MercoPress. South Atlantic News Agency

Peña says the Milei-Lula crisis has not affected how Mercosur functions

Peña said Lula and Milei now hold “irreconcilable differences,” though he argued both understand that the relationship between their countries is greater than the relationship between them.

Paraguayan President Santiago Peña said on Friday that the differences between his Argentine and Brazilian counterparts, Javier Milei and Luiz Inácio Lula da Silva, have had no consequences for Mercosur, despite the diplomatic crisis between the two countries.

“We are always trying to intercede so that differences between heads of state do not reach a point where they affect the bloc,” Peña said in an interview with Paraguayan channel Unicanal, on the eve of completing three years in office. He said Lula and Milei now hold “irreconcilable differences,” though he argued both understand that the relationship between their countries is greater than the relationship between them.

The tension began on July 25, when Milei took part in São Paulo in the Liberal Party convention that proclaimed Senator Flávio Bolsonaro as its presidential candidate. In his speech, the Argentine president called Lula a “thief” and a “convict,” accused him of squandering public funds and directed insults at Supreme Federal Court Justice Alexandre de Moraes. He also described Jair Bolsonaro, sentenced to more than 27 years for attempting a coup and under house arrest, as a friend unjustly imprisoned.

Brasília recalled its ambassador in Buenos Aires, Julio Bitelli, for consultations on July 26. After Milei repeated the insults in a television interview on August 2, the Brazilian government decided on August 4 to downgrade relations to chargé d'affaires level and requested the return of the Argentine ambassador, Daniel Raimondi, who left Brasília the following weekend. There was no declaration of persona non grata and no withdrawal of credentials: both diplomats retain their titles, which would allow them to resume their posts if ties are restored. It is the first time since democracy returned to both countries that the relationship has fallen to that level.

Brazilian Foreign Minister Mauro Vieira described the episode as an unprecedented provocation in more than two centuries of bilateral relations and said the remarks amounted to interference in internal affairs. Argentina's foreign ministry regretted Brazil's “unilateral” decision and said the country “continues to isolate itself from the rest of the region over purely ideological questions.” Foreign Minister Pablo Quirno ruled out a rupture and framed the episode as political and ideological differences between the two presidents.

The matter has caused concern within the bloc. Uruguayan Foreign Minister Mario Lubetkin warned the situation “does not help anyone.” Sources in both governments have indicated they expect no change until after Brazil's elections on October 4, in which Lula is seeking a fourth non-consecutive term.

Mercosur comprises Argentina, Brazil, Paraguay and Uruguay, with Bolivia in the process of full accession.