Brazilian president Fernando Cardoso postponed his official state visit to Argentina scheduled for next April 16/17th. Although the Brazilian Ministry of Foreign Affairs alleged problems with the presidential agenda, political analysts in the industrial hub of Sao Paulo claim the decision is directly related to the Argentine crisis and its consequences.
Although Brazil's first reaction to the Argentine emergency package was positive ("we want a strong and dynamic Argentine economy"), some of the tariff modifications, particularly those regarding high technology capital imports, which were dropped to zero, have apparently irritated Brazil. Argentina is a strong purchaser of Brazilian cellular phones and computer components. "This is not what we discussed with the Argentines", said Carlos Caramurú head of International Relations in the Brazilian Ministry of Finance. From Toronto, participating in a continental summit, Economy Minister Domingo Cavallo indicated, "we dropped tariffs to zero because we want Argentina to develop a high technology industry, in computers and communications". However, more cautious political analysts in Brasilia believe the postponement is more in line with the development of events in Argentina. "Argentina has Brazil's support, and they still have things to iron out, so the presidential visit will take place when it can harbour greater impact and have a multiplying effect", said Carlos Freitas, a respected Brazilian political columnist. Reflecting Brazilian markets uncertainty about the Argentine situation, the local currency, Real, remains stubbornly floating at 2,15/2,18 to the dollar, when it should be in the range of 1,98/2,02 Reales to the dollar.