2024 G20 Summit highlights diverging paths in Latin America

As the 2024 G20 Summit approaches, scheduled for 18–19 November in Rio de Janeiro, Argentina and Brazil—two major powers in South America—will put their diplomatic and trade relations to the test.

In this context, the leaders of both nations, Brazilian President Luiz Inácio Lula da Silva and Argentine President Javier Milei, stand in stark contrast to each other in terms of their views on the role of the state in the economy and on regional integration. The implications of their differing stances for Latin America’s future are significant, and the summit could either serve as a platform to bridge their positions or further highlight their differences.

Milei’s Agenda and Disruption in Argentine Politics

Argentine politics took a radical turn with the arrival of Javier Milei, whose economic programme is defined by an ultra-liberal approach, featuring promises (yet unfulfilled) to dollarise the economy and drastically reduce the size of the state.

His model is clear: liberalise the Argentine economy to create a fully unrestricted free market. While the dollarisation proposal has seen some popular support due to the country’s severe inflation, it faces serious criticism over concerns that it could limit Argentina’s financial sovereignty and access to monetary policy tools, potentially leaving the country more vulnerable to external crises.

Milei is also sceptical of regional alliances and multilateral organisations. He has expressed doubts about Argentina’s continued membership in Mercosur, a bloc he sees as a barrier to the country’s trade and development.

This stance challenges the historic cooperation between Argentina and Brazil and undermines the vision of a strong South American bloc. His perspective contrasts sharply with Brazil’s stance, which views Mercosur as a pillar for regional development.

Lula’s Commitment to an Active Mercosur

In contrast, President Lula has championed regional integration as a crucial tool for strengthening Latin America’s autonomy in a complex global landscape.

He argues that enhanced economic and political cooperation with neighbouring countries is key to defending the region’s interests against powers like the United States, China, and the European Union. Under Lula’s leadership, Brazil not only firmly supports Mercosur but also seeks to revitalise it and explore its potential expansion through agreements with African and Asian countries.

Lula’s vision suggests Mercosur should serve as an economic and social driver, providing regional solutions to global issues and promoting stability and sustainable development in South America. This approach poses a challenge to Milei’s agenda, as it implies a commitment to integration policies and institutional strengthening, which Milei views as limitations on the free market.

Ideological Differences and Perspectives on Regional Trade

The views of Milei and Lula not only reflect distinct national positions but also represent a clash of economic and ideological paradigms with repercussions across Latin America. While Lula advocates for a model of integration, local industry protection, and redistribution, Milei believes Argentina’s true progress will come from an open economy, with minimal state intervention and a framework that prioritises individualised trade over regional blocs.

For regional business leaders and observers, both leaders’ positions pose risks and opportunities. Lula’s approach aims to attract foreign investment to Brazil that values institutional stability and the potential of the South American market. Meanwhile, Milei’s vision seeks to fully open Argentina’s economy, attracting investors with a higher tolerance for risk and willingness to operate in a highly liberalised environment.

Energy and Climate Change: Another Key Difference

The governments of Brazil and Argentina also differ significantly in their approaches to environmental policies and climate change. Lula has prioritised the protection of the Amazon and renewed international environmental commitments, setting ambitious decarbonisation targets and assuming a regional leadership role in sustainability. In contrast, Milei takes a sceptical stance on climate change.

In this regard, Brazil’s energy landscape is advanced, with nearly 90% of its electricity derived from renewable sources. Global leaders such as the UK’s Chancellor of the Exchequer Rachel Reeves and US Treasury Secretary Janet Yellen have praised Brazil’s progress in green energy.

While hydropower remains a cornerstone, there is growing attention on wind and solar energy. According to the “Green Energy in Latin America” report by Sherlock Communications, Brazil is projected to generate 58% of Latin America’s renewable capacity by 2030.

Elbia Gannoum, General Director ABEEólica notes in the report that “Brazil is positioning itself as a leader in the green hydrogen market, which is vital for industrial decarbonisation,” adding that “green hydrogen will be a major consumer of wind and renewable energy.”

In stark contrast, the Argentine president questions state intervention in environmental policies and prioritises economic development over ecological commitments. This divergence may also complicate negotiations at the 2024 G20 Summit, where the two countries are expected to express opposing views on balancing economic growth with environmental preservation—key topics on the global agenda.

Implications of the G20 and the Regional Landscape

The 2024 G20 summit offers an opportunity for both countries to explore potential points of convergence. However, Milei’s stance on Mercosur may complicate efforts to present a united front. On key issues such as climate change, human rights, and infrastructure cooperation, Milei and Lula face challenges in finding common ground.

Lula, for instance, has advocated for greater environmental and social responsibility at the G20, aligning with the demands of European blocs and climate activists. In contrast, Milei tends to view these global commitments as obstacles to Argentina’s economic growth, arguing that the country should not limit its development due to environmental regulations imposed externally.

Nonetheless, the two leaders could find common ground on shared interests, such as tackling inflation and stabilising the region. Brazil has a vested interest in seeing a more stable Argentina, as it is one of its main trading partners, and both countries face inflation and poverty challenges that could be addressed through coordinated policies. However, achieving this will depend on each president’s ability to prioritise regional cooperation over ideological differences.

The Importance of a Unified Vision for the Region

The interaction between Argentina and Brazil at the G20 will be closely watched by leaders and business people worldwide.

The ability of these two countries to work together—or at least maintain an open dialogue—could impact the stability of Latin America at a time when the global economy faces significant challenges, such as the climate crisis, geopolitical tensions, and economic slowdown. Although the differences between Lula and Milei are profound, their shared interest in a stable and prosperous region may be the key to overcoming their differences.

The future of the Argentina-Brazil relationship will depend on the ability of their leaders to find a balance between their visions. The 2024 G20 Summit could be a decisive moment to redefine cooperation between the two nations and project an image of unity in Latin America, allowing the region to assume a more active role on the international stage.