Argentina tests patience of Brazil In January last year, the sailors aboard the HMS Clyde, a Royal Navy patrol vessel based in the Falkland Islands, were looking forward to docking in Rio de Janeiro. Brazil's sunny seaside metropolis would have been just the right break from the rocky shores of the Falklands. But it was not to be - the ship was denied diplomatic permission to land by Brasília in support of Argentina's claim to the islands. Brazil's then new president Dilma Rousseff was visiting her Argentine counterpart Cristina Fernández that month and was keen to underline Brasília's continuing strategic support for its neighbour. Now, Argentina's growing reputation as an international economic pariah for its ad hoc policies on foreign investment and trade is testing Brazilian patience. "Brazil continues to see Argentina as keystone for its broader hemispheric activities," said Eric Farnsworth, vice-president of the Council of the Americas and the Americas Society. At a political level Brazil is going to do what it needs to do to try to maintain that relationship. Brazil's strategic relationship with Argentina is pinned on their establishment of the Mercosur trading region in 1991 along with Paraguay and Uruguay. The two largest economies of South America also co-operate on nuclear issues and defence. Argentina is traditionally the first market for Brazilian corporate expansion and Argentina buys a quarter of Brazilian industrial exports. With the strengthening of Brazil's currency, the real, against the dollar, its southern neighbour has grown in importance as a market for its industrial exports, which have lost competitiveness elsewhere. On Argentina's side, Brazil buys 80 per cent of its car exports and 65 per cent of its automotive component exports. The strong trade relationship provides the platform for Brazil to project its regional power. Brazil knows it has a different weight in the world and it needs partners in the region to maintain that weight. Its principal partner is Argentina," said Mauricio Tiberi, an economist at Abeceb.com, a consultancy which follows regional trade closely. This trade, however, has also become a source of tension, with Brazil's exports to Argentina growing 55 per cent last year resulting in a surplus with Argentina of nearly $6bn in 2011. When Argentina launched a series of import controls last year, Brazil retaliated with its own barriers to imports of automotive components from its neighbour. The tit-for-tat measures have reduced trade. In April this year, Argentine imports from Brazil fell 23.2 per cent compared to a year earlier, while Argentina's exports to Brazil have also fallen 9.7 per cent. Tensions have increased on the corporate front too. JBS, the São Paulo-based beef producer that is the world's biggest, said earlier this year it was no longer prepared to take losses in Argentina, while a multibillion-dollar investment by Vale in a potassium project in Argentina is in doubt in the wake of its nationalisation of oil company YPF. Having tried confrontation, there are signs Brazil will try a more conciliatory approach. Brazilian media reported on Thursday that Brasília was considering financial assistance to its neighbour to help revive regional trade. "The reality is that the relationship with Argentina is essential and Brazil doesn't want to put it at risk or escalate conflicts," said Mr Tiberi. Still, Argentina's recent moves are jeopardising Brazil's wider international ambitions - the nationalisation of YPF, for instance, has frozen a proposed free trade deal between Mercosur and the European Union. Brazil will be stepping up pressure behind the scenes to persuade its neighbour not to let domestic politics damage regional interests, analysts said. "There is a limit," says Mr Farnsworth. If your [Brazil's] broader project is to build the region in your own image you have to look out for the overall health of the region.