The two leaders of the largest economies of Latin America and Europe met in Berlin on Monday to try and conclude a cooperation and free trade agreement between the South American block and the European Union which has been on the table for over two decades.
Brazilian president Lula da Silva wants to finalize the deal as one of the highlights and success of his six month chair of Mercosur, before he hands over the rotating seat to Paraguay next week. German chancellor Olaf Scholz, with the economy under strain and his ruling coalition facing challenges, would also love to experiment a foreign and trade policy resounding victory.
We are emphatically pushing for the deal to swiftly be concluded, Scholz said during a press conference following consultations with Lula and added, I call on everyone involved to be as pragmatic and as willing to compromise as possible so that we can finalize this deal.
While the two blocs were expected to hold a summit on Thursday in the city of Rio de Janeiro, final approval of a preliminary agreement has remained elusive. Germany's Frankfurter Allgemeine Zeitung newspaper on Monday reported that the EU team had canceled its visit after being informed that the Argentine administration would not support the deal.
Lula pledged to not give up on the trade deal, but he also called on the EU to decide if it was really interested in sealing the agreement.
As long as I can believe that the agreement is possible, I will fight for it, the Brazilian president underlined, who has accused some rich countries (maybe France, Ireland) of not wanting to make any concessions, particularly concerning environment and forestry clearance issues.
Prior to the current German-Brazilian government consultations, Lula with the support of Paraguay had suggested the possibility of failure in the EU/Mercosur talks.
If there's no agreement, patience. It's not for lack of desire. The only thing that needs to be made very clear is that they no longer say it's because of Brazil. And that they no longer say it's because of South America, Lula anticipated on Sunday.
But if passed, the Mercosur-EU deal would create one of the world's largest free trade zones with more than 750 million inhabitants and tens of billions of bilateral trade and investments.
Scholz and Lula are also trying to increase their standing in the international stage. The chancellor because so far he has been unable to re-launch the German economy and the Brazilian leader wants to recover his country's prestige following a period of diplomatic isolation under his predecessor, Jair Bolsonaro.
However because of non coincidental attitudes on the Russian/Ukraine conflict and most particularly on the current war of Israel with the Palestinian group Hamas, the two leaders also have to act with pragmatism. While Lula wants an immediate end of the Israeli bombing of Gaza civilians, Scholz is a stern supporter of Israel's rights to defend itself.
Add to this a sulking outgoing Argentine president Alberto Fernandez who leaves office on Sunday, and is furious because what he considers a great diplomatic success of his making, having Argentina invited to join the BRICS group, but which the incoming president elect Javier Milei has anticipated his administration would reject, boycotting is part of the game including further delaying the EU/Mercosur deal.