With Argentina's president skipping Mercosur, the future of the trade alliance looks doubtful

ASUNCIÓN, Paraguay (AP) — The most notable thing about the Mercosur trade bloc's meetings on Sunday in Paraguay was an absence — that of Argentine President Javier Milei.

With the Argentine populist skipping the summit to star at a right-wing rally in Brazil, South America's biggest trade bloc — politically divided, notoriously slow-moving and beset by backsliding — faces an uncertain future. Milei has advocated for pulling Argentina, a leader of the alliance, out of the agreement altogether.

Overseeing preparations for the presidential summit kicking off Monday after initial meetings, President Santiago Peña of Paraguay — the bloc's rotating chair — set low expectations for what would be accomplished.

“I hope that this summit we are going to hold on Monday will be an opportunity to reflect, at a time when Mercosur is clearly not going through its best moment,” Peña told journalists from Paraguay's capital of Asunción, where 33 years ago the presidents of Argentina, Brazil, Paraguay and Uruguay signed the revolutionary free-trade treaty that soon became Mercosur.

In 1991, as countries across Latin America were shaking off military dictatorships and opening up to free-market ideas, the formation of Mercosur, a customs union of once-estranged neighbors, signaled a regional breakthrough that sent capital surging across borders.

But over recent decades, experts say, protectionism and political volatility have scuppered high hopes. The bloc has put up more barriers than it has broken down. The group's common external tariff is riddled with exceptions. Outside South America, the bloc has struck just two free trade deals, with Egypt and Israel.

The fact that the countries produce similar goods, mostly agricultural, hasn't helped matters. Trade within the bloc remains low, hovering around some 15% of its members' total commerce.

“These countries could be 5,000 miles apart and still do the trade that they’re doing at the moment,” said Christopher Ecclestone, a strategist with investment bank Hallgarten & Company. “It’s not the best idea for a free trade area if you’re all producing the same things at the same prices.”

Politically powerful industries in Brazil and Argentina, the continent’s two biggest economies, long have dominated deal-making in the bloc, stirring consternation among their smaller partners that increasingly feel shunted to the sidelines.

In 2021, the bloc hit a new low point when Uruguay announced that it would seek a deal with China outside the bloc. Mercosur's founding treaty forbade such bilateral agreements — extra sales for Uruguay would come at the expense of producers in Brazil and Argentina.

Uruguay’s president, Luis Lacalle Pou, who has staked his economic legacy on opening up to China, said Mercosur has held his country “hostage.”

Incensed over the breach of solidarity, Brazil announced it would pursue a broader trade deal with China on behalf of the bloc. But diplomats on Sunday reported no progress in those negotiations. Paraguay's strained ties with Beijing over its recognition of Taiwan complicates matters.

For the last 20 years, the bloc has also sought to finalize a free-trade agreement with the European Union to no avail. Argentines have criticized the draft deal as unfairly favoring Brazil. European countries, particularly France, have also opposed it.

“I’ll tell you, honestly, I don’t see the conditions for it,” President Peña said of a prospective deal.

Although there was some optimistic chatter in the conference room Sunday about future deals with the United Arab Emirates, South Korea and Japan, experts have warned that the bloc's reputation for torturous yearslong negotiations could throw cold water on things.

Now, President Milei’s shocking decision to skip the annual summit — and a critical chance to thaw relations with his ideological foe, left-wing Brazilian President Luiz Inácio Lula da Silva — has exacerbated internal discord. The last time an Argentine president bailed on a Mercosur meeting was in 2001, when then-President Fernando de la Rúa had the excuse of an unprecedented financial disaster.

Although libertarian President Milei advocates free trade, he has bashed Mercosur as “defective," a challenge to his free-market overhaul of Argentina’s spiraling economy.

Under his left-leaning Peronist predecessors — as left-wing political parties dominated other Latin American countries — Mercosur took on a political dimension, a sort of rival project to Washington's free trade agenda.

With Milei shattering that consensus, it remains unclear whether other countries will follow Argentina’s example. Uruguay holds presidential elections in October.

“This kind of attitude, previously from Brazil (under hard-right former President Jair Bolsonaro) and now from Argentina, weakens Mercosur as a whole,” said Juan Gabriel Tokatlian, professor of international relations at the University Torcuato Di Tella in Buenos Aires.

Of Milei's absence, he added: “This is a serious problem.”

Argentina's top diplomat on Sunday chimed in during meetings with thinly veiled criticism, going so far as to raise the possibility of the bloc breaking apart.

“Argentina is promoting a new foreign economic policy, strategically focused on freedom,” Argentine Foreign Minister Diana Mondino told her counterparts in Paraguay. “If it's not possible to advance as Mercosur, let’s think about the possibility of having bilateral agreements."

Brazilian Foreign Minister Mauro Vieira shot back that he still places stock in regional cooperation to achieve prosperity. “We must work constantly and constructively to strengthen and not to diminish Mercosur's institutions," he said.

Even as critics call Mercosur a relic of the past, the bloc is growing for the first time in years. During Monday's summit, presidents will ratify Bolivia as the fifth full member of the alliance.

“It means being part of an important space for regional integration,” said socialist President Luis Arce of Bolivia ahead of his Paraguay visit, his first foreign trip since Bolivia’s alleged military coup attempt.

Claims by Milei that President Arce himself orchestrated the coup — which he repeated onstage before a cheering crowd in southern Brazil Sunday — have sparked a political firestorm.

Associated Press writers Isabel DeBre in Buenos Aires, Argentina, and Gabriela Sá Pessoa in Sao Paulo, Brazil, contributed to this report.

Jaqueline Alexander walks outside her house to her daughter Nicole Brandel, in Kuna Pyapy Mbarete neighborhood on the outskirts of Asuncion, Paraguay, Saturday, July 6, 2024. The heads of state from South America's Mercosur trade bloc will gather in Asuncion on July 8. (AP Photo/Rodrigo Abd)

Sofia Maldonado, wearing a skirt in national colors, stands next to her father dressed as "Toro Kandil" for the San Juan festivities, in the Kuna Pyapy Mbarete neighborhood, on the outskirts of Asuncion, Paraguay, Saturday, July 6, 2024. The heads of state from South America's Mercosur trade bloc will gather in Asuncion on July 8. (AP Photo/Rodrigo Abd)

Foreign ministers attend a Mercosur Summit session at the Port building in Asuncion, Paraguay, Sunday, July 7, 2024. Heads of state from South America's Mercosur trade bloc will gather in Asuncion on July 8. (AP Photo/Jorge Saenz)

Brazil's Foreign Minister Mauro Vieira, center, attends a Mercosur summit session at the Port building in Asuncion, Paraguay, Sunday, July 7, 2024. Heads of state from South America's Mercosur trade bloc will gather in Asuncion on July 8. (AP Photo/Jorge Saenz)

Argentina's Foreign Minister Diana Mondino arrives at the Port building to attend a Mercosur summit in Asuncion, Paraguay, Sunday, July 7, 2024. Heads of state from South America's Mercosur trade bloc will gather in Asuncion on July 8. (AP Photo/Jorge Saenz)

Foreign ministers, front row, and staff pose for a photo ahead of a Mercosur summit at the Port building in Asuncion, Paraguay, Sunday, July 7, 2024. From left are Uruguay's Omar Paganini, Argentina's Diana Mondino, Paraguay's Ruben Ramirez, Brazil's Mauro Vieira and Bolivia's Celinda Sosa. (AP Photo/Jorge Saenz)

An Israeli airstrike hit a mosque in central Gaza and Palestinian officials said at least 19 people were killed early Sunday. Israeli planes also lit up the skyline across the southern suburbs of Beirut, striking what the military said were Hezbollah targets.

The strike in Gaza hit a mosque where displaced people were sheltering near the main hospital in the central town of Deir al-Balah. Another four people were killed in a strike on a school sheltering displaced people near the town.

The Israeli military said both strikes targeted militants, without providing evidence.

An Associated Press journalist counted the bodies at the Al-Aqsa Martyrs Hospital morgue. Hospital records showed that the dead from the strike on the mosque were all men, while another man was wounded.

In Beirut, the strikes reportedly targeted a building near a road leading to Lebanon’s only international airport and another formerly used by the Hezbollah-run broadcaster Al-Manar.

Israel and Hezbollah have traded fire across the Lebanon border almost daily since the day after Hamas’ cross-border attack on Oct. 7, 2023, which killed 1,200 Israelis and took 250 others hostage. Israel declared war on the Hamas militant group in the Gaza Strip in response. As the Israel-Hamas war reaches the one-year mark, nearly 42,000 Palestinians have been killed in the territory, and just over half the dead have been women and children, according to local health officials.

Nearly 2,000 people have been killed in Lebanon in the latest conflict, most of them since Sept. 23, according to the Lebanese Health Ministry.

Here is the latest:

BEIRUT — The southern suburbs of Beirut were hit by more than 30 strikes overnight, the heaviest bombardment since Sept. 23, when Israel began a significant escalation in its air campaign against Hezbollah in Lebanon, Lebanon’s state-run National News Agency reported Sunday.

The targets included a gas station on the main highway leading to the Beirut airport and a warehouse for medical supplies, the agency said.

Some of the overnight strikes set off a long series of explosions, suggesting that ammunition stores may have been hit.

PARIS — French President Emmanuel Macron called for “a halt to arms exports for use in Gaza,” saying it's urgent to avoid escalating tensions in the region, his office said.

Macron drew strong criticism from Israel’s Prime Minister Benjamin Netanyahu by saying "the priority is … that we stop delivering weapons to fight in Gaza.” He made the comments in an interview with France Inter radio, which was recorded on Tuesday and aired Saturday.

France doesn’t deliver any weapons to Israel, Macron said.

Netanyahu released a video statement in which he called out the French president by name and referred to such calls as a “disgrace.”

In a statement, Macron’s office said “France is Israel’s unfailing friend. Mr. Netanyahu’s words are excessive and irrelevant to the friendship between France and Israel.”

“We must return to diplomatic solutions,” it added.

The statement also said that Macron had demonstrated his commitment to Israel's security when France mobilized its military resources in response to the Iranian attack. French authorities did not provided details about France’s role.

Macron has called for an immediate cease-fire in both Gaza and Lebanon.

DEIR AL-BALAH, Gaza Strip — An apparent Israeli airstrike early Sunday killed at least 18 people in central Gaza, Palestinian medical officials said.

The strike hit a mosque sheltering displaced people near the al-Aqsa Martyrs hospital in the town of Deir al-Balah, the hospital said in a statement.

An Associated Press journalist counted the bodies at the hospital morgue. Hospital records showed that the dead were all men. Another two men were critically wounded, the hospital said.

The Israeli military did not immediately comment about the strike on the mosque.

The latest strikes add to the mounting Palestinian death toll in Gaza, which is now nearing 42,000 according to the Palestinian Health Ministry. The ministry does not differentiate between civilian and militant deaths, but many of the dead were women and children.

BEIRUT — Powerful new explosions rocked Beirut’s southern suburbs late Saturday as Israel expanded its bombardment in Lebanon, also striking a Palestinian refugee camp deep in the north for the first time as it targeted both Hezbollah and Hamas fighters.

Thousands of people in Lebanon, including Palestinian refugees, continued to flee the widening conflict in the region, while rallies were held around the world marking the approaching anniversary of the start of the war in Gaza.

The strong explosions began near midnight after Israel’s military urged residents to evacuate areas in Beirut’s Haret Hreik and Choueifat neighborhoods. AP video showed the blasts illuminating the densely populated southern suburbs, where Hezbollah has a strong presence. They followed a day of sporadic strikes and the nearly continuous buzz of reconnaissance drones.

Israel’s military confirmed it was striking targets near Beirut and said about 30 projectiles had crossed from Lebanon into Israeli territory.

A man checks the site of an Israeli airstrike in Dahiyeh, Beirut, Lebanon, Sunday, Oct. 6, 2024. (AP Photo/Bilal Hussein)

Emergency workers inspect a building that was hit in an Israeli airstrike in Dahiyeh, Beirut, Lebanon, Sunday, Oct. 6, 2024. (AP Photo/Bilal Hussein)

Israeli soldiers pray at a staging area in northern Israel, Sunday, Oct. 6, 2024. (AP Photo/Baz Ratner)

An Israeli soldier prays at a staging area in northern Israel, Sunday, Oct. 6, 2024. (AP Photo/Baz Ratner)

People check the site of an Israeli airstrike in Dahiyeh, Beirut, Lebanon, Sunday, Oct. 6, 2024. (AP Photo/Bilal Hussein)

Smoke rises from a destroyed building at the site of an Israeli airstrike in Dahiyeh, Beirut, Lebanon, Sunday, Oct. 6, 2024. (AP Photo/Bilal Hussein)

Mourners gather around the bodies of Palestinian men who were killed in an Israeli airstrike in Deir al-Balah, Gaza, Sunday, Oct. 6, 2024. (AP Photo/Abdel Kareem Hana)