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UNCLAS SECTION 01 OF 03 SAO PAULO 000659 
 
SIPDIS 
 
STATE FOR WHA/BSC AND EB/TPP/MTA/IPC 
STATE PASS TO USTR FOR MSULLIVAN 
STATE PASS EXIMBANK 
STATE PASS OPIC FOR DMORONESE, NRIVERA, CVERVENNE 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/SHUPKA 
NSC FOR FEARS 
TREASURY FOR OASIA, DAS LEE AND DDOUGLASS 
SOUTHCOM ALSO FOR POLAD 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECIN ETRD PGOV PREL SCUL BR AR
 
SUBJECT:  ARGENTINE CG DISCUSSES REGIONAL INTEGRATION, CALLS FOR 
BRAZIL-ARGENTINA AMITY 
 
REF: BRASILIA 661 
 
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SUMMARY 
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¶1.  (U) In a recent speech on Argentine-Brazilian bilateral 
relations, Argentine Consul General Vidal faulted regional 
asymmetries for Mercosul's disappointing economic performance 
(reftel) and proposed strengthening cultural ties as a means of 
achieving regional integration.  Vidal points to industrial, 
juridical, and financial asymmetries as the primary obstacles to 
southern cone integration.  While by no means a cure-all, 
reinforcing cultural similarities within regional partners could 
help ease simmering tensions and encourage the long-term goal of 
overall integration.  END SUMMARY. 
 
-------------------------- 
IMPOLITIC AND UNDIPLOMATIC 
-------------------------- 
 
¶2.  (U) Recently, Argentine Consul General Norberto Vidal, who has 
since departed Brazil, delivered remarks at a professional 
development seminar organized by Noronha Law Offices.  Surprisingly 
impolitic and undiplomatic, Vidal proved an engaging speaker with a 
message seldom heard among Brazilians and Argentines: that they 
should become better friends.  To overcome the regional asymmetries 
inhibiting regional integration, Vidal suggests strengthening the 
Brazilian-Argentine cultural relationship.  Vidal identified three 
principal asymmetries: juridical, industrial, and financial. 
 
------------------------ 
OBSTACLES TO INTEGRATION 
------------------------ 
 
¶3. (U) INDUSTRIAL ASYMMETRY:  Vidal blamed industrial asymmetry as 
the main obstacle to commercial integration.  Taking a historical 
view, Vidal identified present-day industrial asymmetry as the 
result of differing approaches taken by erstwhile Argentine and 
Brazilian dictatorships, with Argentina seeking to de-industrialize 
while Brazil sought progressive industrial reform and development. 
These approaches left deep marks on the respective economies, 
ultimately resulting in Brazil's industrial dominance of the 
Southern Cone.  Vidal noted that in the 1950s, Argentina was first 
among the Latin American markets, whereas now it trails third behind 
Mexico and Brazil.  Although Argentina maintained dominance in some 
sectors (e.g., viniculture - a pet industry of the Argentine CG), 
Brazil's industrial dominance has given rise to resentment among its 
neighbors.  As evidence, Vidal cited the common Argentine complaint 
of pervasive "Brasil dependence" - a pejorative reference to the 
abundance of Brazilian imports on the Argentine market (estimated at 
35 percent of total imports).  This industrial asymmetry exacerbates 
prejudices on both sides of the border, fostering resentment among 
Argentines and a feeling of superiority among Brazilians.  These 
perceptions color the entire regional relationship and create 
barriers to regional integration. 
 
¶4.  (U) JURIDICAL ASYMMETRY:  Vidal also faulted juridical 
imbalances between Brazil and Argentina for complicating regional 
commercial integration.  He cited great disparities in the quality 
and substance of tax laws, corporate laws, and government 
regulations, to name just a few areas.  These juridical differences 
account, in part, for the inability of Mercosul's adjudicating body 
to establish itself as an effective dispute resolution organ.  The 
perceived weakness in Mercosul's dispute settlement body (witness 
Mercosul's inability to mediate the bitter Argentina-Uruguay paper 
mill row) has undermined confidence in the agreement as a whole. 
According to Vidal, this is an outgrowth of the inability to effect 
 
SAO PAULO 00000659  002 OF 003 
 
 
judicial reforms throughout the region. 
 
 
¶5.  (U) FINANCIAL ASYMMETRY:  Vidal was very frank in his treatment 
of the Argentine financial crisis and cited financial asymmetry as 
another factor undermining successful regional integration.  He 
described the Argentine struggle to overcome the financial crisis as 
"re-emerging after the end of the world."  Vidal admits that 
Argentina's financial difficulties effectively handicap its ability 
to focus on narrowing the gap between its neighbors, especially in 
terms of industrial parity.  He also recognized that the financial 
crisis will leave its imprint on Argentina's society and political 
machinery for years to come, complicating the national political 
agenda and retarding formal overtures toward regional integration. 
He used this to segue into "alternative" ways to promote regional 
integration and strengthen the Argentina-Brazil bilateral 
relationship in particular. 
 
----------------- 
"WE ARE BROTHERS" 
----------------- 
 
¶6. (U) EMPHASIZING SIMILARITIES:  To Vidal, mutual cultural 
approbation is the key to strengthening regional ties.  He 
criticized politicians as ineffective in this respect, given that 
they seldom benefit from recognizing common ground and tend to find 
advantage in highlighting differences.  Vidal pointed out that, in 
reality, Argentines and Brazilians have more in common than not. 
Both were colonies, and while Portuguese and Spanish colonization 
left distinct imprints on the respective societies, both countries 
emerged form this experience with numerous commonalities.  Vidal 
mentioned that Brazil's ease of gaining independence and Argentina's 
bellicose efforts marked the psyche of their peoples and credited 
this experience with helping make Brazilians an "easier-going" 
people.  Both countries share a recent history of military 
dictatorship and both have made the transition to representational 
democracy.  Vidal also pointed out that a shared love of art, music, 
and food defines both Argentine and Brazilian cultures and provides 
much common ground to build upon. 
 
¶7. (U) INTEGRATING FROM THE BOTTOM UP:  Vidal claimed that as a 
grassroots effort, mutual appreciation can do more to enable 
regional integration than bilateral summits and the exchange of 
official delegations.  As local opinions begin to favor regional 
integration, national leaders are likely to become more comfortable 
"leading the way."  To this end, Vidal suggested academic, 
agricultural, and industrial exchanges to help strengthen ties 
between the two countries. During a meeting with the Governor of Sao 
Paulo state, Vidal suggested a sister-state proposal that would link 
Sao Paulo with the Argentine state of Mendoza and allow for the two 
regions to share expertise.  Vidal highlighted Mendoza as a region 
that enjoys incredible bureaucratic efficiency and thriving 
viniculture, whereas Sao Paulo enjoys a reputation as a leader in 
industry and innovation.  Sub-regional partnerships such as the Sao 
Paulo-Mendoza pairing would serve to promote the regional 
integration agenda from the bottom up.  Vidal suggests that similar 
sister-state pairings could prove highly successful, helping to 
extend cultural contacts beyond Brazil's southern states that border 
Argentina - i.e., Rio Grande do Sul, Parana, and Santa Catarina. 
 
¶8. (U) NO CURE-ALL:  Vidal recognizes that cultural exchanges alone 
will not solve the regional integration problem.  For example, lack 
of pan-regional infrastructure in terms of integrated waterways, 
roadways, and railroads between countries in the Southern cone is a 
great obstacle to practical, functional commercial integration. 
Nevertheless, increased cultural appreciation at the popular level 
will facilitate political willingness to support regional 
integration efforts, such as infrastructure projects. 
 
SAO PAULO 00000659  003 OF 003 
 
 
 
¶9. (U) CURRENT POPULAR OPINION:  Vidal concluded his remarks by 
citing recent polls indicating that 70 percent of Argentines have a 
positive impression of Brazil, while only 12 percent have a 
distinctly negative opinion.  Moreover, 60 percent of Argentines 
favor Mercosul and regional integration.  Vidal claims that 
traditional rivalries between Brazil and Argentina have lost their 
original foundations and have simply become rivalries for the sake 
of tradition.  He believes culture will ultimately be the great 
unifying force in the region.  Given the seemingly insurmountable 
obstacles to integration, creating a regional culture should be the 
near-term goal, one that will facilitate the longer-term efforts of 
strengthening regional industrialization, judicial reform, financial 
security, and infrastructure development. 
 
¶10. (U) This cable was cleared/coordinated with Embassy Brasilia. 
 
MCMULLEN