IMPACT OF BRAZIL-ARGENTINA RELATIONS ON MERCOSUR DEVELOPMENT

The paper deals with the formation and development of the South American integration process – MERCOSUR. The authors suggest that such integration process as the Southern Common Market is caused by the change in the perception of each other by Brazil and Argentina, the two member countries and the founders of MERCOSUR, which in 1985 led to a bilateral agreement on preferential association between these countries. To confirm this hypothesis, the authors conducted the analysis of the change and development of relations between the two founding countries of the Southern Common Market – Brazil and Argentina before its establishment – from the beginning of the 20 th century and after the establishment of MERCOSUR. The paper considers the stages of its development from its foundation to 2020; provides the description and analysis of events characterizing each of the identified stages; identifies the characteristics of the cooperation between the MERCOSUR countries, in order to track and analyze the impact of the relations of these countries on the development of this association, on its internal agenda and the decisions made by the association regarding its participants, such as Venezuela and the suspension of its membership; on agreements and interaction with third countries, as well as with other unions and supranational associations. This study also describes the possible causes of the present is the to the the


Introduction
MERCOSUR is a process of regional integration initiated by Argentina, Brazil, Paraguay and Uruguay. The main objective of the MERCOSUR agreement is to create a common economic space in the territories of the member countries thus providing commercial and investment opportunities through the competitive integration of national economies into the international market (MERCOSUR, 2015). Subsequently, Venezuela (2012) and Bolivia (2015) joined MERCOSUR, however the first is deprived of all rights and obligations related to its membership in MERCOSUR (2017) (Derechos Humanos..., 2017), and the second is only in the process of accession. The fundamental document of MERCOSUR is the agreement signed by the founding countries of the Argentine Republic, the Federal Republic of Brazil, the Republic of Paraguay and the Eastern Republic of Uruguay on August 26, 1991 in Asunción (MERCOSUR, 1991), but this agreement was preceded by another significant event -the signing of the bilateral agreement of the preferential association by Raúl Alfonsín (Argentina) and José Sernay (Brazil) in 1985. The authors believe that this agreement did not only demonstrate a change in relations between the two countries of South America, but also served as the foundation for further formation of the Southern Common Market.

Problem Statement
According to the authors, it was the changes in relations between Brazil and Argentina that contributed to the integration process known as MERCOSUR. This view was presented by the German scientist Bechle (2011), who believed that MERCOSUR is a consequence of the change of political regimes in these countries, which formed the basis for the Southern Common Market, which the rest of the participants joined later.

Research Questions
 One of the issues raised in this paper is the impact of relations between the two countries -Argentina and Brazil -on the establishment of a supranational association in South America and on its further development.
 Another issue of this study is the continued impact of relations between the two largest MERCOSUR countries -Brazil and Argentina -on the trajectory of development of this association.

Purpose of the Study
This work is devoted to the study and analysis of changes in international relations between Brazil and Argentina before and after the formation of the Southern Common Market -the result of the interaction between the two countries. The purpose of the study is to show how relations between these two states influenced the formation of MERCOSUR, as well as how their relations affect the work of this association, and to this end, to gradually consider its development. https://doi.org/10.15405/epsbs.2021.11.198 Corresponding Author: Maria I. Talova Selection and peer-review under

Research Methods
The main methods of study include the descriptive method, the comparative method, the analytical method, as well as the statistical analysis.

Establishment of MERCOSUR with Argentina and Brazil
Argentina and Brazil are the two "major" countries in terms of territory and economic opportunities of the MERCOSUR member. However, the relations between these countries are rather more competitive than friendly. At the end of the 19 th century, when Brazil's conservative elites designated its foreign policy objective as the consolidation of regional hegemony and development of the idea of superiority of power in relations with neighbors, this idea was not supported in Argentina (Borzova, 2012). This means that the rivalry between these countries has deep roots and has developed historically. In the 20 th century, the position of Brazil's perception of Argentina as its main geopolitical rival also dominated. Only the Southern Common Market turned two rivals into major trade and economic partners.
The relations between Argentina and Brazil may be conditionally divided into three stages. The first stage -from the beginning of the 20 th century to the end of the 1950s; during this period, Brazil could not compete with Argentina for regional dominance as it lagged far behind its rival in economic, political and cultural aspects. Brazil began to be perceived by Argentina as a serious geopolitical rival and threat on the border only by the beginning of the 60s of the 20 th century. For a long time the main cause of disputes between the two countries has been the issue of control over the La Plata basin and the leadership in Latin America (Kazakov, 2007). The situation began to change in the mid-80s; gradually the process of rapprochement between the two countries began to be monitored. The relations reached a new level when Brazil supported Argentina in its territorial disputes with Great Britain over the ownership of the Falkland Islands (Malvinas). In 1985, a turning point occurred in Argentine-Brazilian diplomatic relations with the beginning of a gradual but steady process of economic integration and bilateral political cooperation promoted by the Presidents Alfonsín and Sarney, which ended in 1991 with the signing of the Asunción Treaty.

MERCOSUR laid the foundation for close cooperation between the two largest countries of South
America replacing the usual competition with a tinge of hostility to countries -competition of economic partners. However, even within MERCOSUR, the relations between the two countries are not without disagreements and conflicts, but such differences have ceased to be perceived by the countries as threats to security. Currently, there are no large-scale differences between Argentina and Brazil that could lead to an armed conflict.
The establishment of MERCOSUR fostered the increase in the economic interaction between countries. Argentina increased its imports from and exports with Brazil, thus increasing the weight of Brazil in the Argentine economy, and making it significantly larger than the Argentine in the Brazilian economy (Yakovlev, 2008). However, this pattern suggested that the relations between Brazil and Argentina are extremely asymmetric and disadvantageous to the latter, especially for sectors of the https: //doi.org/10.15405/epsbs.2021.11.198 Corresponding Author: Maria I. Talova Selection and peer-review under responsibility of the Organizing Committee of the conference eISSN:  1507 Argentine economy that duplicate Brazilian production. In general, with the exception of sectors that contributed to the establishment of MERCOSUR, it has been said that in the Argentine industrial sector that there is no balance between costs and revenues; and there was no benefit from the integration with Brazil.
The advent of left-wing governments in both countries -Lula da Silva and Nestor Kirchnerbrought the awareness of the need to strengthen good-neighborly relations and build a close political partnership. During this period, many meetings were held between the two presidents and important documents were signed, for example, the Buenos Aires Consensus. In this document, the two presidents overestimated the consolidation of democracy as a mechanism to combat poverty and unemployment and identified the state as the entity responsible for this activity (Rapoport & Madrid, 2011). Besides, "they proposed a development policy taking into account regional diversity and pledged to jointly strengthen the multilateral order based on the sovereign equality of states both in the UN and in the WTO" (Cortes & Creus, 2009). In this agreement, the heads of state note that "MERCOSUR is not just a commercial bloc, but also a catalyst for values, traditions and common future". At this stage the priorities of MERCOSUR are focused on integration, again in the field of production and development, promotion of the integration of energy and infrastructure, macroeconomic coordination, defense and international security, and the full The situation with Brazil has changed with the return of Kirchner supporters to power in Argentina -Alberto Fernandez as a president and Cristina Kirchner as a vice president. Thus, in 2020, Argentina announced a partial suspension of its participation in MERCOSUR (Churikov, 2020) explaining this by an attempt to protect its economy from a situation related to the spread of Covid-19. In fact, this decision meant that the international activities of MERCOSUR turned to be "frozen", which caused disapproval among the rest of the organization. Argentina will no longer participate in MERCOSUR free trade https: //doi.org/10.15405/epsbs.2021.11.198 Corresponding Author: Maria I. Talova Selection and peer-review under responsibility of the Organizing Committee of the conference eISSN: 2357-1330 1508 negotiations with South Korea, India, Canada, Singapore, Lebanon and other trading partners, because it believes that this could lead to another crisis of the bloc.

Stages of MERCOSUR development
Conditionally, the development of MERCOSUR may be divided into several stages. Like any political and economic entity, during its existence MERCOSUR had its "ups and downs".
The first stage may be described as the "take-off stage". Its time frame dates from 1991 to 1998. During this period, trade was liberalized and regional trade increased. Between 1991 and 1995, exports within the zone increased from 11% to 20.4%. Intra-alliance trade increased from $4.1 billion in 1990 to This was followed by the uncertainty stage of 2008-2011. This stage was caused by the global economic crisis, and although the previous crisis of the region was much stronger, the change in the global context also affected the regional trade of the MERCOSUR bloc countries.
In 2008, with the onset of the global financial and economic crisis, the integration process faced a decline in the growth rate of the economies of the countries of the region, which especially affected Brazil, their main trading partner. This slowdown forced the governments to focus on the commercial aspects of integration in terms of protection, creating more obstacles and barriers within MERCOSUR. https://doi.org/10.15405/epsbs.2021.11.198 Corresponding Author: Maria I. Talova Selection and peer-review under responsibility of the Organizing Committee of the conference eISSN: 2357eISSN: -1330 1509 This was the wrong decision, because in the emerging multipolar world, with a strong concentration and foreigners of the economies of the countries, one of the priorities should be to give a new impetus to regional integration (Taiana, 2016).
By mid-2010, the dynamics of MERCOSUR's domestic agenda had improved overcoming some of the paralysis created by differences between countries.
Despite all the problems and differences among the MERCOSUR member countries during this period, as well as the impact of the global economic crisis, the indicators of intra-zone trade remained at the level of previous years.
Following the stage of "uncertainty" there is the stage of "economic stagnation" of 2011-2020.
The beginning of this period was characterized by stagnation in the world economy, a sharp drop in commodity prices, which also affected the MERCOSUR countries. In the current situation, the countries As a result of these three successive events, right-wing governments came to lead the three MERCOSUR countries -Brazil, Argentina and Paraguay, which sabotaged Venezuela's interim presidency in the alliance when it came to take the reins of government. This was followed by the suspension of Venezuela's membership in the alliance according to Article 6 of the Ushuai Protocol in connection with the undermining of the democratic regime in the country (MERCOSUR, 2017). We cannot neglect the political pressure of the right-oriented governments of the MERCOSUR countries at that time on left-oriented Venezuela.
The change in orientation of the two largest MERCOSUR countries -Argentina and Brazil also led to a change in the agenda of the bloc shifting it towards rapprochement with the Pacific Alliance and with the European Union, with which the Strategic Association Agreement was signed (15.07.2019), as a result of which MERCOSUR began to export its goods to the European Union with a minimum duty, while high-quality European goods were subject to a large tax. This situation caused concern on the part of trade unions of the MERCOSUR countries, which believed that this will negatively affect the bloc's industry.
The situation was aggravated by a bunch of Alberto Fernandez and Cristina Kirchner coming to power in Argentina. Brazil has made it clear that if Argentina's leftist newly-minted government begins to hinder ideas and deals promoted by the bloc's right-wing governments, Argentina may be excluded https: //doi.org/10.15405/epsbs.2021.11.198 Corresponding Author: Maria I. Talova Selection and peer-review under responsibility of the Organizing Committee of the conference eISSN:  1510 from integration mechanisms. Perhaps such statements did not frighten the new Argentine government, because after only a couple of months, in April 2020, Argentina announced a partial withdrawal from the existing and future MERCOSUR agreements, with the exception of the agreement with the EU. Argentine President Alberto Fernandez said that his priority is to protect local companies in the face of the Covid-19 pandemic.

Conclusion
Currently, MERCOSUR is a fairly promising supranational entity in South America. The participation of Argentina and Brazil in MERCOSUR is a good opportunity for the countries to continue to develop its export industry, maintain and improve good-neighborly relations with neighboring countries, although it is obvious that for Brazil this association is much more profitable than for Argentina; however, regional economic integration is an opportunity to pursue a more independent policy from the United States.
The background of MERCOSUR begins with a positive trend in the relations between Brazil and Argentina, which is subsequently enshrined in bilateral agreements between these countries, and later in the Asunción Treaty in 1991. It is worth noting that the Argentine perception of Brazil began from the perception of it as an opponent, and only later, as a partner. If in the 1970s the views on seeing Brazil as a rival converged -as to what it was considered a hypothesis of a military conflict -today these views are based on the perception of Brazil as an economic competitor.
From its establishment to date, the association has proved that, despite the problems during its existence, the association has continued to function improving the economic performance of the participating countries, as well as contributing to the preservation and maintenance of a democratic regime in its states. However, during its existence, it became clear that it was very sensitive to an unfavorable external environment. One of the major pressing challenges of unification is the differing political positions of the participating governments. It is possible that today's position of Argentina in relation to the activities of MERCOSUR is the result of the rise of the peronismos Alberto Fernandez and Cristina Kirchner to power.
Partial withdrawal of Argentina from the MERCOSUR agreements temporarily "froze" the international activities of the entire bloc. None of the agreements will have legal force without the signatures of the representatives of all four countries of the bloc. Besides, this situation may weaken the rules that prohibit MERCOSUR members from signing bilateral agreements without the approval of all participants in the bloc (Riveras, 2020).