A noisy regionalist rhetoric dominates Brazil's foreign policy discourse: Brazil is a regional leader, Brazil's foreign policy priority is Latin America, Mercosur remains a central tenet of its foreign policy, etc. etc.
The Mercosur part of this argument has been damaged in recent years by repeated and never-ending disputes, leading prominent commentators like Marcos Janks to call the customs union "a suitcase without a handle," and PSDB presidential candidate Jose Serra a "joke" and a "hurdle" for Brazil. The rest of the equation, however, is largely taken for granted in discussions of Brazilian foreign policy.
Rubens Barbosa, a very prominent retired diplomat and former Brazilian ambassador to London, basically sinks the rest of the argument by pointing out that Brazil's share of foreign investments in the region has fallen from 5.9% in 2006 to 1.7% in 2010. Now, reflect on those numbers: Brazil is currently the world's seventh largest economy, with about 6% of global GDP and Latin America is "its" region. Yet, it basically does not figure among investors into it, leaving the place to "foreigners" like the US, Canada, and EU--particularly Spain--and, increasingly, China. Trade numbers tell the same story: while "up" in absolute terms, the region's share of Brazil's total exports and imports has been declining in recent years.
People have been wondering for a while why Brazil's many regional endeavors had been so devoid of structure, why the Rio Group, UNASUR and especially Mercosur had never really evolved significant institutional capabilities. Obviously, Brazil was not alone in all those, and most Latin American countries are reluctant to tie themselves into a constraining framework with so big a partner as Brazil. But, as Germany and to a lesser extent France have shown with Europe, asymmetry can be compensated in many ways, through institutions that constrain the big fish or through compensation funds. Yet Brazil has never seriously tried those.
The reason looks straighforward: there is simply not enough at stake in the region for Brazil to invest significant amounts of political and economic capital in building serious regional institutions. With so few real ties to the region, political leaders are at a loss to sell serious engagement to the broader public or even the national Congress. Without surprise, they thus fall back to making the right noises in ever multiplying summits and meetings, none of which contributes much to the institutionalization of regional affairs. It is the new inflation: ever-growing mountains of paper on ever-shrinking substance.
The investment numbers reinforce the impression that Latin America is dis-integrating. In the global division of labour, most countries of the region are becoming--again--exporters of primary goods, either minerals, energy or agricultural products, and importers of industrialized ones. Asia, and China in particular, is already the main destination of primary goods and the main source of industrial ones, while Latin neighbours appear increasingly like competitors on global markets. The structural basis of integration is breaking down.
One can argue about how good or bad these developments are, but it is becoming harder to deny that such a breakdown is taking place, however frequent regional summits may be and however thick the Latin solidarity rhetoric that accompany them.