Can Mercosur Survive? Domestic and International Constraints on Mercosur

Abstract

Abstract Mercosur has survived several crises by resorting to presidential diplomacy, but it risks becoming an empty shell unless member states work to coordinate macroeconomic policies. Its survival depends on the outcome of domestic political struggles in Brazil and Argentina and on the harmonization of exchange-rate policies between the two countries. This article examines the Argentine-Brazilian “trade wars” provoked by successive devaluations of the Brazilian currency, aggravated in 2001 by the Argentine economic crisis. The social explosion in Argentina in December 2001 showed that domestic actors can successfully challenge proglobalization policies. To consolidate, Mercosur will have to address the democratic deficit while building supranational institutions and an effective dispute-settlement system.