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Brazil Recession Starts To Weigh On Neighbors

Good times and bad times seep across Latin American borders, as Brazil's economic crisis begins to slows exports and manufacturing in neighbors like Argentina.

Anti-government protests last month in Sao Paulo
Anti-government protests last month in Sao Paulo
Pablo Maas

BUENOS AIRES — Recession for Brazil — a giant economy and huge market — will not leave its neighbors unaffected. For starters, other Latin American countries export goods to the nation of 200 million.

Brazil's GDP is already 2.6% lower than in the second half of 2014, even if observers are a little baffled by the speed and depth of its downturn. Only three years ago, the mood in Latin America's BRICS nation was one of euphoria.

Now, observers see several likely reasons for recession in Brazil, including slowing demand in its own export markets — notably, China — and ongoing corruption scandals that are unsettling institutional life and investment prospects. The country may even face a credit downgrade that would raise the cost of loans.

As a strategic member of regional trading association Mercosur, any weakness in Brazil can only highlight the dependence of partners like Argentina; for months now, exporters of products like fruit and wine have been feeling the chill of reduced demand in Brazil. The impact on car manufacturing is also becoming evident. Days ago, union sources revealed that General Motors would pause production at its plant in Rosario, northwest of Buenos Aires, every Monday in September.

Fiat took similar steps earlier in Córdoba in northern Argentina. Not for the first time, the continent's big economies face problems simultaneously, but they may not be resolved via private contacts of corporate VIPs anymore, or at summits of ministers and presidents that had showed increasing political and economic closeness over the past decade.

So now, Brazil's incipient recession is coinciding with a power transition in Argentina. As Dilma Rousseff struggles into a choppy second presidential term, candidates in Buenos Aires are jostling to succeed Cristina Kirchner at the presidential palace. A new working relationship will have to be forged to help lift the economic fortunes of both countries.

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FOCUS: Israel-Palestine War

Two-State v. One-State Solution: Comparing The Two Options For A Palestinian Homeland

For decades, the Israeli-Palestinian conflict has been left unresolved. Hamas's recent attack has forced politicians to confront facts: the conflict needs a definitive solution. Here's a primer on the two possible scenarios on the table.

Two-State v. One-State Solution: Comparing The Two Options For A Palestinian Homeland

At a art event in Gaziantep, Turkey, aimed at expressing solidarity with Palestinians in Gaza.

Samy Magdy

CAIRO — The Israel-Hamas war in Gaza has once again focused the world’s full attention on the Palestinian cause.

For the latest news & views from every corner of the world, Worldcrunch Today is the only truly international newsletter. Sign up here.

Beyond the outrage and anger over the toll of Israel’s war in Gaza and the Hamas attack of October 7, there is a quieter international consensus that has been revived about forging a lasting settlement that includes the establishment of a Palestinian state alongside the Israeli one.

Naturally, there are the eternal (though largely resolvable) details of how that settlement could be achieved. Yet the so-called two-state solution is very much back in the conversation of international diplomacy.

At the same time, there is another scenario for the Palestinians to have a homeland: to share in a single state with Israelis — the one-state solution. There are supporters and opponents of the two solutions on both sides.

Here’s a look at what’s on the table:

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