With Lacalle Pou, Mercosur moves further to the right

This weekend marks a rapprochement between the governments of Brazil and Uruguay a change of emphasis inside the Mercosur trade bloc in political and economic terms. 

Brazil’s right-wing President Jair Bolsonaro (pictured) will attend the inauguration of Uruguay’s Luis Lacalle Pou. 

Brazil and Uruguay formed Mercosur along with Argentina and Paraguay. 

Like Bolsonaro, Lacalle Pou plans economic reforms to open up the economy and attract private investment.

Bolsonaro's decision to attend the inauguration is a strong sign of support for the Lacalle Pou administration, which puts an end to 15 years of center-left rule in Uruguay.

Since his election at the end of 2018, Bolsonaro has sought, contrary to Mercosur rules, to forge trade deals with developed nations and other blocs and to eliminate protectionist measures.

“With leaders of those countries adopting a similar stance, mainly in the trade arena, it will be easier to coordinate strategies inside Mercorsur,” Rafael Cortez, a political scientist at local consultancy firm Tendências Consultoria Integrada, told BNamericas.

With Lacalle Pou taking power in Uruguay, three of the four Mercosur countries have right-wing leaders, as Paraguay's President Mario Abdo Benítez has similar views to his counterparts in Brazil and (from Sunday) Uruguay.

Bolsonaro, who has strongly criticized Argentina’s president, the Peronist Alberto Fernández, indicated he is open to closer ties with the Argentine leader too. 

Bolsonaro was planning to meet privately with Fernández in Uruguay, but the plan was postponed as the latter will not attend Lacalle Pou's inauguration but will instead be at the opening session of the Argentine congress.

Being by far the largest countries in the bloc, the trade relationship between Brazil and Argentina is crucial for the future of Mercosur.

In recent years, most countries in the bloc have focused on trade ties with China and certain developing nations. Although he has highlighted his intention to maintain good relations with China, Bolsonaro has sought closer ties with the Donald Trump administration.

According to Cortez, Bolsonaro's approach to the US is highly risky due to Trump’s protectionist stance. “This plan to be more in line with the US is not easy and could be frustrated in the medium term, with no positive results on the trade side for Brazil or Mercosur,” said Cortez. 

In addition, Brazil is trying to change the power dynamics in the region even in small countries in Central America, such as Guatemala and Honduras, in an attempt to spread right-wing influence across Latin America.