South American Trade: Turmoil and Opportunity

Argentina’s continuing economic crisis is putting new pressure on Mercosur – South America’s leading attempt at an integrated market. After swift progress in its early years, the group now faces challenges that could break it apart or see it drift into irrelevance.

The World Today
6 minute READ

Michael Reid

Senior Editor, Latin America and Spain, The Economist

When the presidents of the Mercosur countries assembled in Montevideo for their bi-annual summit in December, one of the seats around the table was empty. As the meeting took place, the President of Argentina, Fernando de la Rua, was facing a revolt on the streets of Buenos Aires. The disturbances ended with twenty seven people dead and the President’s resignation.

These momentous events capped a difficult period for Mercosur, South America’s leading regional trade block. Since Brazil’s devaluation and switch to a floating exchange rate in January 1999, it has been dogged by rows between the two main partners.

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