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Brazil & Southern Cone - May 2019

Itaipú renegotiation looms

On 10 May Presidents Mario Abdo Benítez of Paraguay and Jair Bolsonaro of Brazil met in Foz do Iguaçu, Brazil, in a ceremony to mark the start of the construction of a second bridge across the River Paraná. Costing around US$83m, it will be financed by the binational hydroelectric company Itaipú Binacional (IB). This was their fourth meeting since Bolsonaro took office in January. The frequency of these bilateral talks reflects an impending issue of considerable geopolitical concern to Brazil – the renegotiation of Annex C of the 50-year Itaipú Treaty that expires in 2023. The official communiqué after their previous meeting on 12 March made only a bland reference to the treaty renegotiation, stating that “it would be carried out in the same spirit of constructive understanding that has characterised the Itaipú project”. After decades of delays, Brazilian agreement to construct the new bridge is part of an emerging charm offensive to ensure that Paraguay does not rock the boat on the current arrangement for IB energy sharing, which is extremely advantageous to Brazil.

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