Uruguay President-elect warns of tensions in Mercosur trade bloc

Uruguay President-elect warns of tensions in Mercosur trade bloc

By Fabian Werner

South America’s Mercosur trade bloc faces a tense future, the president-elect of member nation Uruguay said on Monday, referring to a diplomatic spat between regional heavyweight economies Brazil and Argentina.

Brazil’s right-wing leader Jair Bolsonaro and Argentina’s incoming leader, left-leaning Peronist Alberto Fernandez, have sparred openly. The Brazilian called Fernandez a “red bandit” and said voters had made a mistake by electing him.

“The tensions are clear,” Luis Lacalle Pou said after meeting with outgoing Uruguayan leader Tabare Vazquez. He added that he hoped “pragmatism would prevail over ideology.”

If relations between South America’s two biggest economies falter, it could contribute to the global trade turmoil due to the tension between the United States and China.

Investors are monitoring Washington and Beijing for signals about trade. The dollar and global stock markets retreated on Monday after U.S. President Donald Trump said he would restore tariffs on some imports from Brazil and Argentina.

Lacalle Pou, leader of the conservative National Party, will take office on March 1, ending 15 consecutive years of center-left government. He claimed victory last week over ruling party candidate Daniel Martinez after a Nov. 24 election.

Lacalle Pou also announced that Uruguay will withdraw from the Montevideo Mechanism, an initiative alongside Mexico and a grouping of Caribbean countries aimed at mediating the conflict in Venezuela, which was established earlier this year.