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Wednesday, February 8, 2023

keys to the integration agreement with Brazil

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For these hours, and after the coup attempt promoted by Bolsonarism sneak into the talks, officials from both countries are working on the final letter of the document. Different proposals were sent from Buenos Aires and analyzed in Brasilia. “Not everything is closed, but there is a common agenda that is moving forward,” an official source that participates in the exchanges told this newspaper.

key axes

The project, say the sources, aims to adapt the strategic association between both countries to the new international context, marked by a period of globalization retreat (known as near shoring or friend shoring) and a redefinition of the importance of the regional integration blocs, which was enhanced by the pandemic and the war in Ukraine.

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“It’s about laying the Bases for the future of the strategic association between Argentina and Brazil for the world in the next ten years, through a program that guides, contains and promotes this relationship that is not only important bilaterally but is key to anchoring political stability and economic growth in all of South America”, they remark.

In view of the agreement, intends to deepen and extend integration in a wide range of fields: energy, finance, agriculture, industry, mining, connectivity, tourism, knowledge economy, defense, human rights, environment, education, science and technology and health. And a series of economic initiatives that the Argentine government considers it essential to prop up the complicated external front, that is, add foreign currency and take care of the reserves obtained.

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One of the central focuses, as anticipated Ambitgoes through the possibility of taking the dead cow gas to the neighboring country (initially to the southern states) through the construction of the second section of the Nestor Kirchner pipelinefunded in part through the Development Bank of Brazil with close to US$700 million.

They count in the Executive that the conversations for the concretion of this credit are quite advanced and that there is a lot of interest from the Brazilian counterpart: “It is a win-win because it would allow Brazil to access gas at a very favorable price”, cheaper than what it buys today from Bolivia. For Argentina, it would mean a new inflow of foreign currency.

Within the energetic plane, it is proposed “a new Energy Memorandum to regulate the sale of gas in summer and the purchase of electric power in winter and the sale of LPG (liquefied petroleum gas)”. In addition, the Government highlights the potential in terms of “new energies” and “electromobility” based on the lithium availability in Argentina and nickel in Braziland the ceiling that generates the complementarity of the automotive industries of both countries.

They also point to “joint investments in potash and fertilizer plants for regional food sovereignty, as well as iron and copper ores for our industries.

In it financial plan, an initiative stands out, which the economic team considers important for the care of the reserves, which allows “increasing bilateral trade and investments, deepening the infrastructure of commercial exchange.” As anticipated by this medium, in the last month progress has been made in the talks on the possibility of implementing a swap or a common currency for trade (in principle bilateral with prospects for regionalization), which coexists with the peso and the real. Different sources consulted ensure that there is good harmony on this point.

In any case, the objective is to create a mechanism to offset the balances of the bilateral balance without having to allocate dollars from the reserves. The point is not minor: Brazil is the main trading partner and official projections mark the expectation of a rise in trade between the two largest economies in South America.

Last year closed with a bilateral deficit for Argentina of US$2.250 million after two surplus years.

While working on the final outline of the points that will make up the document, the Government stresses the importance of Argentina being the destination of the first Lula’s official visit and the “political harmony and common objectives”. “They are economies that dance together,” they synthesized in an official dispatch.

Source: Ambito

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