Brazil to leave Mercosur if Argentina “causes trouble,” Bolsonaro says

President Jair Bolsonaro agreed today (Aug 16) with a statement by Economy Minister Paulo Guedes saying that, should Alberto Fernández, the presidential hopeful in the opposition in Argentina, win the elections and show resistance to the economic opening of Mercosur, Brazil will leave the bloc. Fernández, with Cristina Kirchner as running mate, received 47 percent of the vote in the primaries held last Sunday (11). Incumbent Mauricio Macri garnered 32 percent.

“The candidate leading the race right now in Argentina, who has paid visits to [former Brazilian president] Lula, has described his detention as an injustice, and said he wants to reconsider Mercosur. So, Paulo Guedes, perfectly attuned with me, said if they cause trouble, Brazil will leave Mercosur, and I confirm that,” Bolsonaro said while leaving the Alvorada presidential residence this morning.

The Brazilian president said he is willing to talk to Fernández, but added the Argentine “would have to take the initiative.” “Because of the ideological bias, I felt [before being elected] is that Mercosur should be over. We came, of course, and drove the ideological bias away. The contact was excellent with Macri, Marito [Paraguay’s President Mario Benitez], and Uruguay’s [Tabaré Vázqez]—despite leaning towards the left, some conversation was possible,” Bolsonaro said.

Bolsonaro, however, expects Mauricio Macri to be re-elected. “Take a look at Argentina, what happened to the stock exchange, the dollar, the interest rates. The market made it clear it will not forgive the left in Argentina any more. Executives will no longer invest until the political situation there is addressed,” he said.

The financial market in the region has seen moments of volatility after the victory of Fernández in the primary elections. On the next day, the Mercal index, of the Buenos Aires market exchange, slid 37.93 percent—the sharpest daily drop in the history of the country’s share market, with the dollar going beyond 60 Argentine pesos, but closed art 52.14 pesos. The currency in the neighboring country depreciated 14.99 percent on Monday (12) alone. To curb the departure of capital, Argentina’s Central Bank increased its benchmark interest rate to a yearly 74 percent.