that this constituted an advantage.13 In principle, the Brazilian situation was slightly simpler. The government was less concerned with the support of the industrial sector, which itself was uninterested in, rather than fearful of integration with Argentina. Brazilian entrepreneurs were conscious of their strength and appreciated the long tradition of government efforts to promote industrial development. These considerations reinforced the executive’s conviction that it would be relatively easy to sell the integration project domestically.14 The exhaustion of the import substitution model prompted the Brazilian political class to foster economic relations with the rest of the world and to strengthen political and economic ties with Argentina. This made perfect sense to the business community since it appeared as a new paradigm of industrial development and expansion. Furthermore, Brazil had traditionally been reluctant to concede trade preferences, as the experiences of the Latin American Free Trade Area and the Latin American Integration Association had clearly shown. On the one hand, a plethora of administrative hurdles and technical requirements kept imports into the Brazilian market under strict control. On the other hand, Brazilian trade and customs bureaucracies were informed by old concepts of protectionism and national development. These considerations reassured Brazilian business, although they increased Argentine frustrations.

5.3.2 The sectoral approach to integration and the debate over the involvement of business The initial reactions of the business sector to the announcement of the Argentine-Brazilian integration at Iguaçu were either indifference or surprise, both in Brazil and in Argentina. The failure of the Latin American Free Trade association (LAFTA) and the Latin American Integration Association (LAIA) had undermined the credibility of trade liberalization processes in South America. Furthermore, entrepreneurs had been completely excluded from the preparation of the meeting at Foz. The meeting had been political in nature and no one was surprised by the exclusion of private sector representatives or protested against it. Quite the contrary, the private sector accepted that such an initiative was a matter of high politics.15 In Argentina, the government understood the indifference of business as a signal that the latter received the initiative as

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something that “had to do more with the progressive foreign policy led by Alfonsín and Caputo than with the economic and commercial agenda.”16 When the real negotiating phase for economic integration started, in early 1986, the initial business attitude of indifference shifted toward reluctance and at times into overt opposition, especially in Argentina. Yet reservations concerned the implementation of the economic program, never questioning the political choice of close approximation between Argentina and Brazil. On the Argentine side, Favelevic, the president of the UIA, stressed that there was no major objection to the political project, for the world was going toward regionalization, trading blocs, and common markets, therefore to deny support for Mercosur was wrong.17 Jorge Zorreguieta, president of the Argentine Sugar Centre, although representing one of the sectors most averse to Mercosur, acknowledged the high political significance of integration.18 On the Brazilian side, “it is important to stress that not a single significant sector of Brazilian society took an up-front stand against the regional integration initiative: the criticism came from different places and may be summarized as questioning the limitations of the process and not its strategic intentions.”19 Between the meeting at Foz do Iguaçu of November 1985 and the signature of the PICE of July 1986 continuous dialectic between government and business on the implementation as well as on the scope of the integration project took place. However, governments retained the final decision at all stages, and channels of consultation were mostly informal and unconventional. Governmental efforts to involve business have not always been fully appreciated by the latter, which felt neglected and often sought a more important role. The executives designed the model and the format of integration. Governments even decided which sectors were to be included in the scope of the PICE. When asked to what extent the entrepreneurial associations were involved in the formulation of the PICE, Roberto Favelevic’s straight answer was “Zero!”20 He then stressed the clear separation existing between the political decision makers and the entrepreneurs. In particular, officials at the Ministry of Foreign Affairs enjoyed a privileged role in the formulation phase and, reportedly, there was scant coordination between the Foreign Ministry bureaucracy at Palacio San Martín and the officials at the Ministry of Economy.21 On the Brazilian side, the logic was the same. Itamaraty secretary general Ambassador Paulo Tarso Flecha de Lima remarked that the Brazilian government offered the entrepreneurs “a set menu.”22 The private sectors could refine the lists of products, but shape and content of the protocols had already been negotiated. Yet things are never as simple as they first appear, and several voices emanating both from the executive and from the industry stress a certain degree of coordination between government and business.

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The Argentine undersecretary of economic international relations Jorge Romero affirmed that “local entrepreneurs were consulted at all stages.”23 Despite the opinion expressed by Favelevic, another Argentine entrepreneur, Israel Mahler, later president of the UIA in the early 1990s, observes that “until 1989, the process was developed through regular consultation with the entrepreneurs, even though there were difficulties and arguments.”24 Mahler came from the capital goods sector, and his version appears to be confirmed by an article published by La Nación, in which it is asserted that protocol No. 1, on capital goods had been designed through close contacts with the metallurgical industry. 25 The chief economic advisor at the Ministry of Economy in Brasília Luiz Gonzaga Belluzzo conceded that conceptualization did not directly involve the entrepreneurs, but, he added, these were regularly consulted in both countries and later involved in the implementation phase.26 This set of considerations introduces new complexity to the analysis. Although it is clear that business was excluded from the theoretical design of the PICE structure, it also emerges that the private sector was consulted throughout the negotiations. The entrepreneurs’ contribution to integration was not strictly limited to implementation. The impact of these consultations upon government decisions may be unclear, but is not negligible. How were business needs and expectations taken into account by governments in this first phase of integration, from 1986 to 1988? First, even if consultation with the private sector was limited during the conceptualization phase, decisions were made taking fully into account both national development strategies and industrial interests. According to Beatriz Nofal, then Argentine undersecretary of industrial policy, only the most competitive products were initially to be included in the lists for tariff reductions, while less competitive ones were to be added at a later stage.27 This was meant to maximize benefits and to delay the costs of integration as long as possible in order to meet industrial requests. This argument is confirmed by a telegram Itamaraty sent to the most important Brazilian embassies around the world, in which it was clearly stated that gradualism and flexibility, two of the main characteristics of the PICE, were meant to allow the business sector the necessary time to adapt to the progressive changes integration would bring in the markets.28 Second, a restricted number of entrepreneurs accompanied the formulation and negotiation of the PICE in both countries. In Argentina, government officials established, in a reserved form, an informal working group including a dozen captains of industry.29 The government goals were to obtain preliminary consensus from business on the measures to be undertaken and to gather the opinions and concerns of the private sector. Also, Undersecretary Nofal stresses that a group of entrepreneurs

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enthusiastically supported the government plan and sponsored it within the entrepreneurial community.30 President Alfonsín himself acknowledged the role of the group of entrepreneurs who backed the government in the early stages of the process.31 In Brazil, business associations consistently complained at their exclusion from negotiations. In a note addressed to Foreign Minister Roberto Abreu Sodré, the Federation of Industries of the State of São Paulo (FIESP) expressed dissatisfaction at the absence of business representatives in the Brazilian delegation negotiating bilateral economic relations in Buenos Aires in July 1986.32 In response, the government claimed that there had been participation, and indeed twenty-eight businessmen were invited to participate in the delegation that would accompany President Sarney to Buenos Aires for the signature of the PICE.33 But the government’s response was not very persuasive: The extent to which those invited were representative of the industrial community may be questionable as they were selected by the executive itself through informal channels. Most of all, the influence they may have had over the treaty at such a late stage is also very dubious. The list appears more as etiquette than as an effective provision to ensure business participation in the process. Overall, it appears that restricted forms of consultation were more effective in Argentina than in Brazil. Third, the sectoral approach to integration entailed a sector-targeted involvement in negotiations. Obviously, when consulting with business, governments privileged those sectors with concrete interests in each specific negotiation. Again, the conceptualization of the format was probably fully governmental, but the design of the specific protocols could count on the advice and feedback of the entrepreneurs concerned. Beatriz Nofal recalls that consultations did not occur with the private sector as a whole or with general associations. They rather took place between the government and sectoral chambers or influential businessmen, who were widely recognized as experts on the national industrial situation.34 In Argentina, for instance, when the protocol on capital goods was discussed, the government consistently consulted with representatives of the sectoral chamber of the metallurgical industries, ADIMR A. When the protocol on food was under consideration, consultations with the powerful sectoral chamber of the food industry, COPAL, were regular.35 In Brazil, the role of business at sectoral level was weaker. Generally the private sector contribution to the design of the protocols was negligible.36 The only significant exception was the automotive industry, where powerful multinational corporations enjoyed access to decision makers, although through noninstitutionalized channels. Fourth, business perspective and concern were incorporated in the executive strategy also through the appointment of top businessmen to government positions. In Brazil, with the return to democracy, many business people became politically active. This did not entail a

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reinforcement of business associations, but placed people closely related to business in key bureaucratic and political positions. “São Paulo business was indirectly ‘represented’ in the Sarney government through numerous top level appointees, including several cabinet members.37 These contacts gave São Paulo industrialists access to discussions about economic integration with Argentina.”38 In Argentina, the same phenomenon occurred at a later stage. President Menem, who was reluctant to establish a dialogue with the entrepreneurs, appointed executives from Bunge y Born, an Argentine grain-trading multinational, to run economic policy.39 Miguel Roig, the first minister of economy in the Menem administration, was president of Bunge y Born. His successor Nestor Rapanelli came from the same corporation. Fifth, the role of the business sector in the implementation phase of the PICE was appreciable, especially in Argentina. This was so because the two governments had clearly designed the scheme for this purpose. Although the business sector did not directly influence the conceptualization of the project, it definitely affected its final outcome, having an impact upon government expectations and further plans. Once the capital goods protocol entered into force, in January 1987, government-business discussions took place to define the positive lists of products. In this respect, the content of the lists as well as the result of subsequent rounds of negotiations were influenced by the business sector.40 In Argentina, collaboration between government and entrepreneurs was effective for both the capital goods and food sectors. The Secretariat of Industry and Trade appointed officials specifically in charge of assisting the private sector in drafting the lists. These officials negotiated the technical details of the lists with the entrepreneurs at the national level, and then took part in the international negotiations to define the final content of the common lists at the intergovernmental level.41 In Brazil, the level of involvement of the private sector was once again lower. The government often drafted by itself the lists of products and it consulted with the business sector only intermittently.42 However, there is documentary evidence of exceptions. For the food protocol, for instance, Itamaraty invited the sectoral food association, ABIA, to send a list of items suitable for inclusion in the common list with Argentina.43 Only after receiving such a list was Itamaraty ready to discuss further with ABIA representatives. Pushed by the governments, and having realized the necessity of being something more than passive players, Argentine and Brazilian entrepreneurs also organized joint initiatives, such as conferences, fairs, and working groups, to assert their role in the integration process. The objective was to develop contacts among the private sectors in order to share new trade opportunities and difficulties in the management of the protocols.44 However, the noble intentions and planned activities had a low impact on the process of integration. By contrast, national defensive

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coalitions and the rapid exhaustion of competitive products to include in the lists led to the stalemate of the negotiations for the expansion of cooperation. At least in principle, during the sectoral phase of integration, many entrepreneurial sectors in both countries were not opposed to integration as such, but expressed anxiety about its form, pace, or possible negative sides. In any case, this also means that they were not pushing for accelerating or completing the program.

5.3.3 The road to the common market and the universal approach to integration: changes and continuities The 1990 Buenos Aires Act set the goal of a common market between Argentina and Brazil by the end of 1994. Also, it introduced a universal, linear, and automatic approach to tariff reductions. The 1991 Treaty of Asunción extended bilateral commitment to Uruguay and Paraguay, formally establishing Mercosur. As the scope of integration expanded and the process became irreversible, the interest of business in the issue of integration increased and the private sector sought a larger involvement. However, the rise in interest did not result in a larger participation or influence. On the contrary, and paradoxically, universal and automatic reductions made the implementation of the process more technical and less responsive to the outcome of government-business negotiations. Continuity characterized the attitude of the two governments toward business. The decision to create a common market was state-led and did not include consultations with the private sector. Civil society did not show great interest initially and business was again skeptical, especially about the capacity of the governments to attain this objective. Also the decision to change the approach to integration was essentially governmental. It emerged from the new circumstances of the international economy and was adopted without consultation with the entrepreneurial communities in the two countries. From Iguaçu to Asunción, governments have deliberately been reserved and discrete, maintaining a very low profile during the phase of design and formulation of the process.45 Change is detectable in the level of interest of the business sector, and to a certain extent in its attitude too. Although reluctance still characterized several sectors of the two economies, in particular in Argentina, interest in integration as well as the support for it grew. The 1988 project of a free trade area in ten years following the protocols scheme was considered favorably by Argentine business.46 But announcement of the intention to move to a common market in less than five years was less well received and aroused fears. Entrepreneurs who had planned their adjustment over a longer period had to change strategy suddenly, and the

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UIA voiced discontent at such a short transitional period.47 Business had welcomed the 1988 Treaty as an instrument to enhance its competitiveness at world level, whereas the 1990 Buenos Aires Act, by accelerating the process, forced industrialists to compete immediately within what was soon to become Mercosur.48 As the common market approached, Argentine entrepreneurs concentrated their complaints on lack of macroeconomic coordination, existing asymmetries between the two countries in the levels of subsides, variable incentives to investment and tax exemptions, and the large autonomy Brazilian state governments enjoyed in terms of economic policies.49 Still, the common market was about to become reality and not all the voices were negative. Roberto Favelevic, by then vice president of the UIA endorsed the project though stressing the disparities in size of the two economies.50 The Argentine Chambers of Exporters supported the creation of a common market. The food sector, for which the sectoral protocol had been a significant success,51 confirmed its enthusiasm. Alberto Kohan, secretary general of the first Menem presidency, recalls that entrepreneurs accompanied the process and, despite some inevitable tensions, adapted to the new circumstances.52 Some reservations still remained. Practices to delay or obstruct integration also remained. The infamous acronym NP, no producido, hid a technicality used by the recalcitrant sectors of the Argentine industry to continue importing technology from Europe or the United States evading integration obligations. The mechanism allowed imports at a reduced duty under the pretext that such products were not produced in Argentina or Brazil. The reality was an abuse of the customs codes, which were at times tailored or created to identify products with minor and absolutely negligible differences from those produced locally. Still, overall, it could be argued that “Argentine entrepreneurs seemed to have abandoned their opposition to integration, which they showed in 1986 and 1987.”53 In Brazil, the entrepreneurial sector largely supported the creation of the common market but had negligible influence on the definition or implementation of the scheme. In late August 1989, Mario Amato, president of the FIESP, praised the government for creating conditions favorable to a dynamic and fruitful economic exchange with Argentina but remarked that participation of the business sector was not very intense.54 The FIESP strongly lobbied in favor of both liberalization and economic integration. Foreign Minister Francisco Rezek noticed a high level of expectation of the private sector from the common market.55 In a survey conducted on behalf of the Argentine Banks Association (ADEBA) immediately after the signature the of the Treaty of Asunción, 48 percent of Brazilian entrepreneurs considered Brazil fully equipped to participate in Mercosur, 48 percent considered it partly equipped, and only 4 percent not equipped. The corresponding figures for Argentina

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were 36, 29, and 35 percent, respectively.56 In another study conducted by Coopers and Lybrand in 1991, 82 percent of Brazilian business expected to gain from Mercosur, versus only 45 percent of the Argentine respondents.57 If the attitude of Argentine business was only cautiously favorable to the common market, the optimism of Brazilian industry was remarkable. A set of factors contributes to explain this shift toward more positive attitudes. First, a natural inclination to protectionism and fear of increased competition accompanies all attempts at liberalization. Uncertainty tends to blur the potential advantages of integration, and such was the case of the PICE protocols. Second, the results of the first years of bilateral integration were not as dramatic as it was feared. Bilateral trade increased steadily. Argentine concerns about consolidation of trade imbalances did not materialize, and the sector-by-sector approach softened the specialization trend (Argentine commodities versus Brazilian manufactures). Additional correction mechanisms were negotiated to redress possible distortions. Third, changes in the international context and internal economic policies increased the attractiveness of a regional bloc. Growing external competition made Mercosur an appealing instrument to limit the penetration of extra-regional competitors and to increase regional producers’ competitiveness toward world markets. Neoliberal internal reforms forced the industrial sector to design new market strategies and targets, for which Mercosur could provide a positive support. Finally, the process became irreversible and entrepreneurs, enthusiastically or reluctantly, had to adapt to the new reality. Ironically, as business became more interested in the process, it also became less important as an actor, not only in the conceptualization phase, but also in its implementation. The passage to a universal and automatic approach in tariff reductions rescued integration from delicate negotiations with the business sector to decide the items to be included in the common lists.58 Governments themselves decided at what rate and with what timing to diminish custom duties. Little or no consultation with business was sought. The reduction exercise was automatically repeated at fixed intervals thus excluding business from the process. The role of the private sector was limited either to a few technicalities or to the elaboration of list of exceptions. Furthermore, automatic and general reductions became very technical questions. Political appreciation of possible repercussions on industrial development or employment was replaced by technical judgment on theoretical economic models. The role of technical bureaucracies within governments increased. Finally, the Menem and Collor administrations were less open to business representation than previous governments had been.59 Sectoral advance in the transitional period (until 1994) were extremely slow, and in June 1992 at the summit of Las Leñas, governments took over most of the remaining

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sectoral negotiations from business, further diminishing the importance of the latter.60

5.4 Explaining Major Patterns in Government-Business Relations 5.4.1

The structural weaknesses of the entrepreneurial sector

Business was largely excluded from the formulation of the integrationist project, both in the creation of the PICE and Mercosur. Business participation appears more significant during the implementation phase, but this was under large government control too. This situation was mainly due to a clear government determination to keep a firm lead in the whole integration process. The Argentine and Brazilian executives deliberately limited private sector participation in order to minimize sectoral clashes, which could have delayed or paralyzed integration. Governments appeared more interested in tempering opposition than in fueling support.61 However, there is also a business side of the story. Deficiencies within business organizations contributed to the alienation of the private sector from core negotiations. Internal division, lack of coordination, operational restructuring, and inadequate access to the real decision makers were central shortcomings in this respect. The inability of business associations to present themselves as credible partners in the process was a major problem.62 Industrial associations in Argentina and Brazil were divided and suffered from structural weaknesses. In Argentina, for instance, the UIA was divided between protectionist and liberal members; it had problems in resolving internal conflicts and therefore its representativeness was weakened.63 After the military period, the UIA was still undergoing a process of normalization. This limited its action and coordination among sectoral associations and larger important members.64 In Brazil, entrepreneurial associations had huge staffs and budgets but they did not represent their members well as they suffered from compulsory corporatism, which ended up overrepresenting marginal sectors.65 This gave rise to rival associations and made the government rely upon consultation with powerful individual businessmen or firms rather than with sectoral or regional associations. A complementary explanation for the weak influence of the private sector over governments concerns the levels of the public administration hierarchy at which business was capable of dialogue. Business associations and representatives found it difficult to have direct access to the highest spheres of the state, such as the presidential entourage or the foreign minister’s closer advisers. In Argentina, most of the business-government interactions were channeled through the Ministry of

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Economy, the officials of which were in charge of relations with sectoral representatives to manage the implementation of the agreements.66 But at this stage key strategic decisions had already been taken, mostly at the Chancellery. In Brazil, CACEX, the branch of the Banco do Brasil in charge of foreign trade regulations, and the Ministry of Economy handled the majority of relations with the industrial community, including discussions and mediations concerning integration. Once again, key decisions had already been taken elsewhere, mainly within Itamaraty and the presidential circle. What remains unclear is the extent to which business was unable to reach key decision makers and the extent to which it did not properly understand where core decisions were taken. From a relatively advanced stage of the bilateral integration, around 1988, business also started to lobby the legislature on matters of integration. In Argentina the parliament backed the process but never took a decisive role. In case of quarrel between the government and business, the Argentine Parliament tended to back the former rather than acting as a mediator.67 In Brazil, the legislature interfered with foreign policy decisions only a few times, as it was initially busy with the constitutional reform and most importantly because foreign policy was traditionally reserved for Itamaraty. The few existing consultation mechanisms were generally not institutionalized and often unconventional. Much depended on the goodwill of the executive to release its documents and to open its decision-making procedures to business.68 The openness of the government to business claims varied in each administration, and it often depended on the individual minister or official.69 While the Alfonsín administration and many of its officials showed propensity to dialogue, under Collor and Menem business was largely denied access to decision makers, the Sarney administration being somewhere in between. Much depended also on the lobbying capacity of the private sector on specific subjects under negotiation and on the influence and prestige of individual entrepreneurs, firms, or associations. The informality of the interaction mechanisms favored the most powerful segments of the business community. This leads to further considerations about the role of large conglomerates.

5.4.2

Multinational corporations and big conglomerates

It appears that multinationals and big conglomerates were more involved in the tortuous mechanisms of consultation and were also more in favor of integration than small business.70 Yet while the presence of conglomerates in the process was considerable, their ascendancy over governments should not be overestimated. Support was higher because many large corporations had already established subsidiaries in the two countries

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and designed plans for regional expansion; integration and division of labor were already practiced at the intra-firm level.71 For big companies the advantages of an enlarged market, including regulatory stability, outweighed concerns about competition. The involvement was higher too because top executives of powerful conglomerates had easier access to top political levels and enjoyed closer contacts with political institutions. However, the extent of both support and involvement of the big companies could not be taken for granted, and there were significant exceptions. Regarding the level of support, for instance, it is noteworthy that the automotive sector was actually divided in the first phase. The protocol on the automotive sector was to be signed at the summit of Brasília of December 1986. On the eve of the summit, Ford and Volkswagen reportedly endorsed the proposal, while Renault and Mercedes expressed doubts.72 The Brazilian car parts producers opposed the agreement and the document was eventually aborted. Protocol No. 21, regulating the trade of vehicles and car parts, was concluded in Brasília in April 1988. But just before the signature, Juan Ciminari, Argentine secretary of industry and foreign trade, declared that in order to avoid problems and a crisis of confidence, the exchanges in the automotive sector would be subject to a quota for the year 1989.73 The bargaining was very demanding and the final document was the result of the interests of the assemblers as well as those of the governments. Regarding the involvement and influence of big conglomerates, they should not be overestimated either. The chemical and petrochemical sectors in Argentina and Brazil were mainly composed of big firms, almost all of them multinationals. These companies were strongly in favor of bilateral integration, and while they largely benefited from protocol No. 4 on trade expansion, no specific protocol on chemicals or petrochemicals was signed; the protocol on energy (No. 8) was adopted as it was a priority of national development and not because of business pressure; the protocol on biotechnology (No. 9), relating to the chemical and pharmaceutical sectors, was overall of scant significance. Despite the importance of the automotive industry, the corresponding protocol was one of the last to be signed. Delay was mainly due to hard negotiations between governments and companies. The former aimed at a balanced growth of trade and the modernization of the sector, as opposed to indiscriminate liberalization and the risk of investment flight. Furthermore, Argentina adopted a domestic legislation vigorously favorable to nationals to check the negative effects of liberalization, and the automotive protocol was actually implemented only from 1990, when new decisive measures were agreed upon.74 The composition of the restricted circles of firms consulted by the two governments does not provide final evidence on the influence of

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multinationals either. It certainly indicates a consistent presence of representatives of big national and foreign conglomerates, but nothing in the choice of the protocols, their pace, format, or content allows speculation on whether business interests overruled national development projects and priorities. The choice of the captains of industry co-opted by the Argentine administration seems to reflect the strategic priorities of the government, which sought advice and support from those sectors considered decisive to development and modernization. Among the businessmen who accompanied President Sarney to Buenos Aires for the signature of the PICE, a large number came from sectoral associations and only a few from multinationals. All this said, it is appropriate to remember that the most influential channels of interaction were informal. It is extremely difficult to investigate the extent to which a dinner or a round of golf between a tycoon and a member of the cabinet may have influenced the views of the latter. Moreover, the argument here is far from denying that big companies overall were more in favor of, or more involved in the integration process than other business categories. However, two key points have to be made. First, governments took a firm lead in the process of integration and their consultation with big companies did not entail that the latter were successful in imposing their own will over the former; quite the contrary. Second, the sectors where multinationals and conglomerates had larger interests were not always prioritized in the integration process. The food sector was unhesitatingly integrated because it was a strategic area for Argentina and not because of the favorable position of business. The integration of the automotive sector was delayed because it could cause anxiety to the governments despite the favorable position of many big manufacturers. The emphasis should then be put on the average behavior of the big conglomerates. Regardless of distinctions in size or sector of activity, they took a supportive attitude toward the process of integration.75

5.5

Conclusion

The debate on business involvement in the creation of Mercosur has engendered long discussions among analysts without reaching true agreement. A first current of thought is skeptical of the actual influence of business on the integration process. Its formulation omitted the participation of the organized sectors. Governments’ attitude of mistrust toward business involvement was derived from the considerable differences of opinion existing within the private sector on the most diverse issues.76 Only when a particular sector was on the agenda were its entrepreneurs consulted.77 A second current suggests that the productive sectors were quite significant. The theory of “influence circles” as applied

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to Mercosur maintains that actors can have an impact on integration both at the national and subregional levels.78 According to their degree of influence, actors are gathered into three circles, rated from higher to lower impact. Governments, techno-bureaucracies, and entrepreneurial groupings, including transnational corporations and national associations, are in the first circle. Actors in this category are directly involved in the processes of formulation and negotiation. Following this interpretation, entrepreneurs have then participated in the process from the beginning, and national associations were particularly active to defend sensitive sectors and improve comparative advantages.79 Whatever weight one may want to attribute to business consultative or lobbying role during the integration process, it is obvious that government projects reflect a certain design and concept of society and its interests. In a democratic context, governments may maintain control over the integration process but they also have to accommodate certain societal interests. In cases of state-led integration, such as both the ArgentineBrazilian scheme and Mercosur, this accommodation may remain implicit in virtue of extensive overlap between the interests of powerful business and the plans of the executives.80 Governments’ designs for economic modernization, search for new markets, redress of trade imbalances, and opening-up of national economy largely matched big business interests. In the introduction to this chapter, two conditions were set for the establishment of a link between democracy and regionalization through the involvement of civil society, namely business. First, the private sector had to have a sufficient say in the integration process to influence government decisions; second, business had to be supportive of integration. If one accepts the theory of influence circles, the first condition may have been fulfilled. However, this study has shown that business influence over government on the issue of integration was limited. Moreover, business support for integration was at best tepid and fragmented, and therefore the second condition was not fulfilled. This suggests that business commitment to the cause of integration does not provide sufficient evidence to establish a link between democracy and regionalization. Finally, political classes in Argentina and Brazil had to face a trade-off between prompt consolidation of formal and procedural democracy and the enhancement of the quality of democratic life. The risk of instability and authoritarian resurgence forced the governments to privilege the former while leaving the latter for a successive stage. One of the prices for it was to deny an active role to business in the strategic formulation of integration. With the intellectually comfortable benefit of the hindsight, one may speculate about the detrimental effects of this choice to the quality of democracy in the two countries, but it is possible to indulge in such speculations only if democracy is in place.

CHAPTER 6

Democracy as a Foundational Idea of Integration

6.1 Introduction The central aim of this book is to explore if and how democracy had an impact upon regionalization in the South American Cone. Chapters four and five challenged the argument that institutional and societal actors silenced under military regimes and supposedly brought into play by democracy actually favored regionalization. On the one hand, the legislatures had a minor impact on the integrationist plan conceived and implemented by the executives. On the other, business, which was to be the chief executor of integration in the governmental plans, proved to be more of an obstacle than an asset. In both cases, the governments’ relegation of these actors to a marginal role proved functional to the rapid achievement of integration. Despite limited evidence to support it, the conviction that democracy was essential to Argentine-Brazilian integration and the creation of Mercosur has been consistently reiterated by the key protagonists of those events. After the signature of the PICE, President Alfonsín remarked that “one of the conditions we believe indispensable for integration is the existence of democratic regimes,”1 while President Sarney stressed that “the establishment of democratic regimes created unprecedented conditions for our relations.”2 These statements were typically accompanied by similar declarations from ministers, diplomats, government officials, and legislators. One may wonder if that was a powerful case of political rhetoric and propaganda, or if there was some truth that needs further explanation. A promising line of research concerns precisely the very statements on democracy and integration issued by the protagonists. The search for linkages between democracy and regionalization has been driven so far by the scrutiny of possible explanations of why all the main actors involved perceived democracy as an important factor for regional integration. That

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is to say, the link between democracy and regionalization has been sought in properties and incentives allegedly inherent to democracy that may have facilitated integration. What if, instead, the link between democracy and regionalization resided precisely in the very perception by the key players that democracy was significant to integration? What if the right direction of investigation were precisely that of ideas and beliefs as determinants of foreign policy? If all the key actors believed that democracy played a significant role in integration, it is possible that they acted according to this belief. This would bring into play a cognitive analysis of events and foreign policy, and would consider democracy as a determinant of perceptions, images, and roles of the self and the other. Consequently, democracy would shape interests and expected behaviors, thus affecting foreign policy and as a result the course of the integration project. Democracy would be a, if not the, “foundational value of integration.”3 Indeed cognitive approaches have been “vigorously applied to international politics, especially to the foreign policy-making process [. . .]. There is, therefore, a strong basis of literature to the effect that cognitive psychology can almost certainly make a contribution to the understanding of international organizing process.”4 The hypothesis here is that democracy informed the worldview of the key leaders in the region, shaping their perceptions of their own and others’ roles, and thereby defining interests and behaviors. What the new democratic circumstances meant to each actor, and the extent to which these affected his or her actions may have varied, but democratic beliefs appeared as the starting ring of a logical and consequential chain linking perceptions, roles, interests, objectives, and ultimately the adoption of a given foreign policy. The next three sections will make use of cognitive approaches to international politics to explain the place of democracy in the emergence of integration in the Southern Cone. First, political psychology theories based on perceptions and images are applied to the case study to investigate democracy as a cognitive determinant of international behavior. Second, social constructivist theory is employed to assess the role of democracy at the systemic level. Third, ideational theoretical approaches are applied to analyze how democracy affected foreign policy options and choices. While political psychology and social constructivism concentrate on the locus of the genesis of ideas and perceptions, whether at the individual or systemic level, the ideational approach used here focuses on how ideas affect foreign policy. These theoretical arguments have to be read in conjunction with, and help explain the historical account of part one. Concluding remarks will discuss how ideas actually operate across different levels of analysis in international politics and how both individuals and structural constraints determine policy outcomes. This opens a bridge between realist theories of international relations and cognitive approaches to international politics.

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6.2 Psychology and International Politics: Perceptions, Images, and Roles There is a huge and incontrovertible evidence that all the key players perceived (or at least firmly stated they did) democracy as an important factor for integration in the Southern Cone. Presidents Alfonsín, Sarney, Menem, and Collor and their foreign ministers repeatedly stressed the relevance of democracy to the integrationist commitment.5 All the main negotiators from the Argentine as well as the Brazilian side credited democracy with a clear role in the construction of regional agreements.6 Given the availability of substantive primary and secondary material confirming the existence of this perception, resistance to methodology on the grounds of difficulty to determine perceptions should be overcome. A different question is to assess if and how these perceptions actually affected the decision to integrate. The first step is to ask if decision makers’ perceptions matter at all. One can separate the “psychological milieu,” or the world as the actor sees it, from the “operational milieu,” the world in which policies will be carried out, and argue that “policies and decisions must be mediated by statesmen’s goals, calculations and perceptions.” 7 In separating these spheres, the question remains as to whether or not significant differences in policy preferences are attributable to differences in the perceptions held by decision makers. Robert Jervis, a pioneer of cognitive approaches to international politics, maintains that individual perceptions may explain a good number of things in international politics.8 To argue that the international environment fully accounts for a state’s behavior implies, implicitly or explicitly, that all states endowed with comparable capabilities react similarly to the same objective external circumstances. But there is little empirical evidence to discard all variables other than the international setting. Differences in economic and social organization within the state and domestic politics may also affect foreign policy. However, if these were the only determinants, together with systemic factors, change in a state’s political class would not alter the course of foreign policy. Yet again, international history provides little support for this view. Hence, the differences in quality and perceptions of the political leadership may account for those differences in states’ international behavior that cannot be explained considering only international or national constraints. Psychological approaches put emphasis on the individual level. Such approaches however leave open the question of how to fill the gap between decision makers’ perceptions and state or government actions. The appropriate response has to have recourse to a certain degree of underlying methodological assumption, as persuasively discussed in a work that has now become a classic in the study of foreign policy decision-making: “It is one of our basic methodological choices to define

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the state as its official decision-makers—those whose authoritative acts are, to all intents and purposes, the acts of the state. State action is the action taken by those acting in the name of the state. Hence, the state is its decision-makers.” 9 If differences in states’ behavior can be related to the decision makers, then leaders’ cognitions, in terms of their perceptions of the world and images of self and others, have an impact on foreign policy.10 From a theoretical perspective, the hypothesis that democracy provided the lenses through which the Argentine and Brazilian leaders saw the world, and therefore it constituted the analytical framework conducive to the decision to integrate, is sensible and sustainable. But how did all this work according to a psychological approach? How did cognitive images influence the selection and timing of policies? In international politics, perceptions are “complicated bundles of cognition” principally concerned with intention, power, and “a country’s capacity to create policies, to carry them out, and to achieve its goals.”11 Before the return to democracy, Argentina and Brazil started to perceive their mutual intentions as less threatening but this was not a consolidated or invariable pattern. Also, Argentina clearly conceded Brazil’s advantage in terms of economic and military power. However, Argentina had pursued erratic foreign and economic policies, its military government’s reputation was extremely negative, and its capacity to stick to and implement international commitments was doubtful. Brazil’s economic development was at stalemate and its international weight declining. The return to democracy enhanced the mutual perception of states with clear, consistent, and mostly common interests and objectives and with the determination to achieve them. Other psychological concepts such as mood and affection are rarely addressed in political psychology, but in principle they can be interestingly applied to international politics. “Emotions are an important way in which information is organized in the mind. Emotions do not replace other organizational systems, but rather constitute another network of associations by which events are understood, and more important, linked to each other.”12 Indeed mood and affection influence perception. People tend to be more receptive to positive information and to solve problems better when they are in a positive emotional state. The return to democracy inspired a state of euphoria and enthusiasm in the political milieu of Argentina and Brazil. After long years of military dictatorship, it seemed that democracy could open new horizons. Brazilian foreign minister Francisco Rezek remarked that “now that we both live in full democracy we start facing future with more optimism.”13 In that perhaps ephemeral context of positiveness, the mutually friendly signaling found receptive interlocutors. The confidence in finding effective solutions to problems helped Argentine and Brazilian decision makers evaluate the available policy options and eventually choose for integration.

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Affect and cognition are separate concepts and it is actually difficult to evaluate the impact of the former on the latter or on a particular policy decision. Nonetheless, “putting them back together is the only way to get a picture of the full complexity of the decision making process.”14 The sharing of democratic principles and consolidation problems augmented the feeling of commonality and sympathy between Argentina and Brazil. Both administrations felt a good predisposition toward one another and this added to the objective political and economic conditions that may have suggested bilateral cooperation as a good policy in that historical moment. Also, reacquired democracy enhanced the selfesteem of Argentina and Brazil. The phenomenon was particularly evident in Argentina where the cruel military proceso was perceived as a parenthesis in the history of the country and re-democratization, it was felt, put Argentina back in its natural historical trajectory. Also Brazil saw in president-elect Neves the incarnation of a reinvigorated spirit and hopeful future. Positive mood and enhanced self-esteem increase the actor’s perceived ability to alter events and the actor feels in control. This confident self-image is perceivable by other states and raises the attractiveness of partnership with that actor. Democracy certainly played a role in defining this complex set of psychological dynamics, the derived perceptions of reality, and the appropriate instruments to respond to it. Now, images incorporate those perceptions or beliefs helping an actor to predict how others will behave under various circumstances. It is the image of a state that likely determines the attitude and predisposition of the other members of the international community toward that state. But states may then have reasons for projecting fake images subservient to their opportunistic immediate interests and cheat on other states. In order to be credible and reliable, states have to make sure that their image is accurate and they have to behave accordingly in a consistent way. Therefore, it is worth assessing whether or not the advent of democracy effectively and enduringly affected the image of cooperative and reliable partner Argentina and Brazil transmitted to each other. Robert Jervis proposes a distinction between signals and indices as indicators of intentions and mirrors of images.15 Signals are statements or actions that “do not contain inherent credibility,” they can be issued by a deceiver as by an honest actor since the costs of such undertakings are deferred in time.16 By contrast, indices are statements or actions that “carry inherent evidence that the image projected is correct because they are believed to be inextricably linked to the actor’s capabilities or intentions.”17 The major difference between the two is that signals are generally linked to cheap commitment, the consequences of which may not have a substantial and lasting impact upon the state and its decision makers, while indices refer to costly commitment, having the potential to bring major consequences or change for the state, its objectives, and policy patterns.

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Pre and post-democratic Argentine-Brazilian relations fit Jervis’ model and show a striking correlation between democracy and the shift in mutual cooperative interaction from signal to index. The 1980 nuclear and military cooperation agreements clearly signaled the intention to lessen tension and inaugurated cooperative relations but the actual concessions were limited and the practical implementation of those treaties was of scant importance. By contrast, the opening of the nuclear plants of Pilcaniyeu and Aramar, the creation of the Argentine-Brazilian nuclear agency, and the accession of the two countries to the Tlatelolco Treaty were clear indices of friendly and cooperative commitment, the withdrawal of which would have been extremely costly. The change in quality and quantity of economic cooperation adds to the evidence. Indeed, Jervis takes the argument even further by listing those factors thought to be the cause of future action, that is, the most significant among indices. These include the personal characteristics of the leaders and domestic events. During international conferences or long negotiations leaders can study each other, assess attitudes, positions, and willingness to make real commitments. It is not a coincidence that Argentine-Brazilian integration relied upon the excellent personal relationship between the democratic Presidents Alfonsín and Sarney, or that the secret meetings of Don Torcuato and Itaipava served for the officials involved in negotiations to know each other and exchange visions and projects. It is not by chance either that under democracy, bilateral meetings at all levels grew exponentially and that the military were involved in integrationist face-to-face meetings too. A state’s internal political system and policies may be used as indices too.18 To the extent that decision makers believe that the domestic setting provides an index for foreign policy, predictions about international behavior can be inferred from domestic developments. For example, U.S. president Woodrow Wilson felt there were links between democracy and peaceful conduct and between authoritarianism and aggressiveness. He was not alone. Foreign Minister Dante Caputo maintained that internal policies have to be consistent with political and diplomatic relations abroad,19 while President Sarney stressed that democracy was the linkage giving coherence to external discourse and internal practice.20 The highest political levels in Argentina and Brazil considered domestic regime as inherently consistent with foreign policy, and this reinforced the mutual reception of friendly gestures from another democracy as reliable indices of intentions and future behavior rather than mere signals. However, Jervis remarks, “decision-makers [. . .] need only to be able to predict how others will act, not to understand why they act as they do, knowledge of correlation could be an adequate substitute for knowledge of causation.”21 This means that there is still something missing to effectively link democracy to regionalization: the explanation of how

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democracy turned the mutual image into one of good and desirable cooperator and consequentially how it transformed perceptions into policy outcomes. A return to cognitive psychology concepts, and in particular to the definition of roles, is a promising way ahead in this respect. Images in fact are associated to roles that states script for themselves and for other states. The role of a state consists of “repertoires of behavior, inferred from others’ expectations and one’s own conceptions.”22 Role theory assumes that for each role there exists a complementary counterrole, and this is evident in cooperation where each cooperator needs at least one partner to give sense to its role. Now, did the advent of democracy bring a significant change in the roles of Argentina and Brazil? Alfonsín and Caputo, in direct contrast with the country’s recent past, explicitly made democracy the leading principle of the international role of Argentina, a peace-loving state seeking promotion of democracy and friendly relations. In Brazil there was a certain degree of continuity in foreign policy but the new democratic administration sought a leading continental role by consensus and cooperation rather than by force and imposition as it had happened in the 1970s. Argentina’s and Brazil’s own role conception clearly had changed. As far as mutual relations and expectations are concerned, democracy brought a departure from preexisting roles too. Whereas in the 1970s Argentina and Brazil perceived each other as rivals, from 1979 they became vigilant and utilitarian cooperators, but mistrust did not disappear and interactions were based on self-interest rather than on shared visions. Only with the return of democracy did bilateral relations turn into a strategic alliance, characterized by commonality of material incentives as well as values and objectives. Importantly, according to role theory applied to politics, “changes in historical practices toward neighbors would unambiguously signal a change in world view and national role conception.”23 There is little doubt that following the return to democracy, a major qualitative and quantitative advance in Argentine-Brazilian relations occurred, indicating a clear change both in role conceptions and the expectations of the other. So far, the use of political psychology has made it possible to establish with a reasonable degree of accuracy that democracy contributed to alter the Argentine and Brazilian decision makers’ perceptions, prompting a change in mutual images and roles: from competitors to desirable partners. This provided a good substratum for integration. An interesting explanation of integration itself can also be derived from political psychology, starting from the assumption that “interactions among individual cognitive structures are preconditions of organizing.”24 Individuals need motivation to interact, and so do states. In a traditional realist view of international relations this motivation is

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provided by self-interest. However, there can be only limited organization (and integration is a form of organization) if states just agree on how to interact while the rationales for doing so are significantly different. In the South American case, Félix Peña, undersecretary under the late military and the Menem administrations, stressed that the experience of the Andean Group showed that integration is in principle compatible with ideological pluralism. A culture of working together is not necessarily inherent to regime similarity but, Peña continued, without democratic political systems integration has a “low cap” and room for agreement is rapidly exhausted.25 “The notion of organization as processes of seeking common causal maps thus looks beyond the seeming coordination of behavior and examines the degree of congruence among various world views.”26 Complex and deep organization such as integration needs to satisfy the interests as well as the profound motivations of the members. It is easier to achieve organization when participants “build consensus on what factors have caused what events, what has gone wrong, and what has to be done to resume the correct order.”27 This is the crucial point: Argentine and Brazilian democratic leaders agreed that military regimes had exacerbated tensions and mismanaged the economy, and that close cooperation could help both countries in their attempt to consolidate democracy, modernize the economy, and increase their negotiating power vis-à-vis the rest of the world. Moreover, democratic lenses showed how integration could serve the respective motivational drives, international credibility and economic recovery for Argentina, and international influence and power status for Brazil. Most of all, Argentine and Brazilian decision makers shared the view that democracy was an important element for integration. Political psychology theory does not say directly that democracy was significant for integration or how it was so, but it provides all the theoretical instruments to assess under what circumstances and conditions a given factor alters perceptions, images, and roles eventually leading to certain policy outcomes. Democracy as a potential factor affecting perceptions and the rest of the chain down to policy outcomes passed all the tests requested by the political psychology literature. There is solid ground to maintain that the key political leaders of Argentina and Brazil felt somehow compelled in their choices and behavior by the new democratic circumstances. What these leaders regarded as appropriate democratic expectation and action affected their conduct and had an influence on their perceptions, calculations, and policy choices. Yet, the strong emphasis on individuals overshadow cognitive processes at the international level, where the actual conduct of a state does not necessarily correspond either to its expected and predictable behavior or to the incentives received from the international community. Despite assumptions and

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calculations by policy makers, the outcome of their foreign policy is not always the desired one, and at times, “common cause maps are so difficult to negotiate that many international organizing efforts reflect, at best, the co-existence of many incongruent world views.”28 It is then worth exploring what happened when the apparently convergent worldviews of the individual Argentine and Brazilian policy makers interacted at the systemic level.

6.3 Social Constructivism: Cognition and Interaction at the Systemic Level To Alexander Wendt, the most illustrious among its proponents in the field of International Relations, social constructivism is a systemic theory of identity formation, based on a “cognitive, intersubjective conception of process in which identities and interests are endogenous to interaction.”29 The combination of political psychology and social constructivism suggests that cognition influences roles and interests both prior to and during interaction at the international level. In contrast with realist assumptions, constructivism maintains that interests and identities are not a given, mostly determined by structure, but are variables dependent on the process of interaction. The individual and systemic milieus are closely interconnected, but social constructivists, and Wendt in particular, prioritize the latter in their cognitive analysis. Wendt recognizes that the “raw material” out of which states are constituted is forged domestically, prior to the states’ engagement into international interaction. However, Wendt continues, “the meanings in terms of which action is organized arise out of interaction.”30 The constructivist argument would suggest that integration in the Southern Cone is more the consequential product of interaction and practice between Argentina and Brazil than the policy outcome resulting from the perceptions and strong political will of the respective leaderships. Social constructivist analysis helps make sense of much of what occurred between Argentina and Brazil from the mid-1980s up to the early 1990s,31 yet there are some flaws. The newly democratic administrations conducted a process of signaling that created mutual expectations about each other’s future behavior. Indeed, the military administrations had already launched friendly signals, and re-democratized Argentina initiated a practice of cordial and companionable attitudes vis-à-vis Brazil before the latter regained democracy, creating a positive predisposition in the interlocutor for future understanding. Subsequent diplomatic activity and the declarations of Iguaçu reinforced expectations about a new course of cooperative bilateral relations. The repetition and consistency of this behavior led to new concepts of self and other. In this respect, Argentine and Brazilian mutual visions were not entirely predetermined

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by leaders’ cognitions but were being formed during the interaction process. Yet remaining within a cognitive perspective, as constructivism claims to do, it is not clear what led the two countries to commence mutually friendly relations or what convinced either of them to shift from rivalry to cooperative signaling. One convenient explanation could be to insist further on interactions as determinant of subsequent interactions, but this would exclude any reason for international change other than interaction itself, which would be more likely to perpetuate than change the system. Indeed, if the international political context is a socially constructed reality, it is not inclined to change. On the one hand, “once constituted, any social system confronts each of its members as an objective social fact that reinforces certain behaviors and discourages others” whereas on the other, “systemic change may also be inhibited by actors’ interests in maintaining a relatively stable role identities.”32 In fact, major external criticism toward, and internal debate within social constructivism targets its failure to explain the origin of social structures and how they change over time.33 Wendt’s response introduces institutions and institutional transformations as factors of systemic change.34 Institutions are defined as “relatively stable set or ‘structure’ of identities and interests,” which “are often codified in formal rules and norms, but these have motivational force only in virtue of actors’ socialization to and participation in collective knowledge.”35 For example, sovereignty as an institution provided the social basis for individuality and security of states, modifying the modality of interactions within the international system. Another example, closer to modern times, is cooperation, defined not in terms of mere gains that cannot be achieved by individual action but rather in terms of other incentives, such as the density of interaction. This argument is reminiscent of the spillover effect of functionalist theories of cooperation and integration, and is subject to the same limitations when applied to the Southern Cone: it simply does not fit historical observation. The degree of interdependence, or interaction, between Argentina and Brazil was extremely low in the early 1980s and did not provide any incentive to integration other than the will to reverse the existing situation. According to the constructivists, the major point about cooperation is that the incentives to interact are endogenous to interaction itself, but, ultimately, the argument just moves the critical point back in time: if cooperation is propelled by interaction, presumably a friendly interaction, what prompted this one? A more convincing constructivist path to explain integration in the Southern Cone is what Wendt calls “critical strategic theory,” or the deliberate attempt, driven by self-conscious efforts, to change structures of identities and interests.36 The breakdown of consensus about identity

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commitments engenders a critical evaluation of old ideas of self and other leading to the possible shaping of new identities and aspirations. Indeed it seems that this is exactly what happened in Argentina and Brazil following to re-democratization. Although the process had tentatively started under the military, with the demise of the dictatorship in Argentina the newly democratic leaders critically assessed the identity of the country and its role in the subcontinental and international scenarios. This created new interests and strategies, eventually involving acts and signals of goodwill toward neighboring countries to motivate them to welcome the new Argentine identity and to behave accordingly. Wendt labeled this exercise of inducing desired behavior in other actors “altercasting,” “a technique of interactor control in which ego uses tactics of self-presentation and stage management in an attempt to frame alter’s definitions of social situations in ways that create the role ego desires alter to play.”37 By altercasting, ego tries to induce alter too to take on a new identity, in a first step toward a new practice of interaction to teach other states that one’s own state can be trusted and does not represent a threat. Argentina’s unilateral acceptance of the papal arbitration on the border dispute with Chile, the first talks of integration with Brazil in 1984, and the opening of the nuclear plant at Pilcaniyeu can be interpreted as altercasting exercises by the Buenos Aires government. By the same token, Sarney’s invitation to Alfonsín to visit Itaipú in November 1985, and the opening to the Argentine president of the nuclear facilities at Aramar represent both an exercise of altercasting by Brazil and its positive response to the Argentine use of the same technique. The traditional constructivist model designed by Wendt explains some of the events in the Southern Cone, but does not say much about the origin of the change in Argentine-Brazilian relations. However, his model can be used to test democracy as a factor of change in systemic interactions. Indeed, democracy fits Wendt’s definition of institution (a structure of identities and interests often codified in formal rules and norms), and institutions are factors of systemic transformation. Also, Wendt himself cannot help asking how much and what kind of role human nature and domestic politics play in world politics.38 These questions constitute a bridge between the systemic level, the domestic level, where democratic regimes are operational, and the individual level, where, according to political psychology, the importance of democracy may be more strongly perceived. The empirical evidence presented in part one of this work shows that democracy as an engine of systemic change would fit the constructivist model, in particular the premise and development of the altercasting argument. This provides further clue, if not proper evidence, that democracy was significant for integration. In fact, it is possible to progress even further and explain why democracy, and in particular liberal democracy, was at the basis of change by

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using a constructivist argument. The constructivist analysis of cooperation concentrates on expectations and how they affect identities and interests; therefore the theoretical passage from democracy to cooperation must be linked to those features of liberal democracies that create cognition of reliable and consistent behavior at the systemic level. These elements are stability of democratic foreign policy, distinctive preferences and values, and internal institutions.39 Regarding stability, two considerations emerge. First, “the prospect of electoral accountability will force leaders to choose policies with sufficient appeal to avoid offending a variety of potential majorities.”40 Second, in liberal democracies the current leaders have the power to commit future leaders. Regarding domestic preferences and values, the rule of law and the principle of respect for legal commitments induce potential partners to believe that these principles will be translated into external policies. As far as internal institutions are concerned, these expose liberal democracies’ choices in foreign policy to domestic debate and interest group pressures. Such institutions are also expected to work in the unfortunate case of a potential withdrawal from commitment, which will then require similar complex negotiation and coalition of interests. The dynamic evolution of cooperation into integration may follow similar patterns. Provided that actors adhere to their commitments, once cooperation has commenced it further reinforces the formation of increasingly favorable expectations and friendly attitudes. The considerations discussed so far account mostly for the political aspect, that is to say the political will, characterizing the integration process in the Southern Cone. However, one may ask whether constructivism is also a useful approach to understand the economic and security context of regionalization. There is no a priori reason to reject such an extension. On the economic side, a pioneering attempt to use a still embryonic constructivism to explain foreign economic policy was undertaken as early as 1979 with reference to Western European industrialized countries.41 The argument was that the ideological outlook and material interests of the ruling coalitions largely shape the definition of policy objectives. To put it differently, variations in foreign economic policies may be attributed to perceived identities and their influence in shaping interests. The approximation of Latin American regimes to Western liberal democracies makes the analogy with Europe possible. Regarding security issues, the literature is more recent and robust. The cultural and institutional context of policy and the constructed identity of states are deemed to be determinants of state interests and national security policies.42 Furthermore, research on world polity, focusing the spread of democratic ideals and market economics, shows how a sort of new world political culture is producing standardized models of statehood and state expectations that determine choices

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of national security policy.43 The Alfonsín administration, for instance, soon embraced what it considered a politically appropriate international behavior for a democracy. Argentine nuclear policy was largely shaped in the same way.44 Constructivism has had the great merit of bringing cognitive analysis to the systemic level, where it emphasizes “the importance of shared knowledge, learning, ideational forces, and normative and institutional structures.”45 Moreover, constructivism is equally suitable for application to the political, economic, and security parallel processes that led to regionalization in the Southern Cone. However, constructivism also poses three problematic questions. First, change of identities through interaction is a slow and incremental process.46 Now, the evolution of Argentine-Brazilian relations leading to integration was certainly incremental but, for international standards, it is questionable that its six-year frame, the time passed from re-democratization in Brazil to the signature of the Treaty of Asunción, can be labeled as slow. It is true that the reshaping of identities started earlier but the dramatic and decisive acceleration only occurred with re-democratization. Moreover, interaction alone cannot explain it all. Interaction is based on identities and these may change for reasons other than interactions at the systemic level themselves. Second, constructivism cannot escape a contradiction inherent to its own theorizing. Though emphasizing processes of cognition as factors of change at the systemic level, constructivism has to recognize that domestic or individual factors may be “much more important determinants of states’ identities and interests than are systemic factors.”47 Also, it is possible that interactions actually reinforce processes of identity change that have originated somewhere else.48 This view is entirely consistent with both historical evidence and the argument that democracy played an important role in defining new Argentine and Brazilian identities, interests, and consequently modes of international interaction. Indeed we are not facing the traditional dilemma of which came first, the chicken or the egg; cognitive evaluations at the individual or the systemic level. Instead we face complementary systems of cognition, both of which shaped identities and interests. The point, however, is that states do not enter international interactions without any prior identity or interest. So, if it is true that interactions shape preexisting identities, it is also true that preexisting identities shape interactions. And this investigation is precisely concerned with how preexisting values, beliefs, and practices (democracy at the domestic level) affected, if at all, the modality of interaction (friendly cooperation first and integration later internationally). Third and finally, while political psychology focuses on individuals, constructivism emphasizes system, and while both contribute to shed much light on why democracy may be partly credited for the integration

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process in the Southern Cone, neither resolves the question of how this happened. That is to say that neither approach specifically addresses the nexus between the two dimensions, individual and systemic. It is this passage that has precisely the potential to explain how given perceptions, identities, and preferences of leaders result in certain policy choices and modes of international interaction. Indeed Wendt himself urged the research agenda to focus on “the causal relationship between [international] practice and interaction and the cognitive structures at the level of individual state.”49 The next section will address precisely this final missing link in an attempt to explain exactly how democracy was significant to integration from a cognitive perspective.

6.4 Ideas and Foreign Policy: Three Ways in Which Democracy Affected Integration Traditional approaches to the study of international relations, such as realism and liberal institutionalism, assume that states are interestmaximizing actors whose conduct is subject to systemic constraints. In these models, actors’ preferences and interests are a given and attention focuses on variation in systemic constraints, downplaying the role of ideas. Cognitive approaches, whether psychological or systemic, instead concentrate on the source and genesis of ideas and interests but provide limited explanation of how ideas actually affect policy outcomes and international action. This section does not reject either the traditional or the two preceding cognitive positions, but, still maintaining a cognitive stance, shifts the focus of attention. Both interests and ideas concur to explain foreign policy choices. The aim here is to investigate thoroughly and specifically how ideas matter. To this purpose, the model designed by Goldstein and Keohane to study the effects of ideas on foreign policy will be applied to democracy to investigate how this may have affected perceptions, preferences, interests, policies, and eventually the decision to integrate.50 Ideas are very basically defined as “beliefs held by individuals.”51 At one and the same time, this avoids complex and problematic definition of psychological terminology (perceptions, roles, images, identities, and so on) and skips the level of analysis problem yet retaining the assumption that individuals are the last instance depositaries of ideas and beliefs informing state action. The model maintains that there are three types of ideas: worldviews, principled beliefs, and causal beliefs. Argentine and Brazilian primary sources, mainly interviews and newspapers’ reports, show that democracy actually fits all of the three definitions thus being fully applicable to the three pathways in which ideas affect foreign policy as defined by Goldstein and Keohane. First, ideas provide road maps to interpret reality and select a limited set of desired outcomes among the

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many possible. Second, in the absence of a unique or clearly most appropriate course of action, ideas orientate decision makers’ strategic choices. Third, once ideas are institutionalized in a consolidated set of norms and rules, they define policy in the absence of further innovation. Democracy, understood in terms of values and ideas according to which society should be organized and international affairs managed, was a constitutive element of the “universe of possibilities for action,” or worldview, of both Argentine and Brazilian leaders in the mid-1980s. When ideas take the form of worldviews they have the highest impact on human action as they are “entwined with people’s conception of their identities, evoking deep emotions and loyalties.”52 Both countries emphatically outlined their common worldview informed of democratic values in the December 1986 Argentine Brazilian Act of Friendship, Democracy, Peace and Development, stressing their profound faith in representative democracy to ensure peace and promote national development. Three years later, Presidents Menem and Sarney reiterated that democracy was the key instrument to enduring social and economic growth of their countries, eventually leading to closer ties among the peoples of the continent.53 Worldviews are also pervasive. Foreign Minister Dante Caputo asserted that his country’s foreign policy was committed to “the incorporation of democratic values in the whole network of social behaviors” involving Argentina.54 Democracy also served as principled belief of the Argentine and Brazilian political class during the construction of integration. Principled beliefs are “normative ideas that specify criteria for distinguishing right from wrong and just from unjust.”55 For example, the view that slavery is wrong is a principled belief. In the Southern Cone context, democracy embodied the virtues of the politically good, right, and just. A speech given by President Sarney before the UN General Assembly illustrates the point. Sarney insisted that there will be no war between democratic peoples who decide their own destiny without submission to personal authoritarianism or ideological fanaticism.56 By tightly connecting democracy and integration in political discourse, the Argentine and Brazilian leadership transferred this Manichean view to integration too. This was presented as good and wise as opposed to voices of dissent advocating either cautiousness or other policy choices. Causal beliefs “are beliefs about cause-effect relationships which derive authority from the shared consensus of recognized elites.”57 For example, scientific knowledge may lead to prevention of diseases. Also, the strategies suggested by causal beliefs serve to secure the attainment of goals valued in virtue of principled beliefs, which in turn are generated within a certain context of worldview. Now, in the Southern Cone integration process the reasoning proceeded in three stages. The ultimate objective of the newly democratic Argentine and Brazilian administrations was

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the economic and social development of the respective countries. The two administrations believed that this could only be attained in a framework of democratic systems. Integration, it was felt, was the appropriate instrument to consolidate democracy and promote modernization and development. This is a slightly more sophisticated but far more accurate theoretical conceptualization than the one merely considering democracy as a goal and integration as a means. The 1986 Buenos Aires Act establishing the Economic Cooperation and Integration Program clearly stated in the preamble that integration would improve the prospects for joint growth and welfare, and act as an impulse to the consolidation of democracy, peace, security, and regional development. This statement considers democracy both as a principled and a causal belief. On the one hand, democracy is listed together with peace, security, and development, all concepts recognized as right and just. On the other, democracy is perceived as a causal belief too in that democracy, peace, and security seem to create a favorable environment for, or be functional to the attainment of, growth and welfare. The importance of democracy as a system of life and government is also acknowledged, confirming the vision of democracy as a worldview too. In this reasoning integration is maintained to be a sort of second-level causal belief or the appropriate strategy linking the firstlevel causal belief, democracy, to the ultimate objectives, growth and welfare. Democracy is not, or not only, a goal per se but is perceived as an indispensable element to achieve major goals. Democracy provided “guides for individuals on how to achieve their objectives.”58 That is to say it provided Argentine and Brazilian policy makers with the necessary worldview and instrumental perceptions to identify integration as a suitable foreign policy outcome to pursue the improvement of the economic and social conditions of their peoples. Is it possible to provide empirical evidence that this was actually the theoretical construction conceived by the Argentine and Brazilian administrations? Evidence is plentiful and can be articulated in a set of three arguments. First, democracy provided the ideal environment for integration. President Alfonsín soon after the signature of the Buenos Aires Act in July 1986 declared that “one of the conditions we deem indispensable to integration is the existence of democratic regimes.”59 Again, after the signature of the 1988 Integration, Cooperation and Development Treaty, Alfonsín commented that “the resurgence of democracy in the two countries decisively contributed to the climate of confidence and profound understanding absolutely indispensable to [. . .] any integration project.”60 Just to make sure, the vision is identical on the Brazilian side. President Collor, on the occasion of the launch of the bilateral common market in 1990, told the Argentine Congress that “it was the

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establishment of democratic governments that made it possible that both nations established the bases to generate convergences and common policies.”61 The democratic emphasis did not vanish with time. Second, democracy and integration were perceived to be closely interrelated with economic and social development. On the occasion of the visit to the Argentine nuclear plant of Pilcaniyeu, President Sarney stated that “Brazil and Argentina seek to preserve their democratic achievements and ensure their economic and social development. Integration is one of the instruments for this struggle.”62 On a previous occasion, José Sarney had already stressed that the approximation between the two countries had accelerated when both began to share the same ideals of democratic living and the same determination to pursue economic and social progress.63 On a later occasion, Sarney went as far as stating that there is no fair and equitable development without democracy.64 Third and finally, if democracy was so important to economic and social development, it is logical that the Argentine and Brazilian administrations wanted to preserve it. Indeed, on the occasion of the signature of the 1986 Buenos Aires Act, Alfonsín and Sarney emphatically reiterated the importance of bilateral integration as a means to strengthen representative institutions and give stability to the democratic system.65 It could be argued that the reasons for that were not only based on idealistic and ethical considerations but also reflected concern with broader objectives of material improvement for the respective peoples. This closes the circle confirming that both ideas, or ideals, and interests, or material objectives, contribute to foreign policy formation. Still, “the delineation of the existence of particular beliefs is no substitute for the establishment of their effects on policy.”66 Ideas are the basis of any reasoned discourse and political discussion; therefore their actual impact on policy cannot simply be assumed. So, now that the theoretical reasoning prompted and shaped by democracy as a worldview, principled and causal belief has been made manifest, it finally remains to explain how it materialized in, or was implemented through concrete foreign policy choices. This occurred through three distinct but concurrent processes. First, ideas act as road maps. Once the idea is selected, “it logically excludes other interpretations of reality or at least suggests that such interpretations are not worthy of sustained exploration.”67 Worldviews and principled beliefs in their normative dimension define the morality of practices and choices thus contributing to the selection of policy preferences. In such a context, newly democratic Argentina immediately ruled out options of continuing confrontational stances with its neighbors. Brazil too, having had to face changes in both the international scenario and the domestic setting, opted for a more cooperative, pragmatic, and, at the end of the day, convenient, subcontinental strategy.

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Conflictive posture became inappropriate for both the newly democratic status and the achievement of long-term objectives. Also, decisions are often taken with only partial information, and ideas in the form of causal beliefs may complement the available information. “[I]f actors do not know with certainty the consequences of their actions, it is the expected effects of action that explain them.”68 In early 1985, Alberto Ferrari Etcheberry, president of the Argentine Cereals Committee, negotiated a sale of Argentine wheat to Brazil with the sole instruction to agree to whatever the Brazilian demanded.69 On the eve of the 1986 secret meeting in Don Torcuato, Ambassador Francisco Thompson Flores reportedly told the Brazilian delegation that the results of the meeting were unpredictable but they had to be very open-minded because they were about to change the course of events.70 The overall success of both meetings was deemed so important to the evolution of bilateral integration as to overshadow the specific clauses negotiated. The timing and extent of Argentine-Brazilian integration can only be explained by taking into account the new ideas about democracy. Between the late 1970s and the mid-1980s in fact only minor changes characterized the systemic scenario faced by the two countries. The Cold War was still going on, possibly even becoming more intense. Mutual interdependence remained extremely low. Domestically, both models of economic development were already close to exhaustion in the late 1970s and needed some fresh input. A certain degree of regime similarity was a matter of fact in 1979 as well as in 1985. In the absence of significant systemic alterations, the emergence of new ideas contributes to explain change in foreign policy behavior. This does not imply that Argentine and Brazilian interests and rational calculations in terms of cost-benefit remained unchanged, but these are not sufficient alone to explain the pace of integration. The second pathway elaborated by Goldstein and Keohane makes ideas the focal point and glue among a range of viable options. During interaction, including interstate interaction, almost any outcome may occur. Since “unique predictions cannot be generated solely through an examination of interests and strategic interactions,” and with multiple equilibriums equally possible, “the ideas held by players are often the key to a game’s outcome.”71 This would explain why, for instance, integration did not occur under the two military administrations before the Falklands/ Malvinas War, despite the improvement in mutual relations. As reviewed earlier, the international and domestic conditions were not too dissimilar from those faced by the democratic administrations. But the ideas informing the military’s worldview and their principled and causal beliefs impeded the consideration of integration as a desirable option for mutual relationship. And in fact cooperation under the military achieved only

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limited results: it lessened tension but did not progress much further as this was not part of the military ideational background. On the eve of Argentine-Brazilian integration, early in 1985, the elimination of mutual threats to security, the increasing convergence of interests on multilateral issues, and the Argentine recognition of Brazilian political and economic power all facilitated political understanding. These were very propitious circumstances, but the outcome of political rapprochement was by no means discounted.72 The new administrations could have pursued a cautiously progressive program of economic cooperation; they could have left their mutual relations in stand-by mode while concentrating efforts on internal regime consolidation; they could have excluded military sensitive areas from mutual agreements; they could have even taken a rigid and assertive posture in foreign policy to raise internal consensus; or they could integrate. The fact that the two countries returned to democracy implied the adoption of associated beliefs and appropriate behaviors. Democratic beliefs guided the assessment of the viable options. In this perspective, the consolidation of democracy was clearly intermingled with other preexisting and enduring interests, such as national development. It is hard to see how military regimes would have agreed to make the economy more dependent on foreign countries rather than more autonomous in order to pursue development and increase their bargaining power internationally. Most of all, democracy influenced the assessment of the integrationist option and led to its adoption since integration combined an effective strategy of economic growth and international insertion with a parallel operational strategy of democratic consolidation. On the one hand, the mere reduction of barriers to trade could have led segments of the political spectrum and civil society to defect. The fact that the economic choice was strongly associated with the protection of democracy compelled these segments to embrace or acquiesce in integration. On the other hand, by removing reasons for security concern toward the major neighbor, integration diminished the importance of the military in political life. In this sense, the checking of the military as an expected result of integration acquires full sense and political dimension. Also, by enhancing economic performance, integration was deemed to strengthen support for the democratic administration. Finally, in the unfortunate case of democratic breakdown, international reaction would have been more vigorous and the economic advantages of integration suspended. The third pathway concerns the institutionalization of ideas. “Once ideas have influenced organizational design,” and are embedded in the organization, “their influence will be reflected in the incentives of those in the organization and those whose interests are served by it.”73 The importance of democracy for the integration process in the Southern Cone, and vice-versa, was explicitly stated in the preamble to the 1986

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Economic Integration and Cooperation Program. Despite the fact that subsequent bilateral integration treaties up to 1990 did not make explicit mention of the relation between integration and democracy, all of them reaffirmed the principles and commitments enshrined in the 1986 Act. Indeed, according to the Goldstein and Keohane model, organizations can be agencies, laws, or simply operating procedures. Mercosur was not provided with an explicit clause of democratic commitment until 1998. Yet, this was not fundamental to shared understanding and practice. At the 1992 meeting of Las Leñas the presidents of the four Mercosur countries issued a joint declaration stating that the full functioning of democratic institutions was an indispensable condition to the existence and development of Mercosur. Even during the Argentine-Brazilian bilateral phase, democracy acted as an exclusionary criterion. Democratic Uruguay was regularly invited as an observer to important summits and was welcomed as an associate to some of the protocols. Authoritarian Paraguay was never invited and no sort of association scheme was ever offered. There was no explicit rule, but “nobody thought this was important because as a matter it fact it worked like that.”74 “[T]he interests that promoted some statute may fade over time while the ideas encased in that statute nevertheless continue to influence politics.”75 This has the potential to explain the relationship between democracy and the passage from the protocol system to the common market under Menem and Collor. While the sectoral integration phase was clearly and directly influenced by the imperative need to fortify the infant democratic regimes, the turn to the common market in 1990 seemed to be prompted essentially by economic concerns and changes in the international scenario, such as the emergence of regionalization and globalization. Still, institutionalized ideas continued to exert an effect, and hence, the repeated declarations by Menem and Collor on the importance of democracy and the engraving of democratic principles in integration agreement throughout the 1990s. Even more convincing evidence is provided by the continuing relevance of democracy as a foundational value of integration in South America after eighteen years from the creation of Mercosur. In spite of a largely consolidated democratic environment and limited preoccupations for possible military resurgence in today’s Argentina, Brazil, or most South American countries, democracy continues to feature as a key founding and inspiring principle in recent integration treaties. As will be further discussed in the epilogue, both the Community of South American Nations, established in 2004, and the South American Union, formed in 2008 as an evolution of the former, refer to democracy as a foundational principle in their preambles. When certain ideas cease to be just the occasioning factor of a given process or institution and turn into an integral part of that process or institution, thus configuring as

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one of its constitutive and defining elements, “it is no longer possible to understand policy outcomes on the basis of contemporary configurations of interest and power alone.”76

6.5 Conclusion All the key actors involved in the events of democratization and regionalization in Argentina and Brazil maintained that the two processes were definitely connected. Most of them even believed that democracy was in fact indispensable to the achievement of integration. Investigation of whether this alleged link could be traceable to the democratic setting, in particular to institutional balance and societal participation in the decision-making process leading to integration, did not provide particularly encouraging evidence. In this chapter a different route has been followed. Assuming that if all the players believed democracy was significant to integration they then acted in that belief, it has been argued that Argentine and Brazilian leaders therefore shaped their worldview and policy preferences accordingly. The focus of investigation moved from democracy as a set of institutional or societal arrangements and practices to democracy as a set of ideas and beliefs, and to associated or appropriate behaviors. From this perspective, three considerations are particularly significant. First, emphasis is to be put once again on the liberal component of modern democratic systems as liberal values in a normative and prescriptive understanding of today’s liberal democracy are those more likely to influence the international conduct of a state (respect of the rule of law, human rights). Second, cognitive schemes and motivational forces place the individual at the center of interstate action. Even using rationalist assumptions of unitary states and given interests, it is undeniable that these parameters have to rely on the will and perceptions of the representatives of the state. Third, ultimately the link between democratic principles and the choice to integrate rested on the ethics of key leaders, on the kind of people they wanted to be, on the kind of state they wanted their respective countries to be in the world, and the kind of regional space they wanted to create.77 Leaders transferred their beliefs and ideas to the state they represented and on to the integration scheme they contributed to shape. This relationship completes the circle between individual, domestic, and international levels. Too often International Relations as a discipline has privileged systemic constraints and structure, downplaying the role of individuals and their actual ability to influence systemic interactions. This is not to say that ideas explain the universe of world politics. “Ideas matter, as a result of a system of interacting multiple causes of which they are a part.”78 As the analysis of the causes of and reasons for integration in

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the Southern Cone has explained in chapter two, democratic ideas found a fertile soil to flourish in the long-term forces and contingent international and regional circumstances. These exogenous dynamics, however, do not alone explain the evolution of Argentine-Brazilian relations between 1979 and 1991. The emergence of democracy and its powerful ideational dimension largely account for the timing and scope of integration. While it is true that no single theoretical approach fully explains the rise of Mercosur,79 the combination of realist elements and cognitive approaches accounts for a good number of things. As far as cognitive approaches are concerned, political psychology explains how ideas emerge at the individual level and how they inform the perceptions of leaders, influencing their construction of images and roles of the self and the other and thus forming objectives and strategies. Social constructivism concentrates on the systemic level, questioning the realist assumption that images and interests are exogenous to interaction and arguing instead that the interaction process and repeated experiences forge identities and behaviors on the basis of reasonable expectations and predictability. While both approaches greatly contribute to give value to the role of ideas in international politics, they do not explain systematically how certain ideas may result in certain foreign policy outcomes; put differently, they do not explain precisely how democracy was significant to integration in the Southern Cone. The model designed by Goldstein and Keohane to explain the influence of ideas on foreign policy concentrates precisely on the question of how this influence operates. The application of the model to the South American case has shown that democratic ideas and ideals constituted at one and the same time a worldview and a set of principled and causal beliefs. In this multifaceted dimension, democracy provided three pathways to guide foreign policy choices. First, it offered a road map restricting the number of options consistent with the inspiring principles and the ultimate goals. Second, it acted as an instrument of coordination, and as a glue, among viable foreign policy preferences to identify the most appropriate choice. Third, once democracy was institutionalized as a foundational principle of integration in the Southern Cone, it continued to display its effect on the process. The ideational approach minimizes the level of analysis problem. While disregarding the locus of the genesis of ideas, this approach maintains that ideas are processed and spread by key individuals, and that ideas display their effect at all levels, individual, process, and system. Indeed states are made of individuals and the international system is composed of states made of individuals. In Man, the State, and War, even an advocate of systemic explanations of international politics such as Kenneth Waltz has to recognize that it is human nature or the domestic politics of predator states that provide the initial impetus to make the anarchical

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system a dangerous place.80 That means that ideas, although promoted and translated into practice by individuals, and regardless of the level of analysis from which they stem, have the potential to affect the individual as well as the domestic and international levels.81 Moreover, ideas can actually arise at any of these levels or at more than one level at the same time. At the individual level, for example, the educational background of the statesman may influence his views on foreign policy. At the national level, domestic party politics may determine the statesman’s ideas about international action. At the systemic level, according to Wendt, by interacting with each other, states learn how to behave in the future. But those who actually learn are individuals, the state representatives. Political psychology applies cognitive approaches mainly at the individual level. Social constructivism does it at the systemic level. As appropriately observed by Roberto Russell, the national level is not exempt, and democracy can be considered as a “structural cause” of external behavior.82 Democracy itself does not determine public policies “in any direct, mechanical way but sets incentives and imposes constraints [. . .] When the regime changes, so will incentives and behaviors.”83 The ideational approach recognizes that ideas and practice interact at all levels and only this complex combination actually explains the power of ideas over political conduct, domestic or foreign. Instead of concentrating on the chicken-or-egg dilemma of level of analysis, the cognitive ideational approach deliberately spans across levels of analysis to dissect how ideas affect foreign policy. Objections to the conclusion that democracy had a significant impact on integration have been raised on the ground that regime change empirically affects foreign policy very inconsistently. Drawing on the mid-1980s Brazilian experience, for example, some scholars have rejected the connection between regime change and foreign policy variations stressing the high degree of continuity between pre- and post-democratic Brazilian foreign policy.84 Although this investigation strongly maintains that democracy was a major factor in Argentine-Brazilian integration, this position is not central to the possible counter-responses to the critique. First, even if democracy had been of secondary relevance to integration, the emphasis is not on the ranking of concurrent factors in order of importance but on how one of these factors operated to affect the decision to integrate. Second, the degree of change in Brazilian foreign policy is a matter of subjective evaluation and there is no agreement either among scholars or practitioners. Third, here the emphasis is not on particular regime organization and setting but on certain values and expected behaviors, which eventually and empirically happened to be intimately associated to democracy. It seems undeniable that democratic values shaped Brazilian politics too during the second half of the

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1980s. Fourth and finally, there is no doubt that democracy dramatically changed the course of Argentine foreign policy. Taking for granted that Brazil needed a partner with whom to integrate, and that the integrationist initiative originated in Argentina, there is sufficient ground to confirm that democracy was a significant factor leading to integration in the Southern Cone. For those readers who might still remain skeptical of the linkage, there are further supporting arguments of this thesis. In particular, for those suspicious of an essentially qualitative methodology combining political theory, logical reasoning, and historical observation, there is an additional source of evidence based on quantitative, numerical, and more measurable evidence: statistical surveys on perceptions of democracy and integration. In 1996, Latinbarometer conducted a survey about popular support for integration in Latin America.85 Results show a very high correlation between those respondents who were satisfied with democracy and those supportive of integration. Support for integration increases from about two-thirds of the sample among those with low satisfaction with democracy to nearly four-fifths of those who are satisfied with it. Three-quarters of those who are also willing to defend democracy are supportive of regional integration compared to two-thirds of those unwilling to defend it. The survey suggests that support for democracy may translate into support for regional integration.86 Another survey, conducted in 1998, investigated elite perceptions in the Southern Cone, and showed that nearly 70 percent of the Argentine intelligentsia recognized Brazil as a subregional power and more than 50 percent attributed to it the status of regional leader. What is perhaps most surprising is that the Argentines’ perception of Brazilian role in international forums, including Mercosur, is fully consistent with the attainment of the Argentine objectives.87 It is hard to image how a similar set of results could have been possible before democratization with political elites largely coming from the military ranks. The historical analysis conducted in part one has concluded that integration in the Southern Cone was invariably a state-led process. It has also acknowledged that systemic, international and regional, long-term, and contingent forces had a significant role in the decision of Argentina and Brazil to integrate. Chapter four and five have additionally showed that integration was essentially a government exercise. This set of considerations suggests that realism can actually account for many of the circumstances leading to Mercosur. However, political and theoretical analyses, combined with historical observation, have shown that other elements were also important. In particular, cognitive approaches have suggested that ideational factors like democracy, understood in terms of beliefs, played a major role in determining the perceptions and visions of political leaders, and consequently their policy choices. Also, this line

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of argument has urged to reallocate a central role to individuals in the study of international relations. Both the need to reconcile realist and cognitive approaches and the weight of the personal factor will be further discussed in the general conclusion. Only a combination of systemic and individual elements on the one hand, and of realist and cognitive theorizing on the other can fully explain reality and thoroughly account for the regionalization process in the Southern Cone. While systemic constraints and given capabilities limit the number of viable foreign policy options, personal ideas and beliefs influence the final choice among the available options.

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Conclusion

C.1

The Performance of the Research Methodology

This work has consistently adopted a historical approach to the study of international relations and foreign policy. In historical methodology, empirical and theoretical analyses are synergic, but historical verification is the prior basis for any speculation and theorizing. This research started from historical observation, and then tried to make sense of it, and not from a predetermined theory or hypothesis to be tested on a case study, chosen either randomly or purposefully to fit the theory. In a historical approach, theory infrequently assumes the form of general propositions about state behavior or international politics but is more humble and confines itself to the explanatory exercise of specific and limited, geographically or temporally, events and circumstances. As Hedley Bull observed, history may not be sufficient to understand international relations but cannot be overlooked for at least four reasons.1 First, certain political situations are not merely illustrations of general patterns but genuinely singular events. Second, any international situation is located in time and to understand it the scholar must place it within a sequence of events. Third, the quality, techniques, and canons of judgment of diplomatic history as a discipline are often less obscure and controversial than those of theoretical studies. Fourth, history itself is the primary material for the social sciences, which have themselves a history and emerge within a defined historical context. Following this approach, diplomatic investigation was conducted through a combination of previously unexamined written documents and extensive interview material. Given the problems of access to diplomatic and government documentation, oral history, traditionally used to retrieve the history of the marginalized, was applied to grand politics, and it proved to be a satisfactory method of work. Richard Neustadt, a pioneer in this technique, concluded that “if I were forced to choose between documents on the one hand, and late, limited, partial interviews with some of the principal participants on the other, I would be forced to discard the documents.”2

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C.2 The Findings of Diplomatic Investigation and Historical Analysis Empirical findings have shown that attempts at integration characterized the whole history of Argentine-Brazilian relations until the 1970s, when bilateral interactions became tense due to power imbalances and short-sighted military thinking embedded in a Cold War logic. The diplomatic rapprochement of the late 1970s and early 1980s owed more to systemic factors and changes than to internal developments, although the role played by promoters of cooperative relations such as General Figueiredo and Ambassador Camilión is not to be underestimated. The long turn toward constructive relations eliminated immediate reasons for conf lict but is not to be regarded as a clear antecedent of bilateral integration because similar initiatives were not even put forward. The idea of bilateral integration was conceived in Argentina upon return to democracy as a way to eliminate possible sources of instability for the new government. The idea was first offered in 1984 to a still authoritarian Brazil, which responded sympathetically but was unable to take major initiatives as it was in the final stage of its own democratic transition. As soon as democratic president Sarney assumed office negotiations took off. The intention to integrate was announced in November 1985 and the first formal agreement was signed in July 1986. Democracy was the central tenet of the integrationist discourse, and domestic political factors prevailed over other concerns in Argentine and Brazilian integration plans during this early phase. The passage to the common market remained an aspiration until the early 1990s. The 1988 Treaty of Integration concluded by the first democratic presidents introduced the concept of a common market in the integration process but actually only provided for the formation of a free trade area. Mercosur emerged from the challenges of globalization and the perceived need to engage in competition between regional trade blocs. Systemic considerations regained priority in the international insertion strategies of Argentina and Brazil. Democracy remained a consolidated element of political discourse but did not appear in the Mercosur treaty. More than anything else, the whole integration process was based on the consistent political will to achieve it, regardless of, or at times even despite, the objectively adverse international circumstances. Democracy may have been the cohesive link between different forces and processes, but the historical analysis has exposed serious weaknesses in the established narratives that have up to now served as the basis for theorizing the relationship between democracy and regionalization.

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C. 3 Potential Implications for Historiography and Theory What are the implications of these innovative readings of history? The first and most direct may be to force a reluctant reconsideration of established historiography. The democratic fanfare surrounding integration has to be muted. Integration was conceived out of political necessity in democratic Argentina and was immediately offered to authoritarian Brazil regardless of regime diversity. It was not the result of a combined effort of the newly democratic administrations, although this version is certainly part of the story and fits subsequent developments perfectly. By the same token, the common market was designed not by the first democratic administrations, which were the most sensitive to consolidation problems, but rather by the governments of the 1990s, which were more concerned with economic than democratic issues. It was certainly comfortable to attribute some of the shortcomings of Mercosur to those who allegedly distorted the original project. It was also suitable for both epic and apologetic narratives to believe that the neoliberal bullies Menem and Collor mismanaged the otherwise wonderful project by Alfonsín and Sarney, the father figures of integration in the Southern Cone. The truth is that there was no original plan: Menem and Collor turned into reality what their predecessors had only envisaged. If Mercosur, despite its deficiencies, has been regarded as an advance for the region, then Menem and Collor deserve the credit. This would entail at least their historical rehabilitation, recognizing their place in the history of the respective countries, and their contribution to political stability in the region. Historical rehabilitation does not mean political or moral rehabilitation. Political and managerial practices at the edge of legality and risk remain. But Menem and Collor are not the first political leaders whose international accomplishments have been diminished by domestic misfortunes. Think only of Richard Nixon of United States or Bettino Craxi of Italy. An audacious and honest reconsideration of the recent past, however, appears in sharp contrast with current orientations in Argentina and Brazil. A second and probably more significant implication and undesirable complication concerns the theorizing about regime type and international cooperation. It has been suggested that jointly democratic dyads and jointly autocratic dyads cooperate more readily than dyads composed of one democracy and one autocracy.3 This argument has been suggested with specific reference to the four Mercosur countries too.4 Yet these conclusions are challenged by the Argentine and Brazilian experience in the first half of the 1980s. One case study is not sufficient to reject a general rule and perhaps regime diversity should not be overemphasized

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since it was understood that transition in Brazil was shortly to be completed. Also, while Argentina and Brazil were ready to cooperate in a situation of regime asymmetry, formal integration agreements were signed under a democratic dyad. However, the existing theorizing needs some complement at least in two related areas: mechanisms of cognition and the strategic context. The Southern Cone experience reinforces the view that perceptions are an important component of international interactions. Re-democratized Argentina did not perceive authoritarian Brazil as a threat, and was therefore ready to negotiate closer economic ties, regardless of regime difference. The advantages of cooperation were deemed to compensate for possible increased economic dependency and potential clash due to temporary regime asymmetry. Furthermore, regime type had little to do with mutual perceptions of threat and this calls into question a central tenet of the theory of democratic peace: the notion that democracies harbor a presumption of enmity toward non-democracies.5 Military Argentina and Brazil had perceived each other as a threat during the 1970s. The military dyad was also responsible for the diplomatic rapprochement of 1979–1982. And democratic Argentina perceived nondemocratic Brazil a desirable partner. Invariably, cognition mechanisms and perceptions are intertwined with the strategic context. Some scholars have suggested that democracies are associated with risk aversion regardless of the strategic context and that states undergoing transition from autocracy to democracy are more willing to take risks in their international conduct.6 Assuming risk as a trade-off between security-maximizing and autonomy-maximizing behaviors, implying a certain degree of assertive and unilateral attitudes, Argentine-Brazilian integration represents a powerful exception. One democracy and one autocracy purposefully and intentionally pursued nonaggressive and low-risk policies toward one another and vis-à-vis their regional neighbors. The Argentine and Brazilian experience also suggests that precisely the dynamic transition to democracy played a fundamental role in the launch of bilateral integration. Without proper consideration of the strategic context, it is hard to make sense of these events. “Strategic tagging” introduces an instrument for democracies to select like-minded cooperators,7 but this applies to and fits non-democracies as well. The Argentine-Brazilian case suggests that the strategic context induced a presumption of scripted partnership despite temporary regime asymmetry. The Southern Cone experience in bilateral integration calls for caution in generalizations about state behaviors associated with regime types, but also acknowledges the role democracy played in the integration process. In the presence of economic understanding but in the absence of a political minimum common denominator, regional agreements are either not destined to last, or have a very “low cap” and the room for agreement is

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rapidly exhausted.8 But regime similarity alone is not sufficient to forge a meaningful and lasting political common denominator; a favorable strategic context is indispensable to create the perception of desirable partnerships.

C.4 The Findings of Political Investigation and Theoretical Analysis The main research question guiding this investigation was how to assess the place of democracy in the regionalization process in the Southern Cone. To do so, and once again following the historical method, it was important to look at reality and establish first what kind of democracy we are talking about, what its practical features are, and if these were present in the Argentine and Brazilian contexts. What today is generally called democracy is in fact liberal democracy, a combination of democratic procedures and liberal principles and values, the latter arguably constituting the more relevant component of the dyad. The liberal legacy emphasizes principles such as the rule of law and the rights of the individual, which are translated at the constitutional level in mechanisms of checks and balances, the separation and independence of state powers, and the freedom of speech and association. The specialized literature detected some anomalies in the functioning of these mechanisms and rights in the newly democratized countries of the Southern Cone in the mid-1980s and defined a new species of “limited democracy,” 9 or as I restate it, limited liberal democracy. Stress was put on the weakness of the rule of law and the poor articulation and participation of civil society, but also on the supremacy of the executive over other constitutional powers. Accountability appeared to be limited to the vertical dimension, expressed through the democratic ballot, while the horizontal dimension remained problematic. In order to study if and how democracy may have influenced regionalization in the Southern Cone, the analyst has to refer to the type of democracy actually in place in that part of the world, and fully appreciate the alleged limitations of that specific model. Accordingly, the political and theoretical analyses of part two explored two distinct though entwined aspects. On one hand, drawing upon the neo-idealist paradigm, the investigation of the practical functioning of democracy covered its material properties, including the institutional setting, the accountability mechanisms, and the instruments and procedures for societal participation. On the other hand, the study of the ideational dimension of democracy comprised its immaterial properties, including the effects of its values, principles, and aspirations. Whether one wants to call it cynicism or simply pragmatism, governments felt that long and possibly problematic discussions with the

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representatives of the people, both parliaments and business associations, would have delayed the integration process, a measure deemed indispensable to consolidate the democratic system initially and later on to enhance economic performance. Executive-legislature relations were largely imbalanced in favor of the former with the exclusion of the latter from key decisions concerning integration. Also the cautious involvement of business in negotiations was calculated to gain its consensus or acquiescence in the project without allowing it to exercise any effective impact on the core outcome. By contrast, the ideational forces of democracy in the construction of Mercosur were very strong and resilient to domestic and international changes. All the protagonists maintained that they felt compelled by democratic ideas and expectations. This means that their actions were somehow influenced by what democracy meant to each of them and, consequently, that cognition processes played a major role in foreign policy outcomes. Goldstein and Keohane have persuasively argued that ideas influence foreign policy by providing decision makers with road maps, clues for choice in the absence of a unique solution, and consolidated pattern of action and expectation in the absence of innovation.10 The model perfectly fits the case study. Democracy was the foundational value of Mercosur. So what was the exact place of democracy in the regionalization process in the Southern Cone? This book has argued that the main contribution of democracy to integration was its role as foundational value guiding the perceptions, preferences, and policy choices (including integration) of the democratic leaders. Additionally, democracy was significant in two other respects. First, the strong emphasis on democratic procedures and values gave the government considerable freedom to pursue the integrationist project. On the procedural side, political democracy and its stress on vertical accountability through the popular vote conferred upon the president a great degree of democratic legitimacy and endowed him with large room for maneuver. On the values side, the integrationist discourse consistently linked democracy to integration thus transferring a normative/prescriptive legitimacy to integration. The syllogism worked as follows: democracy is good, integration helps democratic consolidation, therefore integration is good too. This kind of rhetoric, which largely prevailed under the first democratic administrations, persisted also throughout the 1990s, and was used, for example, to check the attempted coup of General Lino Oviedo in Paraguay in 1996. Democracy had become an institutional value of the integrationist commitment in the Mercosur area. Second, the limited functioning of the liberal elements of the Argentine and Brazilian liberal democracies amplified the freedom of the executives. Limited horizontal accountability impeded proper parliamentary discussion of integration and

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consequently limited the questioning of the choices made by the executive. Limited societal participation, induced either by the government or inherent to local structural deficiencies, rescued integration from potential delay or dilution due to compromises and accommodation between different societal and entrepreneurial segments. The theoretical explanatory synthesis is that the combination of strong democratic values, beliefs, and procedures and weak liberal principles and checks and balances that characterized Argentine and Brazilian limited liberal democracy turned out, somehow ironically, to facilitate integration.

C.5 Three Propositions and Implications for International Relations and the Study of International Relations C.5.1 In favor of a pluralistic and open theoretical approach to international relations To account for the rise of Mercosur is not the same as to account for the role of democracy in the process. Democracy was one among the factors leading to integration and this investigation mainly focused on how this one operated. This choice was made “in the belief that one of the best routes to international relations theory does not lie in an attempt to deal with all the significant variables operating in any case,” but in concentrating on specific aspects of reality.11 To reduce the debate on whether regional integration was “a by-product of democratization or a device to advance democracy’s cause”12 is too simplistic a position. Complex phenomena require complex explanations and to allocate causes exclusively to one level, external or internal, would not capture the whole picture.13 Indeed, the combination of diplomatic and political investigations has clearly shown that systemic constraints, domestic circumstances, and individual perceptions all contributed to the process of regionalization in the Southern Cone. This observation calls for reconciliation between those theoretical approaches that most value the systemic approach and those that privilege the individual. This is the first implication raised by the book. Mercosur was clearly a state-led process, and this reiterates the primacy of states as international actors. The limited weight of institutional or societal actors other than governments may also suggest that a unitary view of the state was not entirely misplaced in this case. Additionally, the influence exercised by the systemic environment played a part in the decision to integrate. All these elements seem to reinforce the explanatory power of realist and neorealist theories vis-à-vis the Mercosur case. However, in these theories the considerable weight of ideational forces,

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such as democracy, is missed and explanations of international change are quite problematic. Cognitive approaches in turn focus on the individual as a determinant of state behavior. Perceptions and images are determined at the individual level and information coming from the system is also processed by individual decision makers. Yet cognitive approaches stressing the importance of values are far from vague idealism. Through cognition mechanisms, values and ideas influence interests, including national interests, as understood according to the realist tradition. The cognitive dimension of foreign policy making can account for changes in states’ international conduct that otherwise would be almost inexplicable. Hence emerges the need to reconcile realist theories of international relations with cognitive approaches to international politics. This is a topical issue in today’s International Relations theory and a first important step in this direction has been undertaken with the forum “Bridging the Gap: Towards a Realist-Constructivist dialogue.”14 Indeed the opposition of constructivism to realism may not be so clearcut. The main tension emerging from the debate seems to reside in the greater or lesser emphasis on power and its construction in international politics.15 A constructivism admitting that power cannot be transcended is very close to a realist constructivism and misses out variations in nature and degree of power itself. Instead, a constructivism that takes seriously ideas and norms is rather a constructivist realism in that it acknowledges that power cannot be transcended, like realists do, but crucially adds that power can take different forms in different sociopolitical circumstances.16 It has also been argued that constructivism and realism may be grouped in a unique school of thought labeled realist-constructivist approach.17 Its uniqueness would reside in the common assumption that any approach to international studies should start with power and the impossibility of transcending from it. Rather than reconciliation, this looks like a merging or fusion, and indeed is quite an arbitrary one. It remains unclear how the main differences between realism and constructivism can effectively be overcome without distorting or overstretching the key assumptions and theorizing of either of them. Realists maintain that anarchy is relatively immutable, that it has strong implications for the actors, and that it is independent from historical configurations of order and legitimacy. By contrast, constructivists argue that self-help and power politics do not follow logically or causally from anarchy, that self-help is the result of a process of social construction, and that as a socially constructed entity itself anarchy is amenable to transformation.18 Reconciliation between two different approaches does not mean their manipulation or reduction to singleness. Classical realists such as Thucydides, Clausewitz, and Morgenthau “maintained that identities

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and values were more important determinants of policy than the constraints and opportunities of the external environment.”19 This can constitute a more promising common ground for dialogue between realists and constructivists. In fact, assumptions such as the primacy of the state as an international actor or the importance, and relative stability, of the international setting are not undermined by giving attention to values and identities as contributors to both state behavior and the social formation of that international environment. A fruitful theoretical reconciliation must not be limited to realism and constructivism, the latter being only one among a variety of cognitive approaches. Social constructivism claims to be a systemic cognitive approach, insisting that state identities are formed by interactions at the systemic level. But this is only one side of identity formation. Values and identities act—and are constantly reshaped by experiences—at the individual, domestic, and international levels. What has to be transcended when reconciling realist theories and cognitive approaches is not power but rather the level of analysis. Cognition operates at different levels, and it is complementary to rather than exclusive of realist analysis. “[N]o one paradigm ever suffices.”20 The study of international relations requires a synergic, cross-paradigm approach. The distribution of capabilities and power are certainly sources of national role conceptions but cognitive approaches complement realist thinking indicating that the national role conception may change regardless of “power matrix persistence or variation.”21

C.5.2 In favor of the centrality of the individual in international relations Bruce Bueno de Mesquita, a world-leading scholar in International Relations, has called for a revision of the question of method in the study of international relations and for refocusing on leaders and domestic affairs as a centerpiece for understanding the world of international relations. 22 This book is an attempt to take up the challenge. The advocacy of a pluralistic method of research has in fact been coupled with a strong emphasis on domestic dynamics and the role of individual decision makers. In particular, by stressing the function of values and perceptions, this book calls for the centrality of the human factor in the study of international relations. This is the second major implication. Empirical evidence has shown that the human factor was indeed a key feature of international politics in the Southern Cone. The human factor does not only refer to the great leaders who shaped grand history, but encompasses those who made regionalization in the Southern Cone a reality by virtue of their beliefs, perceptions, and personal experiences. Democracy is among those beliefs, arguably a very important one, but certainly not the only one.

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Counterfactuals, though questioned by orthodox historians, are often intriguing to social and political scientists. Speculation can indeed be illustrative of the role of the human factor. General Figueiredo was the man who gave momentum to the agreement over Itaipú on the Brazilian side. Still the technical agreement had been ready and available for a while but General Geisel refused to sign it. General Figueiredo’s father had been exiled under Vargas and the young Figueiredo spent his youth in Buenos Aires; this time brought wonderful memories and a sense of gratitude and sympathy toward the country that hosted his family. That feeling was so powerful that he felt emotional when he eventually returned to the Argentine capital as Brazilian head of state in 1980. Is it credible that all this did not affect Figueiredo’s perceptions of the regional context and his predispositions toward Argentina? President Alfonsín had been a human rights activist and a true believer in the complementary nature of the domestic and international conduct of the state. This vision was largely inspired by the German philosopher Karl Christian Krause, a follower of Kant, who harbored the conviction that internal democracy and liberal international principles go hand in hand.23 It is no surprise that Alfonsín viewed foreign policy as an instrument to protect the fragile Argentine democracy from external disturbances. Any other democratic president would have pursued regime consolidation but Alfonsín’s Krausian thinking certainly helped the visionary idea of close and rapid association with Brazil as well as his perseverance and determination in the enterprise. Had another candidate won the 1983 election, integration might have had a different fate, at least in the pace at which it was achieved. Other officials of the Argentine administrations had personal links with Brazil and maintained a favorable attitude toward the neighbor. Undersecretary Romero had lived in Brazil where he ran a business in the textile imprint sector. His small company, Datacolor, was one of the suppliers of the textile group headed by Dilson Funaro, future Brazilian minister of the economy. When Romero and Funaro occupied positions of power and personally negotiated for bilateral integration, their relationship was excellent.24 Also Undersecretary Carlos Bruno and Undersecretary Juan Schiaretti, under Menem, had lived in Brazil during the years of the military dictatorship in Argentina and actively favored closer cooperation with Brazil. President José Sarney came from Maranhao, a remote and rural Northern state where anti-Argentine prejudice was less rooted than, for example, in the states of the South. The unexpected sequence of events that brought Sarney to the presidency contributed to his desire to stabilize his own position as well as to promote democracy. Integration may have appeared more appealing to him than to someone else in his position but with a different background. Moreover, an immediate and

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genuine sympathy united Sarney and Alfonsín in a long-lasting friendship that endured after they left power. It is plausible that their personal rapport facilitated their political understanding too. Also President Menem had a personal predisposition toward integration in Latin America. This derived from his traditional reading of the Peronist doctrine, which makes integration a central pillar in continental politics. Other members of his cabinet, such as Foreign Ministers Domingo Cavallo and Guido Di Tella, were overtly less inclined to Mercosur but the president’s instinct and convictions prevailed. As discussed in chapter six, affect matters.25 Whether affect targets other people, a country, or an ideal, it modifies perceptions and attitudes. Undersecretary Nofal recalled that during the years in office she learnt that in foreign policy “individuals count much [. . .], the way a process materializes has a lot to do with the individuals who make history. Yes [integration] is a state policy, but the pace, timing have a lot to do with the individuals who in that moment had to take decisions.”26 Ambassador Botafogo, reflecting on the dilemma whether history is moved by ineluctable forces or personal actions, concluded that “in this case [integration] I think that personal action was important.”27 Félix Peña, who has dealt with integration in the Southern Cone in two Argentine governments and as a scholar, summed it up: “Whatever the regime or the political moment, what counts is the vision of the people.”28 While systemic constraints limit the range of options available to decision makers, it is they who ultimately choose a certain foreign policy course among the several possible. To place the individual at the center of international politics is also a question of optimism. If interstate relations are determined in the last instance by human motivations and perceptions, human beings, and not structure, are the ultimate determinant of their own fate.

C.5.3

In favor of representative democracy

The fact that individuals finally decide international conduct poses additional questions, such as which individuals? How many of them? On what grounds are they entitled to take decisions that affect all of the others? What circumscribes their power and discretional judgment? The case study of integration in the Southern Cone offers additional themes for reflection. What is the threshold between limited democracy and undemocratic or illiberal rule? Is foreign policy a suitable realm for large popular participation? Is participatory democracy invariably good? Foreign policy is traditionally one of those public policy areas where reserve, competence, equilibrium, resolution, and the ability to transcend short-term or merely sectoral interests are most valued and needed. Sociology says that these characteristics are unlikely to fit large crowds

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and assemblies, which by nature are prone to emotional drives, temporary or short-term gains, low level of information, and group boldness. Indeed, important achievements in international politics, including Mercosur and its antecedents in the mid-1980s, have been possible precisely because decisions were taken in a restricted environment relatively insulated from public pressure. The Argentine and Brazilian governments intentionally limited the role of parliaments and societal actors maintaining that national interest, democratic consolidation, or economic competitiveness required prompt and resolute action, potentially in contrast with established sectoral interests. Revealingly, those same sectors that complained about their exclusion later admitted that the evaluation of the executives had been justified and was in the end correct. João Hermann Neto, a long-time member of the Foreign Relations Committee of the Brazilian Chamber of Deputies, reckons that external pacts require internal pacts and a strong executive can enforce external commitment domestically more easily.29 This is an implicit recognition that in situations where urgency and resolution are requested, the consultation of large and complex organizations, such as congresses, may actually be detrimental to the national interests at stake. By the same token, Israel Mahler, former president of the Argentine Industrial Union, genuinely admitted that probably if the executives had consulted the business associations more extensively, they wouldn’t have achieved anything.30 The diverse and conflictive nature of sectoral interests would have delayed integration. Additionally, and as a matter of principle, one may ask what are the democratic credentials of a public policy shaped more by the pressures of a few powerful entrepreneurial lobbies rather than the designs of an elected government. From a democratic consolidation perspective, the Argentine and Brazilian governments prioritized the fortification of formal democracy through the immediate achievement of integration, to the partial, calculated, and temporary detriment of substantial participatory democratic practices domestically. Even with the benefit of hindsight, it is hard to assess whether the alternative would have served better the cause of democracy in the Southern Cone. Enlightened elites are often the engine behind historical processes, and a certain degree of elitism, understood as a selected group of political decision makers, is inherent to the functionality of political systems. This opens further discussion on participative democracy and asks questions about who has to be consulted by the deciding elites during foreign policy making process, who is representative of what, and who ultimately decides upon the criteria governing replies to the two preceding questions. In certain circumstances a small democratic elite may appropriately be called on to decide on behalf of the great majority. In the Mercosur case, as in many other examples, the outcome was positive. But such a

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centralized exercise of power cannot rely upon supposedly noble goals or expectedly successful outcomes; it must be subject to regulations and constraints. While the role and prerogatives of the ruling elites are inherent to any social contract ordering society, mechanisms for larger popular participation are certainly desirable. Yet the involvement of a large number of people in crucial decisions about complex issues may produce less than desirable results. Paralysis of the institutions, incompetence and superficiality, ill-informed, emotional, or trivial debates may not be any better that oligarchy. The question is how to deal with this tension. In 1999 and 2000 the Ford Foundation sponsored an interesting study on civil society and governance to assess whether participation of civil society and its encounters with the state enhance good governance and contribute to more democratic decision-making processes. The results for the Brazilian case, the most interesting for its proximity to the subject of this book, are “not linear, but contradictory and fragmented [. . .] eliminating any possibility of conceiving of civil society as the demiurge of democratic deepening.”31 Indeed a Manichean vision of society as “a pole of virtue” as opposed to the state as “an incarnation of evil” is as much ideologically biased as politically uninformed.32 The advocates of participatory democracy as a panacea to contemporary disaffection for politics overlook crucial points. First, the interaction between civil society and state is not naturally harmonic but tense and permeated by conflict. Second, the search for more direct participation by civil society is driven by discontent with the mediation function of parties rather than by a constructive and far-sighted vision. Third, cultural determinants are essential to the success of democratization as well as participatory processes. The tension between state and civil society is not very different from any other political conflict as it hinges on the effective sharing of power. On the state side, ideological resistance to more democratic decisionmaking formats is coupled with considerations about the efficacy and effectiveness of state functioning. On the civil society side, participation in public policy-making is limited by the technical and political qualification required by the nature of state-society negotiations. An additional difficulty resides in the recognition of the plurality and legitimacy of the interlocutors. The risk is to reproduce an elitist and exclusionary model at a lower level. Dominant sectors of society would monopolize representation of civil society vis-à-vis the state, posing the problem of how to encourage a second-level participation of those marginalized in the first-level participation. However, an ideal vision of participative policy formation as an “open political arena, where the disputes for hegemony takes place between equal contenders” is misplaced.33 Not all the actors present in an organized and ordered society have the same right and duty to elaborate and decide public policy.

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Mechanisms of civil society representation are already included in the constitutional and constitutive setting of liberal democracies. In representative democracies, the representative qualifier already means, in principle, that society has debated about what public policies have to be pursued and which candidates will implement them. Civil society leaders can be elected or appointed to office, and they can exercise their right of speech and association. But invariably, the most influential segments of society will occupy spaces of representation. This is the nature and the very essence of democracy; those who are able to collect the consensus of their peers are entitled to represent the people. Liberal principles and counterweights ensure that consensus is actually fairly collected and used and not imposed by social, patrimonial, or power status. Liberal principles and counterweights also ensure that once holding power the representatives make a restrained and appropriate use of it. The state and the government legitimately exercise a dominant role in the choice of public policies. Their right and duty to do so is consecrated by the polls. The fact that “this foothold has lost its monopolistic character [. . .] and has adopted formats which make it permeable to democratizing breaches should not lead us to obscure its basic nature.”34 The true meaning of democratic participation would be questioned if excessive claims to participation were allowed after the polls. If the electoral mandate were subject to continuous renegotiations over single issues, this would lead to the impossibility of taking any major decision. If those entitled to govern were unable to exercise their prerogatives by a vociferous crowd pretending more direct participation, then the democratic order established by the poll and the liberal guarantees provided by the constitution and the rule of law would be subverted. Policy-making may well accept contributions from civil society but last instance decisionmaking must be reserved to those democratically selected for this purpose. Spaces for societal participation in the formulation of public policy “constitute one of the multiple arenas where the dispute for hegemony is engaged.”35 To allow this one space to become the space would likely lead to state paralysis and ultimately to democratic de-legitimization. To neglect such a space would compromise democratic advance: political conflict could not be made public and procedures and spaces to deal with conflict legitimately would be denied. Thus far, representative liberal democracy has proven itself to be the best political system to reconcile the tension between effective and participatory forms of government. It has in itself strong representative and participatory elements and provides the mechanisms to avoid the two extreme scenarios of anarchy on the one hand and illiberal democracy on the other. This is the third and final implication of this book.

Epilogue

A lmost twenty years have passed since the creation of Mercosur. The

aim of this book was to account for its formation and not for its subsequent development. However, the extent to which the foundational values and principles as well as many of the original political and institutional features still hold validity today is striking. This is true in terms of both strengths and limitations. It is also true that in a framework of general continuity there have been significant qualitative changes. Above all, democracy continues to be a driving force and an increasingly stringent criterion for membership to integration schemes, not only in the Mercosur area but in Latin America and the entire Americas. This is confirmation that, once ideas become entrenched in durable institutions, and such is the case of democracy within integration, in the absence of significant change those ideas continue to influence politics and policies.1 The process leading to the Argentine-Brazilian sectoral integration and later to Mercosur was essentially a governmental exercise. The founding fathers of Mercosur did not provide it with supranational power intentionally and kept its institutional frame to a minimum. Even today presidential diplomacy and inter-governmentalism are major features in Mercosur’s decision-making. 2 This can be regarded either as a strength or as a weakness. In periods of economic and possibly political turmoil, inter-governmentalism allows a degree of flexibility in favor of domestic intervention to tackle the crises. Such was the case in the wake of the 1998 economic crisis in Brazil, the Argentine collapse of 2001, and the same can be said for the current global financial crisis. The Argentine and Brazilian governments could undertake temporary and targeted suspensions of integration agreements that would not be possible in more institutionalized cases, such as the European Union. Critics contend that deepening institutionalization is indispensable to the success of integration exercises, basing their assumption on the European case. While this is valid for Europe, structural caveats make it problematic elsewhere. Mercosur leaders have made a political effort to deepen integration but structural asymmetries and the connected vested, although legitimate, interests limit the scope and success of these efforts. Mercosur

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created its own regional parliament in 2006; it has a mechanism for the resolution of controversies and has recently established a Fund for Economic Cohesion (FOCEM). None of these institutions deliver satisfactory performance. Structural limitations and their political consequences account for these shortcomings. Brazil has a population of about 190 million people, Argentina of around 39 million, Paraguay 6 million, and Uruguay 3 million.3 According to proportional representation, Brazil would be able to gain a large majority of seats and thus be in total control of parliamentary deliberations. The other members would oppose the attribution of real powers to the regional parliament. If a weighted voting system redistributed seats so that the other three members united could reach a majority over Brazil it would be in the latter’s interest to oppose the attribution of any significant power to the regional assembly. A temporary compromise has been reached on the basis of equal representation whereby each country has eighteen representatives to the regional parliament. The result is a regional parliament with no real power and a mere consultative role. By a similar token, Brazil’s overwhelming economic weight as compared to its neighbors has to face paradoxes. Argentina and Uruguay have higher GDP per capita than Brazil,4 which, by virtue of its GDP in absolute terms contributes over 80 percent of the FOCEM budget. This is sustainable only as long as this budget remains quite low and the Brazilian administration is politically able to sell the idea that it is transferring resources from the Brazilian poor to the neighboring poor, who happen to have a higher income per capita, in spite of otherwise evident socioeconomic disparities. By comparison, Europe is a relatively stable, uniform, and homogeneous continent in both economic and demographic terms. It can be asserted that Europe is the exception and the rest of the world is the rule.5 To pretend to apply European recipes to Mercosur successfully is extremely ambitious if those recipes do not take local structures and circumstances into account and are adapted accordingly. The enlargement process and the plan to extend Mercosur to other Latin American countries have also proved difficult. In March 1991 Mercosur started with four members. In March 2009 Mercosur still had four full members. At present, ratification of Venezuela’s accession treaty is being kept on hold by the Paraguayan and the Brazilian senates. This is not just a procedural hurdle but hides deeper differences, fears, and interests. President Chávez of Venezuela seems to have his own strategic vision of Latin American integration along almost revolutionary, anticapitalist, and anti-U.S. lines. On the one hand, this is hardly compatible with Mercosur’s traditional openness to world negotiation and neoliberal imprint.6 On the other, Venezuela offers a regional leadership alternative to Brazil’s and this has not remained unnoticed in Brasília.

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On the Paraguayan side, Asunción seems to play the Venezuela card to extract as many gains as possible from its traditional partners within Mercosur. Overall the dilemma is whether to accept Venezuela in the club to exercise stricter control over its initiatives or to keep it on hold lest it should jeopardize Mercosur’s unity and direction. Last but not least, Chávez’s style at home may cast some doubts on his full commitment to representative liberal democracy so cherished by the other members. Regarding other candidates, as in the 1990s, Chile is still not keen to join Mercosur and other countries may have economic structures and levels of development hardly suitable for Mercosur commitments. The reasons that made recruitment to Mercosur quite difficult twenty years ago are still largely true. Argentina and Brazil are still the driving axis of Mercosur and remain the most important partners in both political and economic terms. Also, their motives to promote Mercosur remain largely the same. Argentina views Mercosur essentially as an instrument of economic development. Brazil is by far Buenos Aires’ first commercial partner.7 The Argentine economic interest in the association has a political character too in so far as integration is strategic to the country’s wealth and development model. Brazil is not economically dependent on regional markets. Argentina is Brazil’s third commercial partner after the United States and the European Union and is closely followed by China.8 Brasília’s interest in the association was and remains political as it uses its supposed capacity to aggregate and represent the region to reinforce its claims to global power status. Paraguay and Uruguay remain largely dependent on their two more powerful neighbors as the Mercosur bloc represents between 30 and 40 percent of their entire commercial flows.9 Yet both countries are growing increasingly vociferous as they feel they have not gained enough from Mercosur. The creation of FOCEM indeed reflects the acknowledgment by the stronger associates that something more has to be done in favor of the smaller parties. The most important qualitative change in this framework is the rise of Brazil toward world power status and the widening economic and power gap with its neighbors. Although its regional leadership may be contested, Brazil’s increasing role in multilateral forums and the concert of powerful nations will certainly have an impact on regional integration dynamics too. Above all democracy has consolidated itself as the foundational value of Mercosur. The commitment to democratic ideals and institutions of the four members was tested early on during a constitutional crisis in Paraguay in 1996 when the head of the army General Oviedo refused to step down as requested by democratically elected President Wasmosy.10 Although the crisis was resolved largely because of domestic and U.S. support of the legitimate president, Mercosur also played a role. At the outset of the crisis, Brazilian ambassador to Paraguay Marcio D’Oliveira

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Dias was among the first to speak out, on behalf of the other members of the bloc, against any attempt to subvert democracy. While the ambassadors of Argentina and Uruguay deployed their good offices during the crisis, it was Ambassador Dias who played a central role in support of Wasmosy, and the Brazilian minister of the army personally mediated with Oviedo. The Paraguayan crisis exposed three features of the relationship between Mercosur and democratic order. First, the political value of democracy and the consensus around it are high while the fear of losing economic ties within the bloc played a minor role. Second, the bloc members acted individually rather than concertedly and the role of Brazil as a likely mediator of political disputes within the bloc emerged clearly.11 Third, the Paraguayan episode was the trigger to the institutionalization of a democratic clause within the bloc. In 1998 the four Mercosur members, alongside Bolivia and Chile, signed the Ushuaia Protocol on democratic commitment, which gave a binding character to the democratic principles set out in previous presidential statements. This Protocol, known as the Mercosur democratic clause, established that “functioning democratic institutions constitute an essential precondition for the development of the integration process among the Parties” and that “the break of the democratic order in a State Party would unleash an immediate process of consultations with the concerned State.”12 The Protocol also provides for the possibility of measures “that might encompass from the suspension of the right to take part in the organs of the integration processes to the suspension of rights and obligations ensuing from these processes.”13 The practice of democratic conditionality for membership in regional organizations has found application well beyond Mercosur. In June 1991 the Organization of the American States (OAS), a hemispheric-wide institution, adopted the Santiago Commitment to democracy, abiding by the protection of human rights and representative democracy, the latter considered indispensable for stability, peace, and development. OAS Resolution 1080 detailed procedures to make the Santiago Commitment operational in the event of interruption of the democratic process. The 2001 Declaration of Quebec City extended democratic conditionality to the participation in the Summit of the Americas process and eventually resulted in the signature of the Inter-American Democratic Charter later the same year. Recent integrationist developments in South America have also made democracy a centerpiece of their enterprises. The 2004 Cuzco Declaration establishing a South American Community of Nations reaffirmed the common faith in democratic systems of government of all the members. The 2006 Cochabamba Declaration that laid out the basis of the future South American Union (Unasur) reaffirmed the democratic character of all members and the intention to create a democratic integration project, respectful of political and ideological plurality but within

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democratic boundaries. Finally, the 2008 Treaty of Brasília, constitutive of Unasur, ratified the directing principles of the organization, among which is democracy. If anything has changed with regard to the democratic commitment of the Argentine and Brazilian leaders of the late 1980s and early 1990s in the framework of regionalization, it is the emphasis on the quality of democracy. Early regional commitments to democracy privileged the political dimension (representative democracy as an affirmation of free and fair elections, respect of the rule of law and human rights), while current commitments stress the participative and social dimensions (equality, poverty reduction, social inclusion). The risk is to confuse what can be expected of democracy and what can be expected of integration. A generation of excessively and unreasonably high expectations is often the primary cause for disillusionment. That said, current commitments reflect perfectly the political and public mood and priorities of our time, just as past commitments reflected the expectations and urgencies of their epoch. In this sense, the purpose of integration is still to serve the cause of well-being and development as understood at a given time. The dream of Latin American unity is in a broad sense taking shape. Unasur put together the Andean Pact countries, Mercosur and Chile, Guyana, and Surinam with the aim of deepening integration in South America and emulating the European Union. While the attempt is laudable and ambitious it may suffer from weaknesses that had undermined Latin American integration before Mercosur and that the founding fathers of Mercosur had carefully tried to avoid. The tension was then and remains today between “integrarse o amucharse” (integrate or pile up),14 pointing to the contrast between a proper integrationist effort and an incongruous, scarcely cohesive, and overambitious patchwork. Both scenarios provide potential challenges to and opportunities for Mercosur. In the case of Unasur’s success, on the one hand, Mercosur could face fierce competition for the limited resources available for integration and eventually dissolve into the new scheme. This might turn out to be beneficial for its member states and populations but it would nonetheless mark its end as an autonomous project. On the other hand, Mercosur may represent the core of the new integrationist venture and direct the evolution of the latter according to its own preferences and on the back of its comparatively long and successful experience. Conversely, if Unasur proves overambitious, conflictual, and lacks the necessary political will and economic convergence, on the one hand all integration regional schemes could suffer from this anticlimax, but on the other Mercosur could regain a central role and/or act as an avant-garde in a regional integration project that works at different speeds. Historical experience and this book show that precisely at times of uncertainty and difficulty, Mercosur has found new momentum.

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Finally, at the time of revising this manuscript, in March 2009, one of its key protagonists, former president Alfonsín of Argentina died. His political and human legacy will outlive his administrative or economic results. Alfonsín understood democracy as continuous negotiation, identified himself with Western liberal thought, and consolidated a flawed democracy.15 His values and beliefs were incarnated in the initiation of the integration project that resulted in Mercosur. Their institutionalization still affects regional integration politics and policies. Like its founding father, Mercosur may not have fulfilled all its economic and institutional expectations, but it has certainly contributed to the consolidation of an otherwise limited democracy.

Appendices

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R. ALFONSIN President

A. FERRARI ETCHEBERRY Special adviser to the president

OTHER MINISTRIES (Limited involvement)

FOREIGN MINISTRY D. CAPUTO Foreign minister

SECRETARIAT OF INTERNATIONAL RELATIONS J. SABATO Secretary of international relations

R. ALCONADA SEMPE Undersecretary of Latin American affairs

J. ROMERO Secretary of international economic relations

MINISTRY OF ECONOMY J. SOURROUILLE Minister of economy SECRETARIAT OF INDUSTRY AND TRADE R. LAVAGNA Secretary of industry and trade (ministerial rank)

J. CAMPBELL Undersecretary of foreign trade

C. BRUNO Undersecretary of economic integration

Appendix 1: The Argentine Negotiating Team (1985–1986)

B. NOFAL Undersecretary of industrial policy

L. GARCIA Undersecretary of industry (Little involvement)

OTHER DEPARTMENTS (Little or no involvement)

J. SARNEY President R. RICUPERO Special adviser to the president

BANCO DO BRASIL—CACEX R. FENDT Director of CACEX (ministerial rank) CASA MILITAR R. BAYMA DENYS Secretary general of the national security council

CASA CIVIL (little involvement)

L. A. CASTRO NEVES Undersecretary of the national security council

MINISTRY OF FOREIGN AFFAIRS OLAVO SETUBAL (R. Sodreu from February 1986) Minister of foreign affairs

OTHER MINISTRIES (Little involvement except military ministries)

SECRETARIAT GENERAL OF ITAMARATY P. T. FLECHA DE LIMA Secretary general of Itamaraty G. FONSECA Political advisor to the secretary general

L. GONZAGA BELLUZZO Special secretary of economic affairs and chief advisor to the minister

J. H. PEREIRA DE ARAUJO Ambassador to Buenos Aires

F. THOMPSON FLORES Itamaraty undersecretary general

S. PINHEIRO GUIMARAES Head, Latin American Economic Department

S. DO REGO BARROS Head of the Economic Department

Appendix 2: The Brazilian Negotiating Team (1985–1986)

J. M. do AMARAL OLIVEIRA Joint chief of staff

MINISTRY OF ECONOMY DILSON FUNARO Minister of economy

J. TAVARES DE ARAUJO Secretary executive of the customs committee

R. MULLER FILHO Head of cabinet

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Appendix 3: Dramatis personae and List of Interviews Interviews with the Argentines Roberto Bloch, Buenos Aires, March 19, 2003 Professor at the National School of Defence. Expert on integration and foreign trade in the Southern Cone. Roberto Bouzas, Buenos Aires, February 5, 2003 Professor of economics, Universidad San Andres, Buenos Aires. Professor of international economics, Universidad de Buenos Aires. Reader in international relations, FLACSO Argentina. Carlos Bruno, Buenos Aires, March 11, 2003 Advisor to the undersecretary of international economic relations, Ministry of Foreign Affairs (1983–1985). Undersecretary of economic integration, Ministry of Foreign Affairs (1985–1987). Undersecretary of international economic relations, Ministry of Foreign Affairs (1987–1989). Fabián Calle, Buenos Aires, February 14, 2003 Professor of theory of international politics at the University of Buenos Aires. Expert in Argentine foreign policy and integration in the Southern Cone. Oscar Camilión, Buenos Aires, March 25, 2003 Ambassador to Brazil (1976–1981). Minister of foreign affairs (1981). Jorge Campbell, Buenos Aires, February 24, 2003 Undersecretary of foreign trade, Ministry of Economy (1986–1987 and 1989). Undersecretary of economic integration, Ministry of Planning (1991). Secretary of international economic relations, Ministry of Foreign Affairs (1994–1999). Jorge Castro, Buenos Aires, March 20, 2003 Professor at the National University of Buenos Aires, University of Salvador, Escuela de Defensa Nacional, Escuela Superior de Guerra, Instituto del Servicio Exterior de la Nación. Member of the secretariat of international relations of the Justicialista party. One of the chief thinkers of the Menemista project. Andrés Cisneros, Buenos Aires, February 21 and 26, 2003 Between 1992 and 1997 he assumed several government offices, including head of cabinet of Foreign Minister Guido Di Tella, secretary general of the Ministry of Foreign Affairs, and deputy foreign minister. He is the author of numerous studies on Argentine foreign policy and integration. Claudio Escribano, Buenos Aires, January 31, 2003 Deputy director of Buenos Aires-based daily paper La Nación. Roberto Favelevic, Buenos Aires, March 7, 2003 President of the Argentine Industrial Union (1983–1987). Vice president of the Argentine Industrial Union (1972–1983 and 1987–1994). President of the Argentine Federation of Textile Industry (1975–1983 and 1990–1994).

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Alberto Ferrari Etcheberry, Buenos Aires, March 28, 2003 President of the Argentine Cereals Committee (1983–1985). Special advisor to President Alfonsín (1985–1986). Head of cabinet of Minister Caputo (1986–1987). Secretary of Latin American affairs, Ministry of Foreign Affairs (1987–1989). Aldo Ferrer, Buenos Aires, March 27, 2003 Minister of economy (1970–1971). President of the National Atomic Energy Commission (1999–2001). Analyst of economic integration and Argentine foreign policy. Andrés Fontana, Buenos Aires, March 7, 2003 Dean of graduate studies, University of Belgrano, Buenos Aires, and former undersecretary for strategic policy. Expert in Argentine security and military affairs. Albino Gomez, Buenos Aires, February 25, 2003 Official spokesman of the Ministry of Foreign Affairs (1983–1986). Jorge Hugo Herrera Vegas, Buenos Aires, March 26, 2003 Head of Department of Bilateral Economic Relations, Foreign Ministry (1985–1986). Head of cabinet of the director general of the Foreign Ministry (1986–1987). Minister councillor at the Argentine Embassy in Brasília (1987–1992). Head of cabinet of the foreign minister (1992–1993). Undersecretary of American economic integration, Foreign Ministry (1993–1997). Ambassador to Brazil (1997–2000). Alberto Kohan, Buenos Aires, March 14, 2003 Secretary general of the Argentine presidency (1989–1991). Close advisor to President Menem. Anibal Laiño, Buenos Aires, March 19, 2003 Director of the Escuela Nacional de Defensa, Ministry of Defence, Buenos Aires. Roberto Lavagna, Buenos Aires, March 27, 2003 Secretary of industry and trade (1986–1987). Minister of economy (2002–2005). Jorge Lavopa, Buenos Aires, February 11, 2003 Director of the Committee on Latin American Affairs of the Argentine Council for International Relations. José Maria Lladós, Buenos Aires, March 14, 2003 Advisor at the Ministry of Defence (1983–1986). Undersecretary of defence production (1987–1989). Israel Mahler, Buenos Aires, March 14 and 21, 2003 President of the Argentine Metallurgical Industries Association (ADIMR A) (1988–1991). President of the Argentine Industrial Union (1991–1994).

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Federico Merke, Buenos Aires, February 10, 2003 Deputy director of academic affairs, Argentine Council for International Relations. Gabriela Mustapic, Buenos Aires, March 24, 2003 Professor of politics and government at Di Tella University, Buenos Aires. Expert in executive-legislature relations. Beatriz Nofal, Buenos Aires, March 25, 2003 Undersecretary of industrial policy and development (1986–1988). Félix Peña, Buenos Aires, February 25 and March 12, 2003 Undersecretary of international economic relations, Ministry of Foreign Affairs (1982–1983). Undersecretary of economic integration, Ministry of Foreign Affairs (1991–1992). Expert in Latin American integration and Argentine foreign policy. Enrique Peruzzotti, Buenos Aires, February 20, 2003 Professor of politics and sociology at Di Tella University, Buenos Aires. Expert in democracy, civil society, and institutional reforms. Roberto Pons, Buenos Aires, February 17, 2003 Officer at the Department Mercosur of the Argentine Industrial Union. Gregorio Recondo, Buenos Aires, March 11, 2003 Sociologist and former diplomat, expert in international relations and integration. Author of two books on the antecedents to, and the cultural dimension of Mercosur. Roberto Russell, Buenos Aires, February 20, 2003 Professor of theory of international relations at the University of Buenos Aires. Professor of theory of international relations and Argentine foreign policy at Di Tella University, Buenos Aires. Author of numerous studies on Argentine-Brazilian relations and Mercosur. Formerly director of the Instituto del Servicio Exterior de la Nación. Andrés Serbin, Buenos Aires, February 21, 2003 Director of the Center for Global and Regional Studies (CEGRE) at the Universidad de Belgrano, Buenos Aires, and president of the Regional Coordination for Economic and Social Research (CRIES). Expert in democracy, civil society, and governance. Federico Storani, Buenos Aires, March 27, 2003 President of the External Relations Committee of the Argentine Chamber of Deputies (1983–1989). Vice president of the External Relations Committee of the Argentine Chamber of Representatives (1989–1991). Juan Gabriel Tokatlian, Buenos Aires, February 5, 2003 Professor of international relations and director of politics and international relations, Universidad San Andrés, Buenos Aires.

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Jorge Zorreguieta, Buenos Aires, March 20, 2003 President of the Department Mercosur of the Argentine Industrial Union and president of the Argentine Sugar Centre.

Interviews with the Brazilians José Maria do Amaral Oliveira, São Paulo, June 5, 2003 Head of joint chiefs of staff (1985–1986). Luiz Gonzaga Belluzzo, São Paulo, June 4, 2003 Secretary of economic affairs and chief advisor to minister of economy (1985–1987). Deputy minister of economy (1987). Luiz Borgerth, São Paulo, June 4, 2003 Former director of Globo Television, vice president of the Brazilian Association of Radio and Television Stations (ABERT). President of the Brazilian branch of Radio and Television International Association (1983–1991). Pedro Fernando Bretas, Brasília, May 29, 2003 Head of the department South America I (Argentina, Uruguay, Paraguay, and Chile), Ministry of Foreign Affairs. Sonia de Camargo, Rio de Janeiro, June 12, 2003 Professor of international relations at the Pontificia Universidade Catolica, Rio de Janeiro. Expert in Brazilian foreign policy and Mercosur. Author of numerous studies on Argentine-Brazilian relations. Luiz Augusto Castro Neves, Brasília, May 29, 2003 Undersecretary of the National Security Council, in charge of economic affairs (1981–1987). Amado Luiz Cervo, Brasília, April 14 and 30, 2003 Professor of international relations and history of Brazilian foreign policy, University of Brasília. Author of numerous studies on Brazilian foreign policy. Sergio França Danese, Buenos Aires, February 18, 2003 Advisor to the head of department of the Americas at the Foreign Ministry (1981–1985). International politics advisor to the civilian cabinet of the presidency (1985–1987). Advisor to the secretary general of the Foreign Ministry (1992–1993). Professor of Brazilian diplomatic relations and foreign policy at the Instituto Rio Branco, Ministry of Foreign Affairs (1982–1987 and 1993–1995). Minister councillor at the Brazilian Embassy in Buenos Aires. Rubens Bayma Denys, Rio de Janeiro, June 9, 2003 Head of the military cabinet of the presidency (1985–1990). Secretary general of the National Security Council (1985–1990). Roberto Fendt, Rio de Janeiro, June 11, 2003 Director of CACEX, Banco do Brasil (1985–1987).

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Roberto Muller Filho, São Paulo, June 3, 2003 Head of cabinet of Minister of Economy Dilson Funaro (1985–1987). Paulo Tarso Flecha de Lima, Brasília, May 13, 2003 Secretary general of the Ministry of Foreign Affairs (1985–1990). Francisco Thompson Flores, Geneva, December 8, 2004 Undersecretary general of economic affairs and chief of negotiators for integration agreements with Argentina, Ministry of Foreign Affairs (1985–1988). Ambassador to Buenos Aires (1988–1992). Deputy secretary general of WTO. Ramiro Saraiva Guerreiro, Rio de Janeiro, June 10, 2003 Minister of Foreign Affairs (1979–1985). Samuel Pinheiro Guimarães, Brasília, May 22, 2003 Head of the Economic Department for Latin America at the Ministry of Foreign Affairs and secretary executive of the National Committee for LAIA (1985–1988). Head of the economic division of the Ministry of Foreign Affairs (1988–1990). Secretary general of the Brazilian Foreign Ministry. José Botafogo Gonçalves, Buenos Aires, March 17, 2003 International politics advisor to Minister of Planning Delfim Neto (1979– 1985). Undersecretary of integration, Ministry of Foreign Affairs (1995). Ambassador to Argentina (2002–2004). Celso Lafer, São Paulo, June 2, 2003 Minister of Foreign Affairs (1992 and 2001–2002). Minister of Industry and Trade (1999). Professor of international law and philosophy of law at the University of São Paulo. Expert in Brazilian foreign policy. Luiz Felipe Lampreia, Rio de Janeiro, June 11, 2003 Secretary of the Planning Department of the presidency (1986), minister of foreign affairs (1995–2001). Estevão Rezende Martins, Brasília, May 9, 2003 Professor of history and international relations, University of Brasília. Vice president of the Committee on Latin American History (UNESCO). João Hermann Neto, Brasília, May 29, 2003 Brazilian Congressman (1983–1991 and 1999–present). Several times member and president of the External Relations Committee. Member of the Brazilian delegation for the signature of PICE (1986). Member of the Joint Inter-parliamentary Committee of Mercosur (JICM). João Hermes Pereira de Araujo, Rio de Janeiro, June 10, 2003 Ambassador to Buenos Aires (1984–1987). Head of the Division South America, Ministry of Foreign Affairs (1980–1983) and head of department of the Americas, Ministry of Foreign Affairs (1981–1982).

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Rubens Ricupero, telephone interview, September 7, 2004 Head of Department of the Americas at the Foreign Ministry (1981–1985). Chief advisor on international politics to president-elect Neves (1984–1985) and to President Sarney (1985–1987). Olavo Setubal, São Paulo, June 3, 2003 Minister of Foreign Affairs (1985–1986). José Tavares de Araujo, Brasília, May 19 and 22, 2003 Executive secretary of the Customs Policy Committee of the Ministry of Economy (1985–1988). Tullo Vigevani, São Paulo, June 2, 2003 Professor of political sciences at São Paulo State University (UNESP). Expert in civil society and political and social participation. Author of numerous studies on Mercosur.

Interviews with others Christophe Manet, Buenos Aires, January 31, 2003 EU official, formerly at the EU Commission Delegation in Buenos Aires. Raúl Bernal Meza, Brasília, May 6, 2003 Director of the Centre of Latin American International Relations Studies (CERIAL), Mendoza, Argentina. Expert in the international relations of the Southern Cone. Author of the book Sistema Mundial y Mercosur, 2000. Uziel Nogueira, Buenos Aires, June 27, 2003 Deputy director and senior trade and integration economist, Institute for the Integration of Latin America and the Caribbean (INTAL-IADB), Buenos Aires.

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Appendix 4: Essential Chronology (1979–1991) 1979 October October 17: Signature of the Tripartite agreement between Argentina, Brazil, and Paraguay.

1980 May May 14–17: Visit of General Figueiredo to Buenos Aires and signature of bilateral agreements in a number of fields, including nuclear issues.

August August 19: Visit of General Videla to Brazil and signature of minor bilateral agreements.

1982 April Falklands/Malvinas conflict.

1983 December December 10: President Alfonsín and his democratic government assume office in Argentina.

1984 January First informal talks about integration between Argentina and Brazil.

April Bilateral ministerial meetings in which the issue of integration is discussed.

1985 January Tancredo Neves is democratically elected president of Brazil. He is due to take office in March.

February Meeting in Buenos Aires between President Alfonsín and President-elect Neves; conversations cover issues such as the reinforcement of bilateral trade and further economic integration.

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March Neves falls irreversibly ill; José Sarney, vice president designated, is sworn in as president of Brazil. First meeting between Alfonsín and Sarney.

May The meeting between Foreign Ministers Caputo of Argentina and Setubal of Brazil set the integrationist plan into motion on the Brazilian side.

July On the inauguration of President Alan Garcia of Peru Caputo and Setubal decide to advance with the project of bilateral integration.

November November 29–30: At the Foz de Iguazú presidential meeting, Alfonsín and Sarney formally commit their respective countries to integration. A joint Declaration on Nuclear Cooperation is also issued.

1986 April April 5: Secret meeting at Don Torcuato, Buenos Aires, to draft the future integration agreement.

May May 3: Secret meeting at Itaipava, Rio de Janeiro, to draft the future integration agreement.

June June 20: Third intergovernmental meeting to finalize the text of the integration agreement.

July July 29: Buenos Aires, Presidents Alfonsín and Sarney sign the Programa de Integración y Cooperación Económica (PICE) establishing economic integration between Argentina and Brazil. The original Program comprised twelve sectoral protocols, increased to twenty-four in subsequent summits.

December December 8–11: Presidential summit in Brasilia, enlargement of the scope of the existing protocols, and expansion to new sectors. New Joint Declaration on Nuclear Policy.

1987 July Presidential meeting at Bariloche and Viedma, Argentina. Expansion of the protocols and visit of President Sarney to the secret nuclear plant for the

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enrichment of uranium at Pilcaniyeu. Additional Joint Declaration on the peaceful use of nuclear energy.

1988 April Presidential summit in Brasília. Visit of President Alfonsín to the Brazilian secret nuclear station of Aramar at Iperó. Signature of new protocols and announcement of the intention to systematize all the existing agreements in a single integration treaty.

November Signature of the Treaty of Integration, Cooperation and Development between Argentina and Brazil. The treaty establishes a common economic space and introduces the concept of common market as an aspiration for the future.

1989 May Carlos Menem is elected president of Argentina and is due to take office in December.

July Due to the severe economic crisis, Menem is sworn in six months ahead of schedule.

August Presidential summit in Brasília between Menem and Sarney. Integration is in a situation of stalemate.

November–December In a two-round election Fernando Collor de Mello becomes president of Brazil. He is to take office in March 1990.

1990 June Foreign Ministers Cavallo of Argentina and Rezek of Brazil meet in Buenos Aires and discuss the possibility of anticipating the schedule for the attainment of a common market. Also, it is decided to recruit new members for the integrationist project.

July July 6: Signature of the Buenos Aires Act that provides for the establishment of a bilateral common market by December 1994. A diplomatic campaign

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to attract new members to the future common market starts. Negotiations proceed now on two parallel tracks, bilateral and multilateral.

November Signature of the Economic Complementation Agreement No. 14 (ACE-14) that systematizes all the concession Brazil and Argentina had made to each other since 1962 in the framework of the Latin American Integration Association.

1991 March March 26: The Treaty of Asunción, establishing a common market between Argentina, Brazil, Paraguay, and Uruguay, is signed.

Notes

Introduction 1. Franklyn Steves, 2001, “Regional Cooperation and Democratic Consolidation in the Southern Cone of Latin America,” Democratisation, 8:3, pp. 75–100. 2. See Andrew Hurrell, 2001, “The Politics of Regional Integration in Mercosur,” in Victor Bulmer-Thomas (ed.), Regional Integration in Latin America and the Caribbean. The Political Economy of Open Regionalism, Institute of Latin American Studies, London, pp. 194– 211; and Philippe C. Schmitter, 1991, “Change in Regime Type and Progress in International Relations,” in Emanuel Adler and Beverly Crawford (eds), Progress in Postwar International Relations, Columbia University Press, New York, pp. 89–127. 3. Andrés Malamud, 2000, Mercosur: From “Delegative Democracies” to “Delegative integration”?, Paper prepared for the 2000 meeting of the Latin American Studies Association, Miami, p. 5. The paper was later published in two separated pieces: Malamud, 2003, “Presidentialism and Mercosur: A Hidden Cause for a Successful Experience,” in Finn Laursen (ed.), Comparative Regional Integration: Theoretical Perspectives, Ashgate, London, pp. 53–73; and Malamud, 2003, “O Presidencialismo na América do Sul: Argentina e Brasil em Perspectiva Comparada,” Análise Social, no. 168, pp. 715–742. 4. Félix Peña, 1992, “Una Idea Atractiva,” Archivo de La Nación. 5. The 1961 agreements of Uruguaiana were also signed by nominally democratic Argentina and Brazil, but the nature of that democratic context was at least problematic. President Frondizi of Argentina was politically a hostage of the armed forces, while the desirability of a democratic regime in Brazil was neither valued nor spread as much as it was in the mid-1980s. Also, the international climate in general and the U.S. attitude in particular were much more favorable to democratic rule in South America in the mid-1980s than they had been in the early 1960s. 6. Peter Coffey (ed.), 1998, Mercosur, Kluwer Academic Publishers, Boston and London. Riordan Roett (ed.), 1999, Mercosur. Regional

210

NOTES

7.

8.

9. 10. 11. 12.

13. 14. 15.

Integration, World Markets, Lynne Rienner Publishers, Boulder CO. Victor Bulmer-Thomas (ed.), 2001, Regional Integration in Latin America and the Caribbean: the Political Economy of Open Regionalism, ILAS, London. Jaime Behar, 2000, Cooperation and Competition in a Common Market. Studies on the Formation of Mercosur, Springer, New York. David R. Dàvila-Villers, 1992, “Competition and Co-operation in the River Plate—The Democratic Transition and Mercosur,” Bulletin of Latin American Research, 11:3, September, pp. 261–277. Sylvia M. Williams, 1996, “Integration in South America: The Mercosur Experience,” International Relations, 13:2, August, pp. 51–61. Wayne A. Selcher, 1985, “Brazilian-Argentine Relations in the 1980s: From Wary Rivalry to Friendly Competition,” Journal of Interamerican Studies and World Affairs, 27:2, pp.25–53. Monica Hirst, 1992, “Mercosur and the New Circumstances for its Integration,” CEPAL Review, no. 46, April, pp. 139–150. Karen L. Remmer, 1998, “Does Democracy Promote Interstate Cooperation? Lessons from the Mercosur Region,” International Studies Quarterly, 42, pp. 25–52. Philippe C. Schmitter, 1991, “Change in Regime Type and Progress in International Relations,” in Emanuel Adler and Beverly Crawford (eds), Progress in Postwar International Relations, Columbia University Press, New York, pp. 89–127. Steves, “Regional Cooperation and Democratic Consolidation in the Southern Cone of Latin America,” pp. 75–100. Remmer, “Does Democracy Promote Interstate Cooperation?” Ibid., p. 29. Ibid., p. 30. Remmer uses a sophisticated statistical model to assess the behavior of the dependent variable—cooperation—during dyad years. Specifically, Remmer presents a comparison of regime type dyads, including democracy-democracy, democracy-authoritarian, and authoritarian-authoritarian. To account for the relative weight of other intervening factors, the behavior of the variable is also combined with time duration, Gross Domestic Product, interstate equality, economic interdependence, export dependency, and recent democratization Schmitter, “Change in Regime Type and Progress in International Relations.” Ibid. Other authors suggest the contrary; see, for example, Roberto Lavagna, 1998, Argentina, Brasil, Mercosur. Una Decisión Estrategica, Ciudad Argentina, Buenos Aires; Jorge Lucangeli, 1998, “Argentina and the Challenge of Mercosur,” in Peter Coffey (ed.), Mercosur, Kluwer Academic Publishers, Boston and London, pp. 21–112; Andrés Cisneros and Carlos Piñeiro Iñiguez, 2002, Del ABC al Mercosur. La Integración Latinoamericana en la Doctrina y Praxis del Peronismo, Nuevohacer Grupo Editor Latinoamericano,

NOTES

16. 17. 18. 19. 20. 21. 22.

23. 24. 25.

26. 27. 28.

29.

30. 31.

32. 33.

211

Buenos Aires; Jorge Campbell (ed.), Mercosur. Entre la Realidad y la Utopia, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 39–228. In any case, if the alleged increase cannot be directly and causally related to the change of regime itself, it can certainly, and crucially, be attributed to the integration mechanism and the cultural change intervened under the democratic regimes. For this interpretation, see Lavagna, Argentina, Brasil, Mercosur. Schmitter, “Change in Regime Type and Progress in International Relations,” p. 104. Ibid., p. 108. Steves, “Regional Cooperation and Democratic Consolidation in the Southern Cone of Latin America.” Ibid., p. 76. Ibid., p. 83. Mario Sznajder, 1996, “Transition in South America: Models of Limited Democracy,” Democratization, 3:3, pp. 360–370. Andrew Hurrell, 1995, “Regionalism in Theoretical Perspective,” in Louise Fawcett and Andrew Hurrell (eds), Regionalism in World Politics, Oxford University Press, New York, pp. 37–73. Ibid., p. 42. Ibid., p. 43. Walter Carlsnaes, 2002 “Foreign Policy,” in Walter Carlsnaes, Thomas Risse, and B.A. Simmons (eds), Handbook of International Relations, Sage, London, pp. 331–349. Ibid., p. 341. Martin Hollis and Steve Smith, 1990, Explaining and Understanding International Relations, Clarendon Press, Oxford, p. 74. For a milestone example of this kind of approach, see Philip Zelikow and Condoleezza Rice, 1995, Germany Unified and Europe Transformed, Harvard University Press, Cambridge MA. Diplomatic documents were mainly sourced from the archives of the Brazilian Foreign Ministry, Itamaraty, and the Brazilian Federal Congress in Brasília. Also useful was the oral history archive at the Getúlio Vargas Foundation in Rio de Janeiro. Jorge Campbell, interview with the author, Buenos Aires, February 24, 2003. Alberto Ferrari Etcheberry, interview with the author, Buenos Aires, March 28, 2003; Samuel Pinheiro Guimarães, interview with the author, Brasília, May 22, 2003. Roberto Russell, interview with the author, Buenos Aires, February 20, 2003; Ferrari Etcheberry, interview. Over sixty interviews were conducted with key Argentine and Brazilian politicians, diplomats, entrepreneurs, and academics. To make the interviewees more comfortable and open to dialogue, most were conducted in the native language of the respondents. Translations are my own and all the recorded material is available.

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NOTES

34. 35.

36. 37.

Interviews were conducted according to a semi-structured scheme of questions so to allow the interviewees to speak freely while at the same time driving discussion along a defined track. Almost all the interviewees took direct part in the events narrated here, and all closely followed the process. The respondents were chosen according to their professional profile and their direct involvement in the issues under analysis; thus they can be regarded as representative of the Argentine and Brazilian political elites directly engaged in the regionalization process. Consistent concepts, views, and perceptions were expressed by respondents belonging to the same (or homologous) institutions or social and political circles in the two countries, and many perceptions, although with variations in degree and intensity, were shared across the border. The consistency and therefore reliability of the oral material collected was very significant. Minor discrepancies on specific places, dates, or people occasionally occurred, but oral history is significantly more concerned with meaning than with events as such. The reader can find the full list of interviews, including a concise profile of the respondents, in the dramatis personae in appendix three. This, together with the charts of appendices one and two, serves as a guide to follow the historical narration and its possible interpretations. Graham Allison and Philip Zelikow, 1999, The Essence of Decision. Explaining the Cuban Missile Crisis, Longman, New York, p. 312. Ronald J. Grele, 1998, “Movement without Aim: Methodological and Theoretical Problems in Oral History,” in Robert Perks and Alistair Thomson (eds), The Oral History Reader, Routledge, London and New York, pp. 38–52, 41. Alessandro Portelli, 1998, “What Makes Oral History Different,” in Perks and Thomson, The Oral History Reader, pp. 63–74, 68. Judith Goldstein and Robert O. Keohane, 1993, “Ideas and Foreign Policy: An Analytical Framework,” in Judith Goldstein and Robert O. Keohane (eds), Ideas and Foreign Policy. Beliefs, Institutions, and Political Change, Cornell University Press, Ithaca NY and London, pp. 3–30.

Chapter 1 1. Amado Luiz Cervo, 2001, Relações Internacionais da America Latina. Velhos e Novos Paradigmas, IBRI, Brasília; Luiz Alberto Moniz Bandeira, 2003, Brasil, Argentina, Estados Unidos. Conflito e Integração na America do Sul. Da Tripliçe Aliança ao Mercosul, Revan Editora, Rio de Janeiro. 2. Interview with Celso Lafer. 3. Moniz Bandeira, Brasil, Argentina, Estados Unidos. 4. Félix Peña, 2003, “Does Mercosur Have a Future?” Provided directly by the author, no publication details, p. 5.

NOTES

213

5. Pierre Renouvin and Jean-Baptiste Duroselle, 1968, Introduction to the History of International Relations, Pall Mall Press. 6. Ibid., p. v. 7. Lanús, Juan Archibaldo, 1984, De Chapultepec al Beagle. Política Exterior Argentina: 1945–1980, EMECE Editores, Buenos Aires. 8. Cervo, Relações Internacionais da America Latina. 9. Enrique Peltzer, 1996, “La Política Exterior del Gobierno Onganía. 1966–1970,” in Silvia Ruth Jalabe (ed.), La Política Exterior Argentina y sus Protagonistas. 1880–1995, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 205–218. 10. Pedro Motta Pinto Coelho, 2000, “Observações sobre a Visão Argentina da Política Internacional de 1945 até Hoje,” in Samuel Pinheiro Guimarães (ed.), Argentina, Visões Brasileiras, IPRICAPES, Brasília, pp. 89–208. 11. Moniz Bandeira, Brasil, Argentina, Estados Unidos. 12. Motta Pinto Coelho, “Observações sobre a Visão Argentina da Política Internacional de 1945 até Hoje.” 13. Moniz Bandeira, Brasil, Argentina, Estados Unidos. 14. Motta Pinto Coelho, “Observações sobre a Visão Argentina da Política Internacional de 1945 até Hoje”; Julio C. Carasales, 1996, “Política Exterior del Gobierno Argentino, 1973–1976,” in Silvia Ruth Jalabe (ed.), La Política Exterior Argentina y sus Protagonistas. 1880–1995, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 247–258. 15. Moniz Bandeira, Brasil, Argentina, Estados Unidos. 16. Mário Gibson Barboza, 1992, Na Diplomacia o Traço Todo da Vida, Record, Rio de Janeiro. 17. Cervo, Relações Internacionais da America Latina, p. 245. The Peronist administrations between 1973 and 1976 included the governments of Campora, Perón himself, and Maria Estela Martinez de Perón 18. Moniz Bandeira, Brasil, Argentina, Estados Unidos. 19. Oscar Camilión, 1999, Memorias Políticas. De Frondizi a Menem (1956–1996), Grupo Editorial Planeta, Buenos Aires. 20. Oscar Camilión, interview with the author, Buenos Aires, March 25, 2003. 21. The Argentine Foreign Ministry, after the name of the premises where it was historically located in Buenos Aires. 22. Celso Lafer, 1987, “A Bacia do Prata nas Relações Internacionais: Argentina e Brasil sob o signo da Cooperação,” in Centro Brasileiro de Documentação e Estudos da Bacia do Prata, Bacia da Prata. Desenvolvimento e Relações Internacionais, Editora da Universidade Federal do Rio Grande do Sul, Porto Alegre, pp. 32–41. 23. Amado Luiz Cervo, and Clodoaldo Bueno, 2002, História da Política Exterior do Brasil, Editora UNB, Brasília. 24. Matias Spektor, 2002, “O Brasil e a Argentina entre a Cordialidade Oficial e o Profeto de Integração: A Política Externa do Governo

214

25.

26.

27.

28. 29. 30. 31. 32. 33.

34.

35. 36. 37. 38.

39. 40.

NOTES

de Ernesto Geisel (1974–1979),” Revista Brasileira de Política Internacional, 45:1, pp. 117–145. Luiz Augusto Souto Maior, 1996, “O Pragmatismo Responsavel,” in José Augusto Guilhon de Albuquerque (ed.), Sessenta Anos de Política Externa Brasileira (1930–1990), Vol. I, Cultura Editores Asociados, São Paulo, pp. 337–360. These included trade, the construction of a bridge over the river Iguaçu, maritime transportation, technical cooperation, fishery, wheat supply, as well as the use of the rivers Uruguay and Paraná. Rosendo Fraga, 1999, “La Experiencia Histórica en Brasil y Argentina desde 1966 hasta 1983: Comienzo de la Convergencia,” in José Maria Lladós and Samuel Pinheiro Guimarães (eds), Pespectivas. Brasily Argentina, IPRI-CARI, Brasília and Buenos Aires, pp. 367– 385, 373. Ibid.; Motta Pinto Coelho, “Observações sobre a Visão Argentina da Política Internacional de 1945 até Hoje.” Spektor, “O Brasil e a Argentina entre a Cordialidade Oficial e o Profeto de Integração.” Ibid.; Moniz Bandeira, Brasil, Argentina, Estados Unidos. Camilión, Memorias Politicas. Today, the Corpus plant is still not operational. Spektor, “O Brasil e a Argentina entre a Cordialidade Oficial e o Profeto de Integração.” Sonia de Camargo, 1987, “Política Interna e Relações Internacionais na Bacia do Prata,” in Centro Brasileiro de Documentação e Estudos da Bacia do Prata, Bacia da Prata. Desenvolvimento e Relações Internacionais, Editora da Universidade Federal do Rio Grande do Sul, Porto Alegre, pp. 21–31, 21. Cervo and Bueno, História da Política Exterior do Brasil; Camargo, “Política Interna e Relações Internacionais na Bacia do Prata,” pp. 21–31. President Campos Sales crossed the river Plate in 1902, and Getúlio Vargas traveled to Buenos Aires in 1935. Sergio França Danese, 1999, Diplomacia Presidencial: História e Crítica, Topbooks, Rio de Janeiro. Ramiro Saraiva Guerriero, 1992, Lembranças de um Empregado do Itamaraty, Editora Siciliano, São Paulo, p. 98. Monica Hirst and Héctor Eduardo Bocco, 1992, “Appendix: Nuclear Cooperation in the Context of the Programme for ArgentineBrazilian Integration and Cooperation,” in Paul L. Leventhal and Sharon Tanzer (eds), Averting a Latin American Nuclear Arms Race, MacMillan and Nuclear Control Institute, Basingstoke NH and London, pp. 214–229. Fraga, “La Experiencia Histórica en Brasil y Argentina desde 1966 hasta 1983.” Felix Peña, interview with the author, Buenos Aires, February 25, 2003.

NOTES

215

41. José Botafogo Gonçalves, interview with the author, Buenos Aires, March 17, 2003 . 42. Peña, interview. 43. Botafogo, interview. 44. Peña, interview. 45. Celso Lafer, 1984, O Brasil e a Crise Mundial, Editora Perspectiva, São Paulo; Marcelo Vieira Walsh, 1995, “A Atuação de Diplomacia Brasileira frente a Crise das Malvinas/Falklands—1982,” in Lubisco Brancato, Sandra Maria, and Albene Miriam F. Menezes (eds), Anais do Simposio O Cone Sul no Contexto Internacional, EDIPUCRS, Porto Alegre, pp. 251–253. 46. Britain entrusted Switzerland with the protection of its interests in Argentina. 47. Cervo, Relações Internacionais da America Latina, p. 271. 48. Moniz Bandeira, Brasil, Argentina, Estados Unidos. 49. Lafer, O Brasil e a Crise Mundial. 50. Moniz Bandeira, Brasil, Argentina, Estados Unidos; Luiz Alberto Moniz Bandiera, 1993, Estrado Nacional e Política Internacional na America Latina. O Continente nas Relações Argentina-Brasil, Editora Ensaio, São Paulo. 51. Saraiva Guerreiro, Lembranças de um Empregado do Itamaraty. 52. Ibid., p. 112. 53. Spektor, “O Brasil e a Argentina entre a Cordialidade Oficial e o Profeto de Integração. 54. Carlos Washington Pastor, 1996, “Chile: La Guerra o la Paz, 1978–1981,” in Silvia Ruth Jalabe (ed.), La Política Exterior Argentina y sus Protagonistas. 1880–1995, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 259–308. 55. Fraga, “La Experiencia Histórica en Brasil y Argentina desde 1966 hasta 1983.” 56. Camilión, interview; Ramiro Saraiva Guerriero, interview with the author, Rio de Janeiro, June 10, 2003.

Chapter 2 1. Carlos Washington Pastor, 1996, “Chile: La Guerra o la Paz, 1978– 1981,” in Silvia Ruth Jalabe (ed.), La Política Exterior Argentina y sus Protagonistas. 1880–1995, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 259–308; Williams da Silva Gonçalves, 1995, Presentation at the workshop “Políticas Exteriores: Hacia una Política Común,” in Fundación Konrad Adenauer, Argentina y Brasil en el Mercosur. Políticas Comunes y Alianzas Regionales, Grupo Editor Latinoamericano, Buenos Aires, pp. 28–33. 2. Oscar Camilión, interview with the author, Buenos Aires, March 25, 2003; Ramiro Saraiva Guerreiro, interview with the author, Rio de Janeiro, June 10, 2003.

216

NOTES

3. Rubens Antonio Barbosa, 1991, America Latina em Pespectiva: A Integração Regional da Retorica à Realidade, Edições Aduaneiras, São Paulo; Monica Hirst, 1999a, “Brasil-Argentina a la Sombra del Futuro,” in José Maria Lladós and Samuel Pinheiro Guimarães (eds), Pespectivas. Brasily Argentina, IPRI-CARI, Brasília and Buenos Aires, pp. 387–399; Roberto Russell, 1989, Cambio de Régimen y Política Exterior: El Caso de Argentina, 1976–1989, FLACSO, Documentos e Informes de Investigación Nr 88, Buenos Aires. 4. Rosendo Fraga, 1999, “La Experiencia Histórica en Brasil y Argentina desde 1966 hasta 1983: Cominenzo de la Convergencia,” in Lladós and Guimarães, Pespectivas, pp. 367–385. 5. Roberto Lavagna, 1998, Argentina, Brasil, Mercosur. Una Decisión Estrategica, Ciudad Argentina, Buenos Aires. 6. Oscar A. Mendoza, 1989, “El Programa de Integración y Cooperación Argentino-Brasileño. Algunos Criterios para su Evaluación,” in Raúl Bernal-Meza (ed.), Política, Integración y Comercio Internacional en el Cono Sur Latinoamericano, CERIAL and Universidad Nacional de Cuyo, Mendoza, pp. 251–313. 7. Ibid. 8. Monica Hirst, 1998, “Políticas de Seguridad, Democratización e Integración Regional en el Cono Sur,” in Jorge Dominguez (ed.), Seguridad Internacional, Paz y Democracia en el Cono Sur, FLACSO Chile, Nuñoa, pp. 159–187. 9. Thomas Skidmore, 1999, Brazil. Five Centuries of Change, Oxford University Press, Oxford. 10. Ibid. 11. Given the variety of sources and figures I use the data gathered at the Brazilian Foreign Ministry during interviews. Pedro Bretas, interview with the author, Brasília, May 29, 2003; Luiz Augusto Castro Neves, interview with the author, Brasília, May 29, 2003. 12. Raúl Alconada Sempé, 1996, “Democracia y Política Exterior,” in Silvia Ruth Jalabe (ed.), La Política Exterior Argentina y sus Protagonistas. 1880–1995, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 345–356. 13. Roberto Russell, 1995, Presentation at the workshop “Políticas Exteriores: Hacia una Política Común,” in Fundación Konrad Adenauer, Argentina y Brasil en el Mercosur. Políticas Comunes y Alianzas Regionales, Grupo Editor Latinoamericano, Buenos Aires, pp. 34–40. 14. Patricio Silva, 1989, “Democratization and Foreign Policy: the Cases of Argentina and Brazil,” in Benno F. Galjart and Patricio Silva (eds), Democratization and the State in the Southern Cone, CEDLA, Amsterdam, pp. 104–123. 15. Dante Mario Caputo, 1989, Informe. Linea Conceptual y Hechos Fundamentales de la Política Exterior del Radicalismo (1983–1989), Paper produced by Minister Caputo for the Instituto del Servicio Exterior de la Nación, Buenos Aires.

NOTES

217

16. Alfonsín quoted in Mendoza, “El Programa de Integración y Cooperación Argentino-Brasileño,” p. 274. 17. Lavagna, Argentina, Brasil, Mercosur. 18. Caputo, Informe. 19. Russell, “Políticas Exteriores: Hacia una Política Común.” 20. Carlos Bruno, interview with the author, Buenos Aires, March 11, 2003. 21. Ramiro Saraiva Guerriero, 1992, Lembranças de um Empregado do Itamaraty, Editora Siciliano, São Paulo; Saraiva Guerreiro, interview. 22. The Contadora Group, named after an island off Panama where initial meetings took place, was composed of Colombia, Mexico, Panama, and Venezuela, and aimed at a peaceful solution of the conflict in Central America. The Support Group gathered Argentina, Brazil, Peru, and Uruguay in order to sustain the peace efforts in the region. 23. Olavo Egydio Setubal, 1986, Diplomacia para Resultados, Ministério das Relações Exteriores, Brasília. 24. Ibid., p. 5. 25. Tancredo Neves fell gravely ill just a few days before his inauguration. Vice president Sarney was immediately appointed president and took office on March 15, 1985. Eventually, Neves died on April 21, 1985. 26. Lavagna, Argentina, Brasil, Mercosur; Andrés Cisneros and Carlos Piñeiro Iñiguez, 2002, Del ABC al Mercosur. La Integración Latinoamericana en la Doctrina y Praxis del Peronismo, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires. 27. Brazil signed, among others, the UN Covenant on Civil and Political Rights; the Convention against Torture; the UN Covenant on Economic, Social and Cultural Rights. 28. Maria Regina Soares de Lima, 1988, “La Crisis Centroamericana y Brasil: Política Reactiva y Solidaridad Discreta,” in Cristina Eguizábal (ed.), América Latina y la Crisis Centroamericana: En Busca de una Solución Regional, Grupo Editor Latinoamericano, Buenos Aires, pp. 223–236. 29. Wayne A. Selcher, 1985, “Brazilian-Argentine Relations in the 1980s: From Wary Rivalry to Friendly Competition,” Journal of Interamerican Studies and World Affairs, 27:2, pp. 25–53; Sonia de Camargo, 1985, “Os Novos Amigos: Brasil e Argentina Atravessam a Ponte,” Contexto Internacional, 1:2, July–December, pp. 63–80. 30. Cisneros and Piñeiro Iñiguez, Del ABC al Mercosur, p.478. 31. Mendoza, “El Programa de Integración y Cooperación ArgentinoBrasileño,” p. 285. 32. International Monetary Fund, Direction of Trade Yearbooks, 1980 and 1984, quoted in Selcher, “Brazilian-Argentine Relations in the 1980s,” p. 38. 33. Ibid., p. 39.

218

NOTES

34. Francisco Thompson Flores Neto, 2000, “Integração e Cooperação Brasil-Argentina,” in José Augusto Guilhon de Albuquerque (ed.), Sessenta Anos de Política Externa Brasileira (1930–1990), Vol. III, Nucleo de Pesquisa em Relações Internacionais da USP, São Paulo, pp. 175–186, 178. 35. Acta de Buenos Aires, July 29, 1986. 36. Bruno, interview. 37. Jorge Campbell, interview with the author, Buenos Aires, February 24, 2003; José Tavares de Araujo, interview with the author, Brasília, May 19, 2003. 38. Amado Luiz Cervo, 1995, Presentation at the workshop “Políticas Exteriores: Hacia una Política Común,” in Fundación Konrad Adenauer, Argentina y Brasil en el Mercosur. Políticas Comunes y Alianzas Regionales, Grupo Editor Latinoamericano, Buenos Aires, pp. 21–27; Hirst, “Brasil-Argentina a la Sombra del Futuro”; Luiz Alberto Moniz Bandeira, 2003, Brasil, Argentina, Estados Unidos. Conflito e Integração na America do Sul. Da Tripliçe Aliança ao Mercosul, Revan Editora, Rio de Janeiro. 39. Tavares de Araujo, interview. 40. Celso Lafer, interview with the author, São Paulo, June 2, 2003. 41. Paulo Tarso Flecha de Lima, interview with the author, Brasília, May 13, 2003. 42. Bruno, interview. 43. La Nación, December 4, 1986 44. La Nación, July 28, 1986 45. Rosembaum quoted in Lavagna, Argentina, Brasil, Mercosur, p. 148. 46. Caputo, Informe. 47. Roberto Lavagna, interview with the author, Buenos Aires, March 27, 2003. 48. João Hermann Neto, interview with the author, Brasília, May 29, 2003. 49. The seat of the Brazilian government. 50. Campbell, interview; Bruno, interview; Alberto Ferrari Etcheberry, interview with the author, Buenos Aires, March 28, 2003. 51. Dominique Fournier, 1996, The International Dimension of Democratic Transitions: Argentina and Chile, DPhil thesis, University of Oxford, unpublished, p. 102. 52. Ramiro Saraiva Guerriero, 1992, Lembranças de um Empregado do Itamaraty, Editora Siciliano, São Paulo, p. 114. 53. Bruno, interview. 54. Sábato, quoted in Fournier, The International Dimension of Democratic Transitions, p. 102. 55. Telegramme No. 14.448, of August 28, 1986, sent by the Ministry of Foreign Relations to the Brazilian diplomatic missions in Latin America and to other nine key embassies. Itamaraty Archive, Brasília DF.

NOTES

219

56. Telegram No. 212, of May 11, 1984 sent by Foreign Minister Ramiro Saraiva Guerreiro to Minister of Planning Antonio Delfim Neto. Itamaraty Archive, Brasília DF. 57. Rubens Ricupero, interview with the author, telephone, September 7, 2004. 58. Ibid. 59. Sábato quoted in Fournier, The International Dimension of Democratic Transitions, p. 102. 60. La Nación, February 7, 1985. 61. Ibid. 62. Ibid. 63. Ibid. 64. Ricupero, interview. 65. Danese, Sergio França, 1999, Diplomacia Presidencial: História e Crítica, Topbooks, Rio de Janeiro. 66. Ferrari Etcheberry, interview. 67. Tavares de Araujo, interview. 68. Ricupero, interview. 69. Sarney quoted in Danese, Diplomacia Presidencial, p. 376. 70. Flecha de Lima, interview; Castro Neves, interview. 71. Ricupero, interview; Raúl Bernal-Meza, interview with the author, Brasília, May 6, 2003; Estevão Rezende Martins, interview, Brasília, May 9, 2003. 72. Flecha de Lima, interview. 73. The PMDB was the major opposition party. 74. José Sarney had been a titular member of the Directorate of the Social Democratic Party (PDS), the ruling party under the military, since 1980, and joined the opposition only a few months before the presidential elections. This was in sharp contrast with Neves’ proven record as a democrat. 75. José Botafogo Gonçalves, interview with the author, Buenos Aires, March 17, 2003. 76. Ferrari Etcheberry, interview. 77. Bruno, interview. 78. La Nación, May 20, 1985 79. Olavo Setubal, interview with the author, São Paulo, June 03, 2003. 80. Ricupero, interview. 81. Ibid. 82. Dante Mario Caputo and Jorge F. Sábato, 1991, “Perspectivas de la Integración Politico-Económica Continental. La Integración de las Democracias Pobres: Oportunidades y Peligros,” Estudios Internacionales, April, 24:94, pp. 194–208, 202. The salience of the event was acknowledged by Minister Setubal too during the interview with the author. 83. La Nación, November 21, 1985. 84. Campbell, interview.

220

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85. Rubens Bayma Denys, interview with the author, Rio de Janeiro, June 9, 2003. 86. José Maria Amaral Oliveira, interview with the author, São Paulo, June 5, 2003. 87. Flecha de Lima, interview. 88. Castro Neves, interview. 89. Ricupero, interview; Bayma Denys, interview. 90. La Nación, October 15, 1999, quoted in Jorge, Ricardo Rozemberg Campbell and Gustavo Svarzman, 1999, “Quince Años de Integración, Muchos Ruidos y Muchas Nueces,” in Jorge Campbell (ed.), Mercosur. Entre la Realidad y la Utopia, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 39–228, 64. 91. Michael Barletta, 1999, “Democratic Security and Diversionary Peace: Nuclear Confidence-Building in Argentina and Brazil,” National Security Studies Quarterly, Summer, pp. 19–38, 22. 92. The account of the incorporation of Roberto Lavagna and the peronist team in the government is largely drawn upon Lavagna, interview; Campbell, interview; Bruno, interview; and Ferrari Etcheberry, interview. 93. Albino Gomez, interview with the author, Buenos Aires, February 25, 2003; Ferrari Etcheberry, interview. 94. Campbell, interview; Ferrari Etcheberry, interview; Bruno, interview. 95. Roberto Muller Filho, interview with the author, São Paulo, June 3, 2003. 96. Informed by the ideas of CEPAL, the UN Economic Commission for Latin America that inspired Latin American integration in the 1960s. 97. Luiz Gonzaga Belluzzo, interview with the author, São Paulo, June 4, 2003. 98. Flecha de Lima, interview; Rezende Martins, interview; Ferrari Etcheberry, interview. 99. Lavagna, interview. 100. Tavares de Araujo, interview. 101. Samuel Pinheiro Guimarães, interview with the author, Brasília, May 22, 2003. 102. Tavares de Araujo, interview. 103. Flecha de Lima, interview. 104. Pinheiro Guimarães, interview. 105. Hirst, “Brasil-Argentina a la Sombra del Futuro”; Campbell, Mercosur. 106. Jeffrey Cason, 2000, “Democracy Looks South: Mercosul and the Politics of Brazilian Trade Strategy,” in Peter R. Kingstone and Timothy J. Power (eds), Democratic Brazil. Actors, Institutions, and Processes, University of Pittsburgh Press, Pittsburgh, pp. 204– 216, 207.

NOTES

221

107. Silva, “Democratization and Foreign Policy,” p. 119. 108. The twelve original protocols included: capital goods, wheat, food supplies, trade expansion, binational enterprises, financial affairs, investments funds, energy, biotechnology, economic studies, assistance in case of nuclear emergency or incident, and aerial cooperation.

Chapter 3 1. Report sent by the Brazilian Ambassador in Buenos Aires João Hermes Pereira de Araujo to the Brazilian Secretariat of State to inform about the reactions to the PICE in Argentina. Document No. 307 of August 26, 1986. Itamaraty Archive, Brasília DF. 2. La Nación, July 31, 1986. 3. La Nación, December 9, 1986. 4. La Nación, December 11, 1986. 5. The project of moving the Argentine capital from Buenos Aires to Viedma, however, never materialized. 6. Jorge Campbell, interview with the author, Buenos Aires, February 24, 2003. 7. Roberto Lavagna, interview with the author, Buenos Aires, March 27, 2003. 8. La Nación, July 18, 1987. 9. Rubens Ricupero, interview with the author, telephone, September 7, 2004; Paulo Tarso Flecha de Lima, interview with the author, Brasília, May 13, 2003; Alberto Ferrari Etcheberry, interview with the author, Buenos Aires, March 28, 2003. 10. Flecha de Lima, interview. 11. Rubens Bayma Denys, interview with the author, Rio de Janeiro, June 9, 2003. 12. Samuel Pinheiro Guimarães, interview with the author, Brasília, May 22, 2003; Ferrari Etcheberry, interview. 13. Pinheiro Guimarães, interview. 14. Ricupero, interview. 15. La Nación, April 7, 1988. 16. Ricupero, interview; Celso Lafer, interview with the author, São Paulo, June 2, 2006. 17. Roberto Lavagna, 1998, Argentina, Brasil, Mercosur. Una Decisión Estrategica, Ciudad Argentina, Buenos Aires. 18. La Nación, July 13, 1987. 19. Jorge Campbell, Ricardo Rozemberg, and Gustavo Svarzman, 1999, “Quince Años de Integración, Muchos Ruidos y Muchas Nueces,” in Jorge Campbell (ed.), Mercosur. Entre la Realidad y la Utopia, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 39–228; Sonia de Camargo, 1992, A Integração do Cone Sul: 1960–1990, IRI Textos, Pontificia Universidade Católica do Rio de Janeiro, September, Nr 13, Rio de Janeiro.

222 20. 21. 22. 23.

24. 25. 26. 27. 28. 29. 30.

31. 32.

33.

34. 35.

36.

37.

NOTES

Treaty of Integration, Cooperation and Development, article 1. Ibid., article 3. Ibid., article 5. Pinheiro Guimarães, interview; Beatriz Nofal, interview with the author, Buenos Aires, March 25, 2003. See also Campbell, Mercosur; and Lavagna, Argentina, Brasil, Mercosur. Nofal, interview. Francisco Thompson Flores, interview with the author, Geneva, December 8, 2004. Pinheiro Guimarães, interview. Nofal, interview. John Lewis Gaddis, 1987, The Long Peace: Inquiries into the History of the Cold War, Oxford University Press, New York. Lavagna, Argentina, Brasil, Mercosur; Campbell, Mercosur. John Williamson, 2002, Did the Washington Consensus Fail?, Outline of remarks at the Center for Strategic and International Studies, Institute for International Economics, Washington DC, November, available online http://www.iie.com/publications/papers/williamson1102.htm. Initially, Menem was expected to take office in December the same year, but the gravity of the economic crisis accelerated the takeover. Correspondence between the governor of the Province of La Rioja Carlos Menem and President José Sarney. Documents No. 1435 of September 27, 1988, and No. 1453 of September 30, 1988. Itamaraty Archive, Brasília DF. Luiz Alberto Moniz Bandeira, 2003, Brasil, Argentina, Estados Unidos. Conflito e Integração na America do Sul. Da Tripliçe Aliança ao Mercosul, Revan Editora, Rio de Janeiro; Andrés Cisneros and Carlos Piñeiro Iñiguez, 2002, Del ABC al Mercosur. La Integración Latinoamericana en la Doctrina y Praxis del Peronismo, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires. Oscar Camilión, 1999, Memorias Políticas. De Frondizi a Menem (1956–1996), Grupo Editorial Planeta, Buenos Aires, p. 313. Cavallo in FLACSO, 1989, “Tramos Seleccionados de Diversas Entrevistas Realizadas al Canciller Domingo Cavallo,” America Latina Internacional, 6:21, July–September, pp. 275–278, 276. Camilión, Memorias Politicas; Domingo Felipe Cavallo, 1996, “La Inserción de la Argentina en el Primer Mundo,” in Silvia Ruth Jalabe (ed.), La Política Exterior Argentina y sus Protagonistas. 1880–1995, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 357–378. Roberto Russell, 1995, Presentation at the workshop “Políticas Exteriores: Hacia una Política Común,” in Fundación Konrad Adenauer, Argentina y Brasil en el Mercosur. Políticas Comunes y Alianzas Regionales, Grupo Editor Latinoamericano, Buenos Aires, pp. 34–40; Cisneros and Iñíguez, Del ABC al Mercosur.

NOTES

223

38. Carlos Escudé, 1997, Foreign Policy Theory in Menem’s Argentina, University Press of Florida, Gainesville. 39. Beatriz Carolina Crisorio, 1995, “Las Relaciones de Argentina con los Bloques Económicos Regionales en la Década del ‘90 y las Perspectivas hacia el Próximo Milenio,” in Lubisco Brancato, Sandra Maria, and Albene Miriam F. Menezes (eds.), Anais do Simposio O Cone Sul no Contexto Internacional, EDIPUCRS, Porto Alegre, pp. 77–97. 40. Moniz Bandeira, Brasil, Argentina, Estados Unidos. 41. Ibid. 42. Raúl Bernal-Meza, 2002, “A Política Exterior do Brasil: 1990–2002,” Revista Brasileira de Política Internacional, 45:1, pp. 36–71. 43. Cervo, Amado Luiz, and Clodoaldo Bueno, 2002, História da Política Exterior do Brasil, Editora UNB, Brasília. 44. Bernal-Meza, “A Política Exterior do Brasil: 1990–2002.” 45. Ibid. 46. Moniz Bandeira, Brasil, Argentina, Estados Unidos. 47. Sergio França Danese, 1999, Diplomacia Presidencial: História e Crítica, Topbooks, Rio de Janeiro. In 1992, the Brazilian Congress impeached President Collor de Mello for his direct involvement in the corruption scandals that invested his administration. 48. Félix Peña, interview with the author, Buenos Aires, February 25, 2003; Luiz Felipe Lampreia, interview with the author, Rio de Janeiro, June 11, 2003. 49. Letter by Carlos Menem to President José Sarney of August 28, 1988. Reproduced in document No. 1453 of September 30, 1988. Itamaraty Archive, Brasília DF. 50. Ibid. 51. Ibid. 52. Letter by President José Sarney to Governor Carlos Menem, no date. Reproduced in document No. 1435 of September 27, 1988. Itamaraty Archive, Brasília DF. 53. Alberto Kohan, interview with the author, Buenos Aires, March 14, 2003. 54. Campbell, Mercosur. 55. See ibid. 56. La Nación, August 24, 1989. 57. Cavallo in FLACSO, “Tramos Seleccionados de Diversas Entrevistas Realizadas al Canciller Domingo Cavallo.” 58. La Nación, June 16, 1990. 59. La Nación, June 20, 1990. 60. Acta de Buenos Aires, July 6, 1990. Preamble, paragraphs 3 and 4. 61. Campbell, Mercosur. 62. Lavagna, interview. 63. La Nación, July 11, 1990. 64. Camargo, A Integração do Cone Sul: 1960–1990.

224

NOTES

65. La Nación, July 18, 1990. 66. Document No. “unclear-00818” of August 31, 1989. Itamaraty Archive, Brasília DF. 67. Camargo, A Integração do Cone Sul: 1960–1990. 68. Intervention of Foreign Minister Francisco Rezek at the External Relations Committee of the Chamber of Representatives, December 5, 1990. Caixa 37, Meeting No. 138, Archive of the Chamber of Representatives, Brasília DF. 69. Communication of Minister Francisco Rezek, concerning his meeting with Argentine Foreign Minister Guido Di Tella, to the Brazilian Embassies to Argentina, Uruguay, Paraguay and LAIA. Document No. 18.239 of March 14, 1991. Itamaraty Archive, Brasília DF. 70. Minute of the quadripartite meeting of Brasília, sent by the Brazilian Foreign Ministry to its Embassy to LAIA. Document No. Of0200100364 of October 4, 1990. Itamaraty Archive, Brasília DF. 71. Peña, interview. 72. Ibid. 73. Campbell, Mercosur. 74. Peña, interview. 75. Cavallo, “La Inserción de la Argentina en el Primer Mundo.” 76. Cavallo in FLACSO, “Tramos Seleccionados de Diversas Entrevistas Realizadas al Canciller Domingo Cavallo.” 77. Julio C. Carasales, 1992, “Presentation: Goals of Argentine-Brazilian Nuclear Cooperation,” in Paul L. Leventhal and Sharon Tanzer (eds), Averting a Latin American Nuclear Arms Race, MacMillan and Nuclear Control Institute, Basingstoke NH and London, pp. 47–61. 78. Jorge Castro, interview with the author, Buenos Aires, February 20, 2003. 79. Peña, interview. 80. Camilión, Memorias Politicas. 81. Kohan, interview; see also Camilión, Memorias Politicas. 82. Danese, Diplomacia Presidencial. 83. Ibid. 84. Lafer, interview. Celso Lafer replaced Francisco Rezek as foreign minister on April 13, 1992, and remained in charge until the dismissal of President Collor by impeachment in October 1992. 85. Campbell, interview; Castro, interview; Andrés Cisneros, interview with the author, Buenos Aires, February 21, 2003. 86. Castro, interview; Kohan, interview; Cisneros, interview. 87. Lavagna, interview. 88. Lafer, interview. 89. Thompson Flores, interview. 90. Hirst, Monica, 1998, “Políticas de Seguridad, Democratización e Integración Regional en el Cono Sur,” in Dominguez, Jorge (Ed.), Seguridad Internacional, Paz y Democracia en el Cono Sur, FLACSO Chile, Nuñoa, pp. 159–187.

NOTES

225

91. Kohan, interview. 92. Hirst, “Políticas de Seguridad, Democratización e Integración Regional en el Cono Sur.” 93. Bayma Denys, interview. 94. Lavagna, Argentina, Brasil, Mercosur, p. 182. 95. Nofal, interview. 96. Alfredo Aldaco, and Guillermo J. Hunt, 1991, “El Mercado Común del Sur,” in Felipe A. De la Balze, El Comercio Exterior Argentino en la Década de 1990, Ediciones Manantial, Buenos Aires, pp. 370– 381; Camargo, A Integração do Cone Sul: 1960–1990. 97. Campbell, Mercosur. 98. Nofal, interview, and Flecha de Lima, interview, respectively. 99. Lavagna, Argentina, Brasil, Mercosur. 100. Campbell, interview. 101. Félix Peña, 1995, La Construcción del Mercosur. Análisis de un Caso de Metodologia de Integración entre Naciones Soberanas, draft chapter for a book, unpublished, p. 7. 102. La Nación, August 23, 1989; La Nación, July 7, 1990; Ambito Financiero, MArch 27, 1991.

Chapter 4 1. See, respectively, Mario Sznajder, 1996, “Transition in South America: Models of Limited Democracy,” Democratization, 3:3, pp. 360–370; Guillermo O’Donnell, 1994, “Delegative Democracy,” Journal of Democracy, January, 5:1, pp. 55–69; Miguel Centeno and Patricio Silva, 1998, “The Politics of Expertise in Latin America: Introduction,” in Miguel Centeno and Patricio Silva (eds), The Politics of Expertise in Latin America, Macmillan Press, Basingstoke, pp. 1–12. 2. Giovanni Sartori, 1987, The Theory of Democracy Revisited, Chatam House Publishers, Chatam, New Jersey, p. 3. 3. Ibid., p. 206. 4. Norberto Bobbio, 1990, Liberalism and Democracy, Verso, London, p. 38. 5. See, for instance, Guillermo O’Donnell, 1998, Polyarchies and the (Un)Rule of Law in Latin America, Paper presented at the Meeting of the Latin American Studies Association, Chicago, September; Guillermo O’Donnell, 1998, “Poverty and Inequality in Latin America: Some Political Reflections,” in Victor E. Tokman and Guillermo O’Donnell (eds), Poverty and Inequality in Latin America, Issues and new Challenges, University of Notre Dame Press, Notre Dame, Indiana, pp. 49–71; Adam Przeworski, Michael E. Alvarez, José Antonio Cheibub, and Fernando Limongi, 2000, Democracy and Development: Political Institutions and Well-Being in the World, 1950–1990, Cambridge University Press, Cambridge;

226

NOTES

6. 7. 8.

9. 10. 11. 12.

13. 14. 15.

16. 17.

18. 19.

20.

21.

22.

Amartya Sen, 2003, “Freedom Favours Development,” in Robert A. Dahl, Ian Shapiro, and José Antonio Cheibub (eds), The Democracy Sourcebook, The MIT Press, Cambridge MA and London, pp. 444–446. Sznajder, “Transition in South America: Models of Limited Democracy,” p. 360. Ibid., p. 361. O’Donnell’s delegative democracy can be viewed as a subcategory, or an example, of limited democracy. However, the latter term was coined later and is specific to Mario Sznajder’s model. O’Donnell, “Delegative Democracy,” p. 55. Ibid, p. 60. Ibid. Guillermo O’Donnell, 1973, Modernization and BureaucraticAuthoritarianism: Studies in South American Politics, University of California Press, Berkeley. O’Donnell, Polyarchies and the (Un)Rule of Law in Latin America. Centeno and Silva, “The Politics of Expertise in Latin America.” Patricio Silva, 1999, “The New Political Order in Latin America: Towards Technocratic Democracies?,” in Robert N. Gwynne and Cristobal Kay (eds), Latin America Transformed, Arnold, London, pp. 51–65, 60. Centeno and Silva, “The Politics of Expertise in Latin America,” p. 3. Philippe C. Schmitter, 1991, “Change in Regime Type and Progress in International Relations,” in Emanuel Adler and Beverly Crawford (eds), Progress in Postwar International Relations, Columbia University Press, New York, pp. 89–127. Sergio França Danese, 1999, Diplomacia Presidencial: História e Crítica, Topbooks, Rio de Janeiro. Fabiano Santos, 1999, “Democracia y Poder Legislativo en Brasil y en Argentina,” in José Maria Lladós and Samuel Pinheiro Guimarães (eds), Pespectivas. Brasily Argentina, IPRI-CARI, Brasília and Buenos Aires, pp. 47–62. Ana Maria Mustapic and Mariana Llanos, 2000, “El Papel del Congreso Argentino en el Tratamiento del Presupuesto y el Mercosur,” in Gerardo Caetano and Rubén M. Perina (eds), Mercosur y Parlamentos, el Rol de los Congresos en la Democracia y la Integración, Centro Interamericano de Economias Humanas and OAS, Montevideo, pp. 49–74. Juan Vicente Sota, 1997, El Manejo de las Relaciones Exteriores. La Constitución y la Política Exterior, Editorial de Belgrano, Buenos Aires, p. 88. Jorge Campbell, interview with the author, Buenos Aires, February 24, 2003; José Maria Lladós, interview with the author, Buenos Aires, March 14, 2003; Roberto Pons, interview with the author, Buenos Aires, February 17, 2003. See also José Octavio Bordon,

NOTES

23.

24. 25. 26. 27. 28. 29. 30. 31.

32.

33. 34. 35.

36.

37.

38. 39. 40.

227

1999, “El Sistema Presidencial en Argentina y Brasil,” in José Maria Lladós and Samuel Pinheiro Guimarães (eds), Pespectivas. Brasily Argentina, IPRI-CARI, Brasília and Buenos Aires, pp. 29–48. Federico Storani, interview with the author, Buenos Aires, March 27, 2003. Also sharing the same view are Alberto Ferrari Etcheberry, interview with the author, Buenos Aires, March 28, 2003 and Adolfo Gass, 1988, “La Visión de Argentina,” in Monica Hirst (ed.), Argentina-Brasil. El Largo Camino de la Integración, Editorial Legasa, Buenos Aires, pp. 185–188. Storani, interview. Gass, “La Visión de Argentina.” Ferrari Etcheberry, interview. Storani, interview. Ferrari Etcheberry, interview; Storani, interview. Bordon, “El Sistema Presidencial en Argentina y Brasil.” Carlos Bruno, interview with the author, Buenos Aires, March 11, 2003. Diego Guelar wrote an article entitled “Entusiasmo, prevenciones y propuestas,” published in Tiempo Argentino. The article is quoted in communication No. 286 of August 8, 1986, by the Brazilian ambassador to Buenos Aires João Hermes Prereira de Araujo, to Itamaraty General Secretariat. Itamaraty Archive, Brasília DF. Marcos Raijer wrote an article entitled “Integración y frente interno” published in La Razón. The article is quoted in communication No. 305 of August 26, 1986, by the Brazilian ambassador to Buenos Aires João Hermes Prereira de Araujo, to Itamaraty General Secretariat. Itamaraty Archive, Brasília DF. La Nación, November 28, 1988. Decree No. 2246 of June 6, 1997, annex I. Leticia Pinheiro, 2003, “Os Véus da Transparência: Política Externa e Democracia no Brasil,” IRI Textos No. 25, January, Pontificia Universidade Catolica do Rio de Janeiro, p. 5. Constitution of the Federal Republic of Brazil, Article 4. Brazil in fact is neither the first nor the only Latin American country to have “constitutionalized” the integrationist commitment. Peru was the first to introduce such a constitutional provision. Similar norms are present in Uruguay and Venezuela too. Celso Lafer, interview with the author, São Paulo, June 2, 2003; Flecha de Lima, Paulo Tarso, interview with the author, Brasília, May 13, 2003; Sergio Danese, interview with the author, Buenos Aires, February 18, 2003. Flecha de Lima, interview. Hermann Neto, João, interview with the author, Brasília, May 29, 2003. Estevão Rezende Martins, interview with the author, Brasília, May 9, 2003.

228

NOTES

41. José Renato Barcellos Ferriera, 1999, O Papel da Democracia na Integração Brasil-Argentina e o Discurso do Parlamento Brasileiro, 1974–1989, Master thesis, Department of History, University of Brasília, unpublished. 42. Hermann Neto, interview; Rezende Martins, interview. See also Tullo Vigevani, Karina Pasquariello Mariano, and Marcelo Fernandes de Oliveira, 2001, “Democracia e Atores Politicos no Mercosul,” in Gerónimo de Sierra (ed.), Los Rostros del Mercosur, el Dificil Camino de lo Comercial a lo Societal, CLACSO, Buenos Aires, pp. 183–228. 43. Report by MP Arnaldo Prieto on a bill proposing ratification of the 1988 Integration, Cooperation and Development Treaty. External Relations Committee, August 7, 1989. Itamaraty archive, Brasília DF. 44. Intervention of MP Victor Faccioni at the meeting No. 237/89 of August 15, 1989, of the Foreign Relations Committee of the Camber of Representatives. Chamber of Representatives archive, caixa 31, Brasília DF. 45. Intervention of MP Amaury Muller at the meeting No. 237/89 of August 15, 1989, of the Foreign Relations Committee of the Camber of Representatives. Chamber of Representatives archive, caixa 31, Brasília DF. 46. Vigevani et al., “Democracia e Atores Politicos no Mercosul.” 47. This understanding of the executive-legislature dynamics in the formative years of Mercosur was discussed with several of the protagonists of those events. Ambassador Paulo Tarso Flecha de Lima acknowledged that the government strategy can be interpreted in these terms. Also Professor Rezende Martins, as an independent analyst and expert of congressional affairs, validated this view. From the Congress, however, MP João Hermann Neto expressed scepticism about the intentional nature and the predictability of the outcomes of such a sophisticated plan. 48. Only a Programme Execution Commission was envisaged, the practical relevance of which turned out to be absolutely negligible. 49. Hugo Javier Gobbi, 2001, Démocratie et Intégracion dans le Mercosud, le Rôle de la Commission Parlementaire Conjointe, CIACO, Louvaine-la-Neuve. 50. Monica Hirst, 1992, “Mercosur and the New Circumstances for its Integration,” CEPAL Review, April, No. 46, pp. 139–150. 51. Patricio Silva, 1997, Going Asia: Economic Internationalization and Technocratic Empowerment in Chilean Foreign Policy, Paper prepared for the XX International Congress of the Latin American Studies Association, Guadalajara, unpublished. 52. Bruno, interview. 53. While trade liberalization had characterized Argentine-Brazilian integrationist project from the very beginning, constituting a central objective of the PICE, internal macroeconomic strategies had followed mainly heterodox programs. Only after 1990 has Argentina

NOTES

54. 55. 56. 57. 58. 59. 60. 61. 62.

63. 64.

65.

66. 67. 68. 69.

70. 71. 72. 73.

74.

229

resolutely undertaken neoliberal orthodox macroeconomic programs. Brazil, though inaugurating a neoliberal course under Collor, did not embark upon true orthodox macroeconomic reforms until 1994. Centeno and Silva, “The Politics of Expertise in Latin America.” Bruno, interview. Ibid. Andrés Cisneros, interview with the author, Buenos Aires, February 21, 2003. Alberto Kohan, interview with the author, Buenos Aires, March 14, 2003. Flecha de Lima, interview; Beatriz Nofal, interview with the author, Buenos Aires, March 25, 2003. Kohan, interview. Nofal, interview. Inspired by structural and dependency theories as adopted and developed by the Santiago-based UN Economic Commission for Latin America and the Caribbean (CEPAL). Luiz Gonzaga Belluzzo, interview with the author, São Paulo, June 4, 2003. Roberto Fendt, interview with the author, Rio de Janeiro, June 11, 2003; Luiz Felipe Lampreia, interview with the author, Rio de Janeiro, June 11, 2003. Mona M. Lyne, 2001, “Executive-Legislative Relations in the ABC Countries of Latin America: The Voters’ Dilemma and Democratic Stability,” Paper presented and the meeting of the Latin American Studies Association, Washington DC. Ana Maria Mustapic, interview with the author, Buenos Aires, March 24, 2003. Danese, interview; Flecha de Lima, interview. Case US v. Curtis-Wright Export Co. Ernst B. Haas, 1958, The Uniting of Europe; Political, Social and Economic Forces, 1950–1957, Stanford University Press, Stanford, CA, p. 241. Ibid., pp. 241–242. Ibid., p. 246. Ibid., p. 119. The attitude toward integration of the French political spectrum was ambivalent, and the ECSC treaty was ratified in France only because it was accompanied by a set of special conditions given the refusal of the executive to accept formal amendments. The major opposition party in Germany, SPD, turned pro-Europe only in 1955. In both Argentina and Brazil, integration agreements were largely supported among parties and comfortably passed congressional ratification. The French case is reinforced by National Assembly’s rejection of the European Defence Community in 1954.

230

NOTES

Chapter 5 1. 2. 3. 4. 5. 6. 7.

8. 9. 10. 11. 12. 13.

14.

15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26.

La Nación, June 2, 1986, p. 12. La Nación, July 29, 1986, p. 18. La Nación, July 30, 1986, p. 18. La Nación, July 19, 1986, p. 17. Roberto Lavagna, 1998, Argentina, Brasil, Mercosur. Una Decisión Estrategica, Ciudad Argentina, Buenos Aires. Jorge Campbell, interview with the author, Buenos Aires, February 24, 2003. Letter by MIC international affairs coordinator João Pinheiro Nogueira Batista to Ambassador Sebastião do Rego Barros, May 18, 1988, Classification: OF/MIC/CAI/BSB/N° 237/88. Itamaraty Archive, Brasília DF. Campbell, interview. Israel Mahler, interview with the author, Buenos Aires, March 14, 2003. La Nación, October 4, 1985. La Nación, October 4, 1985. Mahler, interview. Alejandro Majoral, 1999, “Expectativas Empresariales ante el Proceso de Integración,” in Jorge Campbell (ed.), Mercosur. Entre la Realidad y la Utopia, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 447–488. Jorge Campbell, Ricardo Rozemberg, and Gustavo Svarzman, 1999, “Quince Años de Integración, Muchos Ruidos y Muchas Nueces,” in Jorge Campbell (ed.), Mercosur. Entre la Realidad y la Utopia, Nuevohacer Grupo Editor Latinoamericano, Buenos Aires, pp. 39–228. Jorge Lavopa, interview with the author, Buenos Aires, February 11, 2003. Campbell, Mercosur, p. 71. Roberto Favelevic, interview with the author, Buenos Aires, March 7, 2003. Jorge Zorreguieta, interview with the author, Buenos Aires, March 20, 2003. Héctor Alimonda, 2000, “Brazilian Society and Regional Integration,” Latin American Perspectives, November, 27:6, pp. 27–44, 27. Favelevic, interview. Ibid. Paulo Tarso Flecha de Lima, interview with the author, Brasília, May 13, 2003. Romero quoted in Campbell, Mercosur, p. 72. Mahler, interview. La Nación, July 11, 1987. Luiz Gonzaga Belluzzo, interview with the author, São Paulo, June 4, 2003.

NOTES

231

27. Beatriz Nofal, interview with the author, Buenos Aires, March 25, 2003. 28. Telegram No. 14384, July 22, 1986, sent by Itamaraty to several Brazilian Embassies, reproducing the joint statement of the Argentine and Brazilian Chancelleries at the conclusion of the technical negotiations for the PICE. Itamaraty Archive, Brasília DF. 29. Ben R. Schneider, 2001, “Business Politics and Regional Integration: The Advantages of Organization in NAFTA and Mercosur,” in Victor Bulmer-Thomas (ed.), Regional Integration in Latin America and the Caribbean. The Political Economy of Open Regionalism, Institute of Latin American Studies, London, pp. 167–193. See also Campbell, Mercosur. 30. Nofal, interview. 31. La Nación, December 12, 1986. 32. Telex No. 1292/86 of June 1986, sent from Eulalio de Bueno Vidigal Filho, president of FIESP, to Foreign Minister Roberto Abreu Sodré. Itamaraty Archives, Brasília DF. 33. Telex No. 4377 of July 23, 1986, sent by Godofredo Almeida Santos, coordinator of multilateral affairs of the Secretariat General of Itamaraty to Hélio Souza, sales director of Varig. Itamaraty Archive, Brasília DF. 34. Nofal, interview. Top managers and businessmen, such as Miguel Roig from Bunge y Born and Guillermo Kuhl from Scania, were frequently consulted by the Argentine government. These people were co-opted by the executive, but they counted on a high degree of recognition and prestige within the entrepreneurial community 35. According to Undersecretary Nofal, Alvarez Gaviani, COPAL vice president, collaborated extensively with the officials of the Secretariat of Industry and Trade. 36. Tullo Vigevani, interview with the author, São Paulo, June 2, 2003. 37. These included ministers Dilson Funaro, Olavo Setúbal, and João Sayad. 38. Schneider, “Business Politics and Regional Integration,” p. 175. 39. Ibid. 40. Campbell, Mercosur. 41. Nofal, interview. 42. Campbell, Mercosur. 43. Telegram No. 2232 of May 6, 1987, sent by Ambassador Francisco Thompson Flores, undersecretary general for economic affairs of Itamaraty to Edmund Kletz, president of the Brazilian Association of Food Industries. Itamaraty Archive, Brasília DF. 44. Campbell, Mercosur. 45. Ibid. 46. Lavopa, interview. 47. Favelevic, interview. 48. Lavopa, interview.

232 49. 50. 51. 52. 53. 54. 55.

56. 57. 58. 59. 60.

61. 62. 63. 64. 65. 66. 67. 68. 69. 70.

71. 72. 73. 74. 75. 76. 77.

NOTES

Zorreguieta, interview; Favelevic, interview. La Nación, July 6, 1990. Nofal, interview. Kohan, interview with the author, Buenos Aires, March 14, 2003. El Pais, October 30, 1991, p. 10. La Nación, August 25, 1989. Intevention by Foreign Minister Francisco Rezek at the meeting of the External Relations Committee of the Chamber of Representatives, December 5, 1990. Archive of the Chamber of Representatives, Brasília DF, External Relations Committee transcripts, box 37. La Nación, September 8, 1991. Coopers and Lybrand, cited in Schneider, “Business Politics and Regional Integration,” p. 176. Campbell, Mercosur. Schneider, “Business Politics and Regional Integration.” Tullo Vigevani and João Paulo Cândia Veiga, 1997, “Estrado e Transnacionais na Constitução do Mercosul: O Caso da Industria Automobilistica,” Paper presented at the XX Congress of the Latin American Studies Association, Guadalajara. Schneider, “Business Politics and Regional Integration.” Ibid. Ibid. Interview with Israel Mahler. Schneider, “Business Politics and Regional Integration.” Nofal, interview. Federico Storani, interview with the author, Buenos Aires, March 27, 2003. Roberto Pons, interview with the author, Buenos Aires, February 17, 2003. Mahler, interview. Vigevani and Cândia Vega, “Estrado e Transnacionais na Constitução do Mercosul”; Majoral, “Expectativas Empresariales ante el Proceso de Integración.” Mahler, interview; Zorreguieta, interview; Gonzaga Belluzzo, interview. Majoral, “Expectativas Empresariales ante el Proceso de Integración.” La Nación, December 9, 1986. La Nación, April 7, 1988. Vigevani and Cândia Vega, “Estrado e Transnacionais na Constitução do Mercosul.” Majoral, “Expectativas Empresariales ante el Proceso de Integración.” Alimonda, “Brazilian Society and Regional Integration.” Jeffrey Cason, 2000, “On the Road to the Southern Cone Economic Integration,” Journal of Interamerican Studies and World Affairs, 42:1, Spring, pp. 23–42.

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233

78. Lincoln Bizzozero and Jorge Grandi, 1997, “Vers une Société Civile du Mercosur. Anciens et Nouveaux Acteurs,” Cahiers des Amériques Latines, 24, pp. 53–75. 79. Ibid. 80. Andrew Hurrell, 2001, “The Politics of Regional Integration in Mercosur,” in Victor Bulmer-Thomas (ed.), Regional Integration in Latin America and the Caribbean. The Political Economy of Open Regionalism, Institute of Latin American Studies, London, pp. 194–211.

Chapter 6 1. La Nación, July 31, 1986, p. 18. 2. La Nación, July 29, 1986, p. 18. 3. João Hermann Neto, interview with the author, Brasília, May 29, 2003. 4. Chyh-yu Shih, 1992, “Seeking Common Causal Maps: A Cognitive Approach to International Organization,” in Martha L. Cottam and Chih-yu Shih (eds), Contending Dramas. A Cognitive Approach to International Organizations, Praeger, New York, Westport CT and London, pp. 39–56, 55. 5. See La Nación, February 7, 1985, August 14, 1985, July 29, 1986, July 31, 1986, December 10–12, 1986, November 30, 1988, August 23, 1989, August 24, 1989, June 15, 1990, and July 7, 1990. 6. Carlos Bruno, interview with the author, Buenos Aires, March 11, 2003; Jorge Castro, interview with the author, Buenos Aires, March 20, 2003; Alberto Kohan, interview with the author, Buenos Aires, March 14, 2003; Roberto Lavagna, interview with the author, Buenos Aires, March 27, 2003; José Maria Lladós, interview with the author, Buenos Aires, March 14, 2003; Beatriz Nofal, interview with the author, Buenos Aires, March 25, 2003; Félix Peña, interview with the author, Buenos Aires, February 25, 2003; Federico Storani, interview with the author, Buenos Aires, March 27, 2003; José Botafogo, interview with the author, Buenos Aires, March 17, 2003; Sergio Danese, interview with the author, Buenos Aires, February 18, 2003; Luiz Augusto Castro Neves, interview with the author, Brasília, May 29, 2003; Paulo Tarso Flecha de Lima, interview with the author, Brasília, May 13, 2003; José Tavares de Araujo, interview with the author, Brasília, May 19, 2003; Celso Lafer, interview with the author, São Paulo, June 2, 2003; Olavo Setubal, interview with the author, São Paulo, June 3, 2003; Luiz Gonzaga Belluzzo, interview with the author, São Paulo, June 4, 2003; José Maria Amaral Oliveira, interview with the author, São Paulo, June 5, 2003; Roberto Fendt, interview with the author, Rio de Janeiro, June 11, 2003; Francisco Thompson Flores, interview with the author, Geneva, December 8, 2004; and Hermann Neto, interview.

234

NOTES

7. Robert Jervis, 1976, Perception and Misperception in International Politics, Princeton University Press, Princeton NJ, p. 13. 8. Ibid. 9. Richard Snyder, H. W. Bruck, and Burton Sapin, 1962, “DecisionMaking as an Approach to the Study of International Politics,” in Richard Snyder, H. W. Bruck, and Burton Sapin (eds), Foreign Policy Decision-Making. An Approach to the Study of International Politics, The Free Press of Glencoe, New York, pp. 14–185; italics in the original. 10. Jervis, Perception and Misperception in International Politics; Shih, “Seeking Common Causal Maps”; Martha L. Cottam, 1994, Images and Intervention. US Policies in Latin America, University of Pittsburgh Press, Pittsburgh and London. 11. Cottam, Images and Intervention, pp. 10 and 22. 12. Ibid., p. 23. 13. La Nación, June 15, 1990, p. 1. 14. Martha L. Cottam, 1992, “Recent Developments in Political Psychology,” in Martha L. Cottam and Chih-yu Shih (eds), Contending Dramas. A Cognitive Approach to International Organizations, Praeger, New York, Westport CT and London, pp. 1–18, 14. 15. Robert Jervis, 1970, The Logic of Images in International Relations, Princeton University Press, Princeton NJ. 16. Ibid., p. 18. 17. Ibid. 18. Ibid., p. 34. 19. La Nación, August 14, 1985. 20. La Nación, July 29, 1986. 21. Jervis, The Logic of Images in International Relations, p. 29. 22. Stephen Walker, 1992, “Symbolic Interactionism and International Politics: Role Theory’s Contribution to International Organization,” in Cottam and Shih, Contending Dramas, pp. 19–38, 23; italics in the original. 23. Shih, “Seeking Common Causal Maps,” p. 50. 24. Ibid., p. 41. 25. Peña, interview. 26. Shih, “Seeking Common Causal Maps,” p. 41. 27. Ibid., p. 42. 28. Ibid., p. 43. 29. Alexander Wendt, 1992, “Anarchy is What States Make of it: The Social Construction of Power Politics,” International Organization, 46:2, Spring, pp. 391–425, 394. 30. Ibid., p. 403. 31. Andrew Hurrell, 2001, “The Politics of Regional Integration in Mercosur,” in Victor Bulmer-Thomas (ed.), Regional Integration in Latin America and the Caribbean. The Political Economy of Open

NOTES

32. 33. 34. 35. 36. 37. 38.

39.

40. 41.

42.

43.

44.

45. 46. 47. 48.

235

Regionalism, Institute of Latin American Studies, London, pp. 194–211. Wendt, “Anarchy is What States Make of it,” p. 411. Jeffrey T. Checkel, 1998, “The Constructivist Turn in International Relations Theory,” World Politics, 50:2, pp. 324–348. Wendt, “Anarchy is What States Make of it.” Ibid., p. 399. Ibid., p. 418. Ibid., p. 421. Ibid., p. 409. Indeed, voices raising criticism from within social constructivism maintain that what is missing is a substantive theory of, and attention to agency and the national level, and some social constructivists have later addressed these issues. See, for instance, Checkel, “The Constructivist Turn in International Relations Theory”; Jeffrey T. Checkel, 1999, “Norms, Institutions, and National Identity in Contemporary Europe,” International Studies Quarterly, 43:1, March, pp. 83–114; Amitav Acharya, 2004, “How Ideas Spread: Whose Norms Matter? Norm Localization and Institutional Change in Asian Regionalism,” International Organization, 58:2, Spring, pp. 239–276. Kurt T. Gaubatz, 1997, “Democratic States and Commitment in International Relations,” in Miles Kahler (ed.), Liberalization and Foreign Policy, Columbia University Press, New York, pp. 27–66. Ibid., p. 34. Peter J. Katzenstein, 1978, “Introduction: Domestic and International Forces and Strategies of Foreign Economic Policy,” in Peter J. Katzenstein (ed.), Between Power and Plenty, The University of Wisconsin Press, Madison and London, pp. 3–22. Katzenstein, Peter J., 1996, “Introduction: Alternative Perspectives on National Security,” in Katzenstein, Peter J. (Ed.), The Culture of National Security. Norms and Identities in World Politics, Columbia University Press, New York, pp. 1–32. Ronald L. Jepperson, Alexander Wendt, and Peter J. Katzenstein, 1996, “Norms, Identity, and Culture in National Security,” in Katzenstein, The Culture of National Security, pp. 33–75. Michael Barletta, 1999, “Democratic Security and Diversionary Peace: Nuclear Confidence-Building in Argentina and Brazil,” National Security Studies Quarterly, Summer, pp. 19–38. Hurrell, “The Politics of Regional Integration in Mercosur,” p. 204. Wendt, “Anarchy is What States Make of it,” p. 418. Ibid., p. 423. See Acharya, “How Ideas Spread.” In this study on norms and institutional change in Asian regionalism, Acharya stressed how local agents receive and reconstruct norms derived from international interaction by adapting them to fit preexisting identities and cognition. But see also Steven Bernstein, 2000, “Ideas, Social Structure

236

49. 50.

51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72.

73. 74. 75. 76. 77.

NOTES

and the Compromise of Liberal Environmentalism,” European Journal of International Relations, 6:4, December, pp. 464–512. In this article on ideas and social structure, Bernstein focused precisely on the interaction of ideas with the preexisting social structure they encounter. Wendt, “Anarchy is What States Make of it,” p. 424. Judith Goldstein and Robert O. Keohane, 1993, “Ideas and Foreign Policy: An Analytical Framework,” in Judith Goldstein and Robert O. Keohane (eds), Ideas and Foreign Policy. Beliefs, Institutions, and Political Change, Cornell University Press, Ithaca NY and London, pp. 3–30. Ibid., p. 3. Ibid., p. 8. La Nación, August 24, 1989, p. 5. La Nación, August 14, 1985, p. 10. Goldstein and Keohane, “Ideas and Foreign Policy,” p. 9. La Nación, September 29, 1985, p. 6. Goldstein and Keohane, “Ideas and Foreign Policy,” p. 10. Ibid. La Nación, July 31, 1986, p. 18. La Nación, November 30, 1988, p. 6. La Nación, July 7, 1990, p. 4. La Nación, July 18, 1987, p. 4. La Nación, July 31, 1986, p. 19. La Nación, November 30, 1988, p. 6. La Nación, July 31, 1986, p. 19. Goldstein and Keohane, “Ideas and Foreign Policy,” p. 11. Ibid., p. 12. Ibid., p. 13. Alberto Ferrari Etcheberry, interview with the author, Buenos Aires, March 28, 2003. Tavares de Araujo, interview. Goldstein and Keohane, “Ideas and Foreign Policy,” p. 17. Sonia de Camargo, 1985, “Os Novos Amigos: Brasil e Argentina Atravessam a Ponte,” Contexto Internacional, 1:2, July–December, pp. 63–80; Wayne A. Selcher, 1985, “Brazilian-Argentine Relations in the 1980s: From Wary Rivalry to Friendly Competition,” Journal of Interamerican Studies and World Affairs, 27:2, pp. 25–53. Goldstein and Keohane, “Ideas and Foreign Policy,” p. 20. Lavagna, interview. Goldstein and Keohane, “Ideas and Foreign Policy,” p. 21. Ibid. Scott M. Thomas, 2005, The Global Resurgence of Religion and the Transformation of International Relations, Palgrave MacMillan, Basingstoke and New York. See chapter 3 for a discussion on virtue ethics and moral choices in foreign policy.

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78. Goldstein and Keohane, “Ideas and Foreign Policy,” p. 30. 79. Hurrell, “The Politics of Regional Integration in Mercosur.” 80. Kenneth Waltz, 1959, Man, the State, and War, Columbia University Press, New York, 1959. 81. Cottam, Images and Intervention. 82. Roberto Russell, 1997, “Democratization and Its Qualitative Impact on Argentine Foreign Policy,” Paper prepared for the conference Democratisation, Economic Liberalisation and Foreign Policy: The Argentine Experience, University of Oxford, p. 3. 83. Ibid. 84. Amado Luiz Cervo, 2003, “Regimes Politicos e Política Exterior do Brasil,” Paper prepared for the conference Political Regimes and Foreign Policies: A Comparative Approach, University of Brasília; Raúl Bernal-Meza, interview with the author, Brasília, May 6, 2003. 85. Although the data is aggregated for Latin America as a whole, without a specific breakdown for the Mercosur region, the breakdown per country produces a reliable result of the popular perception of subregional integration in Argentina and Brazil. 86. Mitchell A. Seligson, 1999, “Popular Support for Regional Economic Integration in Latin America,” Journal of Latin American Studies, February, 31:1, pp. 129–150. A very intriguing political perspective is suggested by other variables considered in the study. The highly educated people and those most attentive to news are also those most favorable to regional integration. Since educated and informed people are generally more likely to be active in politics and diplomacy, other factors being constant, it is likely that in Argentine and Brazilian elites democratic convictions further reinforced support for integration, which eventually was a clearly state-led process. 87. Janina Onuki, 1998, A Inserção Internacional da Argentina e o Brasil, Paper presented at the XXI International Congress of the Latin American Studies Association, Chicago.

Conclusion 1. Hedley Bull, 1972, “The Theory of International Politics, 1919– 1969,” in Brian Porter (ed.), The Aberysthwyth Papers: International Politics, 1919–1969, Oxford University Press, London, pp. 30–50. Reprinted in 1995 in James Der Derian (ed.), International Theory. Critical Investigations, MacMillan, Basingstoke and London, pp. 181–211. 2. Richard Neustadt quoted in Graham Allison and Philip Zelikow, 1999, The Essence of Decision. Explaining the Cuban Missile Crisis, Longman, New York, p. 312. 3. Brett A. Leeds, 1999, “Domestic Political Institutions, Credible Commitments, and International Cooperation,” American Journal of Political Science, 43:4, pp. 979–1002.

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4. Karen L. Remmer, 1998, “Does Democracy Promote Interstate Cooperation? Lessons from the Mercosur Region,” International Studies Quarterly, 42, pp. 25–52. 5. Barbara Farnham, 2003, “The Theory of Democratic Peace and Threat Perception,” International Studies Quarterly, 47:3, pp. 395–415. 6. Patricia Weitsman and George Shambaugh, 2002, “International Systems, Domestic Structures, and Risk,” Journal of Peace Research, 39:3, pp. 289–312. 7. Lars E. Cederman, 2001, “Modeling the Democratic Peace as a Kantian Selection Process,” Journal of Conflict Resolution, 45:4, pp. 470–502. 8. Félix Peña, interview with the author, Buenos Aires, February 25, 2003. 9. Mario Sznajder, 1996, “Transition in South America: Models of Limited Democracy,” Democratization, 3:3, pp. 360–370. 10. Judith Goldstein and Robert O. Keohane, 1993, “Ideas and Foreign Policy: An Analytical Framework,” in Judith Goldstein and Robert O. Keohane (eds), Ideas and Foreign Policy. Beliefs, Institutions, and Political Change, Cornell University Press, Ithaca NY and London, pp. 3–30. 11. Robert Jervis, 1970, The Logic of Images in International Relations, Princeton University Press, Princeton NJ, pp. 15–16. 12. I borrow this phrasing from a correspondence with my friend and colleague Sean Burges, formerly at Carleton University, and now at the Canadian Foreign Ministry. 13. Andrés Malamud, 2000, Mercosur: From “Delegative Democracies” to “Delegative Integration”?, Paper prepared for the 2000 meeting of the Latin American Studies Association, Miami, March. The paper was later published in two separated pieces: Andrés Malamud, 2003, “Presidentialism and Mercosur: A Hidden Cause for a Successful Experience,” in Finn Laursen (ed.), Comparative Regional Integration: Theoretical Perspectives, Ashgate, London, pp. 53–73; Andrés Malamud, 2003, “O Presidencialismo na América do Sul: Argentina e Brasil em Perspectiva Comparada,” Análise Social, No. 168, pp. 715–742. 14. See the special issue of the International Studies Review, 6:2, of June 2004. 15. Samuel J. Barkin, 2003, “Realist Constructivism,” International Studies Review, 5:3, September, pp. 325–342. 16. Patrick T. Jackson and Daniel H. Nexon, 2004, “Constructivist Realism or Realist Constructivism?,” International Studies Review, 6:2, June, pp. 337–341. 17. Janice Bially Mattern, 2004, “Power in Realist-Constructivist Research,” International Studies Review, 6:2, June, pp. 343–346. 18. Jackson and Nexon, “Constructivist Realism or Realist Constructivism?”

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19. Richard Ned Lebow, 2004, “Constructive Realism,” International Studies Review, 6:2, June, pp. 346–348, 346. 20. Ibid., p. 348. 21. Chyh-yu Shih, 1992, “Seeking Common Causal Maps: A Cognitive Approach to International Organization,” in Martha L. Cottam and Chih-yu Shih (eds), Contending Dramas. A Cognitive Approach to International Organizations, Praeger, New York, Westport CT and London, pp. 39–56, 55. 22. Bruce Bueno de Mesquita, 2002, “Domestic Politics and International Relations,” International Studies Quarterly, 46:1, March, pp. 1–10. 23. Dominique Fournier, 1996, The International Dimension of Democratic Transitions: Argentina and Chile, DPhil Thesis, University of Oxford, unpublished. 24. Alberto Ferrari Etcheberry, interview with the author, Buenos Aires, March 28, 2003. 25. Martha L. Cottam, 1992, “Recent Developments in Political Psychology,” in Cottam and Shih, Contending Dramas, pp. 1–18. 26. Beatriz Nofal, interview with the author, Buenos Aires, March 25, 2003. 27. José Botafogo Gonçalves, interview with the author, Buenos Aires, March 17, 2003. 28. Peña, interview. 29. João Hermann Neto, interview with the author, Brasília, May 29, 2003. 30. Israel Mahler, interview with the author, Buenos Aires, March 14, 2003. 31. Evelina Dagnino, 2001, “Civil Society and Public Sphere in Brazil. Limits and Possibilities,” Paper prepared for the conference of the Latin American Studies Association, Washington DC, p. 3. The paper was later published in 2002 in both Portuguese and Spanish as a chapter in a volume edited by the author: “Sociedade Civil, Espaços Públicos e a Construção democrática no Brasil: Limites e possibilidades,” in Evelina Dagnino (ed.), Sociedade Civil e Espaços Públicos no Brasil, Paz e Terra, São Paulo, pp. 279–301. And “Sociedad Civil, Espacios Públicos y Construcción Democrática en Brasil: Límites y Posibilidades,” in Evelina Dagnino (ed.), Sociedad Civil, Espacios Públicos y Democratización: Brasil, Fondo de Cultura Económica, Mexico City, pp. 369–395. 32. Ibid., p. 4. 33. Ibid., p. 26. 34. Ibid. 35. Ibid., p. 27.

Epilogue 1. See chapter six in this volume. Judith Goldstein and Robert O. Keohane, 1993, “Ideas and Foreign Policy: An Analytical Framework,”

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2.

3.

4.

5.

6. 7.

8. 9. 10.

11.

12.

13. 14. 15.

in Judith Goldstein and Robert O. Keohane (eds), Ideas and Foreign Policy. Beliefs, Institutions, and Political Change, Cornell University Press, Ithaca NY and London, pp. 3–30. Andrés Malamud, 2005, “Presidential Diplomacy and the Institutional Underpinnings of Mercosur. An Empirical Examination,” Latin American Research Review, 40:1, pp. 138–164. United Nations, 2006, Demographic Yearbook, online: http:// unstats.un.org/unsd/demographic/products/dyb/dyb2006.htm (last accessed April 25, 2009). World Bank, 2007, Key Development Data & Statistics, online: http://web.worldbank.org/WBSITE/EXTER NAL/DATASTAT ISTICS/0,,contentMDK:20535285~menuPK:64133163~pagePK: 64133150~piPK:64133175~theSitePK:239419~isCURL:Y,00.html (last accessed April 25, 2009). Local hegemons may play a preponderant role in their respective regional basins, China in Asia, India in the Indian subcontinent, South Africa in Africa, the United States in Nafta, and of course Brazil in Latin America. In Europe at least three countries, but perhaps more, have similar economic and demographic profiles and equal aspirations to drive regional dynamics. The implications for regional balance and integration schemes should be fairly straightforward. This has been tempered by the social-democratic administrations presently in office. World trade Organization, 2007, International Trade and Tariffs Data, online: http://www.wto.org/english/res_e/statis_e/Statis_e. htm (last accessed April 25, 2009). Ibid. Ibid. For an analysis of the 1996 Paraguayan crisis, see Arturo Valenzuela, 1997, “Paraguay: The Coup that Didn’t Happen,” Journal of Democracy, 8:1, pp. 43–55. This role of regional mediator has recently been confirmed in the 2008 constitutional crisis in Bolivia where Brazil took the lead of the Unasur diplomatic effort (see later). Statement by the Brazilian Delegation on behalf of Mercosur, Bolivia, and Chile at the fifty-fifth United Nations General Assembly, Third Committee—Item 114 (b), New York, October 26, 2000. Online: http://www.un.int/brazil/speech/00d-mercosul-human-rights2610.htm (last accessed April 25, 2009). Ibid. Andrés Cisneros, “¿Integrarse o Amucharse?,” Ambito Financiero, December 8, 2004. Andrés Malamud, “La lucha por Alfonsín,” Página12, April 5, 2009.

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Index

ABACC (Argentine-Brazilian Agency for Accounting and Control of Nuclear Material), 97 ABC Pact 1905–1915, 19–20 1950–1954, 20–21 ACE-14, 12, 94–95 Acta de Buenos Aires, 53, 92, 93, 94, 115, 141 Agosti, Orlando, 30 Alconada Sempé, Raúl, 48, 49, 115 Alfonsín, Raúl Bi-national Group, 33 comparison to Menem’s period, 98, 101, 177 democracy, 149, 151, 154, 155, 161, 164, 165 foreign policy, 49–50, 53, 55, 57 integration, 41, 58–59, 61–64, 66, 70, 73, 77, 78, 80, 98, 184–185, 194 relations with business, 131, 137, 139, 145 relations with legislature, 115 taking office, 85 Amaral Oliveira, José Maria do, 64 Amaral, Sergio, 32 Amato, Mario, 142 Annales School of historians, 17 See also French School Aramar, 77, 154, 159 Aranha, Osvaldo Euclides, 20 Association of South-East Asian Nations (ASEAN), 55

Asunción, see Treaty of Asunción Ata das Cataratas, 23 Aylwin, Patricio, 93 Azeredo da Silveira, Antonio, 26–27, 30 Banco do Brasil, 68, 145 Bayma Denys, Rubens, 64, 65, 77 Beagle Channel, 30, 49, 50 Bi-national Group, 12, 32–33 Bolivia, 22, 24, 26, 51, 91, 93, 94, 192 Bordon, José Octavio, 88, 115 Botafogo, José, 32, 185 Brasília, see Presidential summit Bruno, Carlos, 53, 68, 79, 117, 122, 184 Buenos Aires, see Presidential summit, Acta Bull, Hedley, 175 Bunge y Born, 85, 140 bureaucratic authoritarianism, 111 CACEX (Carteira do Comercio Exterior), 68, 70, 79, 124, 145 Camilión, Oscar, 27, 29, 30, 32, 39, 41, 176 Campbell, Jorge, 67, 101, 131, 132 Campero, Ricardo, 58 Campos, Roberto, 21 Canada, 56, 79, 82 Caputo, Dante bi-national group, 33 Brazil, 57, 60

262

INDEX

Caputo, Dante—Continued democracy, 154–155, 163 foreign debt, 56 foreign policy strategy, 49, 50, 52 integration, 63, 67–71, 75, 78, 80, 98 relations with business, 137 relations with legislature, 115 Carranza, Roque, 65 Cartagena, 50, 59 Carter, Jimmy, 29 Castello Branco, Humberto, 21, 23, 30, 38, 47 Castro Neves, Luiz Augusto, 65, 79 CAUCE (Argentine-Uruguayan agreement of economic complementation), 25, 93, 135 Cavallo, Domingo, 73, 89, 90, 91, 93, 96, 97, 98, 99, 185 Central America, 44, 49, 50, 51, 52, 55, 56, 68, 85 CEPAL (Comisión Económica para América Latina y el Caribe), 68, 124 Chávez, Hugo, 190, 191 Chile ABC Pact, 19–21, 24 Beagle Channel, 49–50 democracy, 83, 93, 192 Mercosur, 93, 191 relations with Argentina, 27, 29–30, 34, 48, 49, 159 relations with Brazil, 24, 51 Unasur, 193 Ciminari, Juan, 146 Cisneros, Andrés, 123 Collor de Mello, Fernando administration, 87 common market and Mercosur, 12, 74, 80, 81, 83, 91–93, 100–102, 177 democracy, 151, 164, 168 election, 86 foreign policy, 86–87 nuclear policy, 96–98 relations with business, 143–145

relations with Itamaraty, 98–99 relations with the legislature, 118 relations with Menem, 88, 90–91, 98 relations with the military, 99–100 relations with the technocrats, 123 Colombia, 26, 50, 51 common market 1988 treaty, 80–83, 100 before Mercosur, 33, 73 bilateral, 2, 74, 84, 92–95, 117, 119, 121, 124, 164 Mercosur, 2, 91–93, 94–95, 121, 134, 137, 141–143, 168, 176, 177 quadrilateral, 74, 92–94, 95, 124 Common Market Group, 33, 92, 95, 134 Contadora Group, 50, 52, 59, 63 Corpus Dam, 23, 25–28, 30 Costa e Silva, Artur da, 30 Cuba, 33, 34, 36, 51 customs union in the 1940s, 20 under the military in the 1960s, 21–22 under the military in the 1970s and early 1980s, 39 under Perón, 21, 25 with reference to the 1988 treaty, 81, 100 with reference to negotiations with Chile, 93 Danese, Sergio, 60, 98 Delfim Neto, Antônio, 32 democracy, 7–8, 105–113 delegative democracy, 106, 110–111, 125 limited democracy, 8, 105–109, 109–110, 109–113, 124, 179, 185, 194 limited liberal democracy, 106, 109–113, 116, 117, 121, 124, 126, 127, 179, 181

INDEX

technocratic democracy, 106, 111–113 Di Tella, Guido, 99, 185 Don Torcuato, 69, 70, 71, 154, 166 Economic Commission for Latin America and the Caribbean (ECLAC), see CEPAL Ecuador, 26, 51 European Coal and Steel Community (ECSC), 126 European Economic Community (EEC), 29, 34, 36, 45, 48, 53, 78, 79, 126 European Union (EU), 90, 122, 125, 126, 189, 191, 193 Falklands, see Malvinas Favelevic, Roberto, 135, 137, 138, 142 Fendt, Roberto, 68, 79, 124 Ferrari Etcheberry, Alberto, 60, 62, 166 Figureido, João Baptista, 31, 33, 35, 37, 38, 50, 52, 58, 59, 135, 176, 184 Flecha de Lima, Paulo Tarso, 54, 58, 63, 65, 118, 137 foreign policy, approach to, 9–10 Foz do Iguaçu declaration, 42, 43, 66, 76 military encounter, 64–66 Presidential meeting, 64–66 Free Trade Area 1941 attempt, 20 1988 treaty, 81–82, 90, 91, 100, 141, 176 between Argentina and Brazil, 69 LAIA/LAFTA, 71, 136 French School of International Relations, 17 Frondizi, Arturo, 21, 33 Funaro, Dilson, 68, 79, 184 Galtieri, Leopoldo, 47 Garcia, Alan, 63 Garcia, Luis, 67

263

Gass, Adolfo, 115 GATT (General Agreement on Tariffs and Trade), 36, 83 Gaucho, 76 Geisel, Ernesto, 25–26, 37, 184 Goldstein, Judith, 13, 162–169, 170, 180 Gonzaga Belluzzo, Luiz, 68, 124, 138 Goulart, João, 21, 33 gradual turn approach, 18 Argentine-Brazilian relations, 28–37 Gross Espiel, Héctor, 91, 93 Guelar, Diego, 116 Guimarães, Ulysses, 61 Guyana, 26, 51, 193 Guzetti, Cesar, 27 Hoffmann, Alberto, 69 human rights, 29, 46, 47, 48, 49, 50, 57, 85, 107, 110, 169, 184, 192, 193 Ibañez, Carlos, 21 Iglesias, Enrique Valentín, 63 Iguaçu see Foz do Iguaçu Illía, Arturo, 22 import substitution industrialization, 45, 85, 136 interdependence, economic, 5, 35 absence of, 52–54 International Atomic Energy Agency (IAEA), 97 Itaipava, 70, 71, 154 Itaipú Alfonsín’s visit, 66, 159 question, 18, 22–27, 27–28, 31, 37, 47 solution, 28–31, 38, 65, 184 treaty, 24, 37, 38 Itamaraty, 27, 35, 51, 54, 57, 58, 59, 60, 61, 62, 63, 65, 68, 72, 74, 77, 79, 82, 99, 117, 120, 133, 137, 138, 140, 145

264 Japan, 55 Jardim de Matos, Délio, 30 Jervis, Robert, 151, 153, 154 Joint Inter-parliamentary Committee (JIC), 120–121 justicialism, 67, 85, 88 see also Peronism Kissinger, Henry, 54 Keohane, Roberts, 13, 162–169, 170, 180 Kohan, Alberto, 88, 99, 123, 142 Krieger Vasena, Adalbert, 21 Lacalle, Alberto, 93, 102 Lafer, Celso, 32, 54, 98, 99 Lafer, Horacio, 31 Lanusse, Alejandro, 24, 30 Latin American Free Trade Area (LAFTA), 71, 136 Latin American Integration Association (LAIA), 71, 92, 94–95, 116, 119, 126, 136 Lavagna, Roberto, 56, 67, 68, 74, 76, 79, 92, 100, 131, 132 liberalism, 8, 105, 108, 109–113 long turn, 12, 18–19, 176 López Acosta, Antonio, 95 Mahler, Israel, 138, 186 Malvinas, 18, 19, 24, 28, 34–37, 38, 47, 48, 53, 65, 166 Martinez de Hoz, José Alfredo, 30, 45 Medici, Emilio, 30 Menem, Carlos Chile, 93 common market and Mercosur, 74, 80, 81, 83, 98–99, 100–102, 177, 185 democracy, 151, 163, 168 election, 84–85, 88 foreign policy, 86 nuclear policy, 96–98 protocols, 73 Realismo periférico, 85

INDEX

relations with business, 140–145 relations with Collor, 90–92, 93, 98 relations with the military, 99 relations with Sarney, 88–90 relations with technocrats, 123 Mexico, 51 Monnet, Jean, 126 Muller, Amaury, 119 NAFTA (North American Free Trade Agreement), 56 neo-functionalism, 5 neo-idealism, 5, 12, 129, 179 neo-Kantianism, 113 Neto, João Hermann, 118, 186 Neustadt, Richard, 175 Neves, Tancredo, 51, 56, 57, 59–61, 62, 153 Nixon, Richard, 54, 177 Nofal, Beatriz, 67, 79, 82, 100, 124, 138, 139, 185 Nogués, Alberto, 30 non-aligned movement, 24, 29, 85 Argentina, 49, 85 Brazil, 51 Ochoa, Raul, 95 O’Donnell, Guillermo, 110–111 Onganía, Juan Carlos, 21, 23, 30 oral history, 10–11, 175 Organization of American States (OAS), 35, 192 Oviedo, Lino, 180, 191–192 Paraguay access to Mercosur, 2, 91, 93–95, 141, 168 democracy, 83, 168, 180, 191–192 Mercosur, 121, 190, 191–192 Paraná controversy, 22–23 relations with Argentina, 22, 25, 28, 48 relations with Brazil, 24, 27, 28, 29–30, 51, 118

INDEX

Paraná, 23, 25, 27, 30, 31, 66 Partido do Movimento Democrático Brasileiro (PMDB), 61 Pastor, Carlos Washington, 30 Peña, Félix, 32–33, 95, 156, 185 Perón, Isabel, 26–27 Perón, Juan Domingo ABC Pact, 20–21 administration, 25–26 Peronism Peronist administration in the 1970s, 25–27 Peronist party, 67 integration, 80, 88, 115, 117, 185 see also justicialism Peru, 24, 26, 50, 51, 63 PICE (Programa de Integración y Cooperación Económica) business, 130, 131, 132, 133, 134, 137, 138, 139, 140, 143, 144, 147, 149 exhaustion, 79–80 implementation in Argentina, 74, 116–117, 126 implementation in Brazil, 116, 118–120, 126 motivations, 53, 74, 76 parliamentary assembly, 120–121 reactions to, 73 relation to Acta of 1990, ACE-14 and LAIA, 94–95 signature, 70–72 state-promoted integration, 8 technocrats, 122 Uruguay, 93 Pilcaniyeu, 77, 154, 159, 165 Pinedo, Federico, 20 Pinheiro Guimarães, Samuel, 63, 77, 80, 82 Pinochet, Augusto, 24, 51 Pires Gonçalves, Leonidas, 64, 65 Plan Austral, 55, 67, 79 Plan Cruzado, 79 Plata Basin, 18, 22, 24, 27, 29, 41, 46

265

treaty, 22–24, 26 Presidential diplomacy Alfonsín, 49–50 Brasília Collor, 87 Figueiredo, 31 Menem and Collor, 98 Sarney, 51 today’s Mercosur, 189 Presidential summit Bariloche and Viedma, July 1987, 75–76 Brasília, December 1986, 74–75 Brasília, April 1988, 78, 80 Brasília, August 1989, 89–90 Buenos Aires, May 1980, 31–33 Buenos Aires, January 1985, 58–59 Buenos Aires, July 1986, 70–71 Buenos Aires, July 1990, 91–92 Foz do Iguaçu, November 1985, 64–66; see also Foz do Iguaçu Prieto, Arnaldo, 119 propositions, 181–188 Quadros, Jânio, 21 Raijer, Marcos, 116 Rapanelli, Nestor, 140 Reagan, Ronald, 35 Realismo periférico, see Menem regionalization, 8–9 Rego Barros, Sebastião, 79, 133 Remmer, Karen, 3–5 Rezek, Francisco, 91, 93, 94, 99, 142, 152 Rezende Martins, Estevão, 118 Ricupero, Rubens, 59, 60, 61, 62, 77, 79 Rio Branco, 19–20 Rodriguez, Andrés, 94 Roig, Miguel, 140 Romero, Jorge, 33, 58, 63, 67, 68, 74, 79, 115, 138, 184 Rosembaum, John, 55 Ruiz-Guiñazú, Enrique, 20 Russell, Roberto, 171

266

INDEX

Sábato, Jorge, 57, 58, 67, 79, 115 Saenz Peña, Roque, 20 Sanguinetti, Julio Maria, 63, 89 San Tiago Dantas, Francisco Clementino, 31 Saraiva Guerreiro, Ramiro, 30, 31, 34, 36, 39, 41, 50, 57, 58 Sarney, José democracy, 149, 151, 154, 159, 163, 165, 101 foreign policy, 51, 52, 55–56 integration, 41, 61–62, 63, 64, 66, 70, 73, 77, 78, 96, 98, 101,177, 184–185 Itamaraty, 62 Menem, 80, 88–90 Neves, 56, 57, 59–61 relations with legislature, 118, 119 relations with business, 131, 139, 140, 145, 147 Schmitter, Philippe, 5–6, 12, 113 Schuman, Robert, 126 Setubal, Olavo, 61, 63, 64, 68 social constructivism, 157–162 Sodré Abreu, Roberto, 68, 70, 71, 75, 139 Sourrouille, Juan, 67, 68, 131 Steves, Franklin, 6–7 Storani, Federico, 114–115 summit, see Presidential summit Surinam, 26, 51, 193 Sznajder, Mario, 109–110 Tavares de Araujo, José, 54, 60, 68, 69, 79 Thompson Flores, Francisco, 55, 63, 69, 79, 82, 166 Treaty of Asunción, 6, 92–96, 115, 117, 119, 121, 134, 141, 142, 161 Treaty of Integration, Cooperation and Development 1988, 80–83, 90, 91, 94, 100, 119, 142, 133, 176 Treaty of Non-Proliferation (TNP), 32, 96–97

Treaty of Tlatelolco, 32, 96–98, 154 Tripartite agreement, 18, 19, 28–31, 32, 33, 36, 38, 57 Unasur (South American Union), 192–193 Unión Civica Radical (UCR), 48, 50, 84, 115 Unión Industrial Argentina (UIA), 135, 137, 138, 142, 144 United Nations (UN), 24 see also IAEA United States (US) ABC Pact, 20–21 Argentina junta, 47 Brazilian military, 47 Carter, human rights, non-proliferation, 29, 46 Collor administration, 86–87 democratic consolidation, 43, 44, 50 executive-legislature relations, 125 Falklands/Malvinas War, 34–36, 48, 53 integration, 55–56, 79, 82 Menem administration, 86 post–Cold War, 83, 85 protectionism in the 1970s and 1980s, 29, 45 Uruguaiana agreements, 19, 21, 28, 31, 33, 36 Camilión, 27 Uruguay accession to Mercosur, 2, 89, 91–95, 141 democracy, 102, 168, 192 Mercosur, 121, 190–191, 192 relations with Argentina, 24–25, 27, 48, 50, 63, 135 relations with Brazil, 26, 51, 63, 64, 118 Ushuaia, protocol of, 192

INDEX

Vargas, Getúlio, 20–21, 184 Venezuela, 26, 51, 190–191 Videla, Jorge, 27, 30, 47, 135

Wendt, Alexander, 157–159, 162, 171 Williamson, John, 84 Yaciretá, 25, 30

Waltz, Kenneth, 170 Washington consensus, 84 Wasmosy, Juan Carlos, 191–192

267

Zavala Ortiz, Miguel Angel, 22 Zorreguieta, Jorge, 137