Latin-America round-up: President-elect Milei, Mercosur-EU and “milestone” lithium agreement

Tue 21 Nov 2023
Posted by: Phillip Adnett
Trade News

South America on globe

In the latest edition of the IOE&IT Daily Update’s Latin America round-up, we cover how diplomats have reacted to a new Argentinian president-elect, the prospects for a trade deal between the EU and Latin America and a “milestone” lithium deal.

New Argentina president-elect

The incoming Argentinean president has promised to re-shape his country’s trading relationships.

President-elect Javier Milei, who beat incumbent economy minister Sergio Massa 56%-44% on Sunday (19 November), said he will cut links with both China and Brazil, currently two of the country’s biggest trading partners.

Milei, who is described as a “radical libertarian economist” has said he would not engage with “communist” countries, that he says includes Brazil under its president Luiz Inácio Lula da Silva and China under Xi Jinping.

Although markets reacted well to his win, the political outsider does not have a majority in the Argentine chamber of deputies or senate.

Milei, dubbed “el loco” (the madman) by his critics, has promised to radically reshape Argentina’s economy, including abolishing the central bank, reducing the number of government departments down from 18 to 8 and pursuing a policy of dollarisation.

The president-elect will take office on 10 December for a four-year term.

Mercosur

The election of the libertarian economist has spurred on talks between the EU and Mercosur over a long-awaited trade deal between Europe and Latin America.

The FT reports that negotiators on both sides are looking to speed things up, with one senior Brazilian diplomat saying that they were targeting a deal by 7 December: three days before Milei would take office.

Milei has previously promised to take Argentina out of Mercosur.

There is additional pressure to conclude a deal soon, as Paraguayan president Santiago Pena has previously said he would not continue the talks if an agreement was not reached by the time Paraguay takes over the Mercosur presidency from Brazil on 6 December.

Although insiders told Reuters that they did not expect Milei to follow through on his threats, one Brazilian diplomat said that Brazil’s president Lula “will probably be even more keen to get it done now”.

Lithium agreement

Chile and Argentina, two of the three countries that make up the so-called “lithium triangle”, have signed an agreement on strategic cooperation over the critical mineral.

According to MercoPress, foreign ministers Alberto van Klaveren of Chile and Santiago Cafiero of Argentina signed the agreement in a video conference.

Van Kleveren said that the deal “represents a milestone for Chile”.

Together with Bolivia, the three Latin American countries sit on over half of the world’s reserves of lithium, although they are each pursuing a different strategy in relation to taking advantage of their deposits.

While the Chilean government has looked to bring its mining industry under state control, Argentina has promised a more market-friendly future. Bolivia has recently invested in mining facilities, having previously left its deposits alone.

Colombia-Venezuela meeting

The presidents of Colombia and Venezuela have announced a new alliance for state-owned oil companies in the two countries.

Colombian president Gustavo Petro and Venezuelan leader Nicolas Maduro met in Caracas for the fourth time in a year, according to Bloomberg Linea.

Petro said it was “very likely” that that the two countries’ agencies would start working together.

Colombia is looking to import natural gas and light crude oil from Venezuela and is exploring its options fully.

Venezuela is also looking to boost its energy exports with the Caribbean, and is said to be close to approving a licence for Shell and National Gas Company of Trinidad and Tobago to develop an off-shore natural gas field and export the product to the Caribbean country, according to Reuters.

UK and Latin America

Minister for Americas and the Caribbean David Rutley has re-committed the UK to a “constant” partnership with Latin America in a recent speech.

In an address celebrating the 80th anniversary of Canning House, a think-tank focused on building relations between the UK, Latin America and Iberia, Rutley said he had travelled to the Americas 16 times and visited 25 countries during his 13 months in office.

Noting that China and Russia were both looking to expand their reach into the Spanish-speaking world, the minister emphasised that the UK “is determined to be constant in our offer of partnership with Latin America”.

He added: “The UK’s joining CPTPP sets the stage for deeper trade and investment ties with several Latin American partners.”

In response to the election of Milei as Argentine president, the minister emphasised that the government would work together with the incoming leader, but re-affirmed that the UK would stand in constant support of the rights of Falkland Islanders.