♠ Posted by Emmanuel in Latin America at 4/19/2010 12:01:00 AMIn all the hurly-burly of following so many other regional economic integration projects, I somehow overlooked the one that sets the pace in South America--Mercado Comun del Sur or MERCOSUR. You can make the argument that, alongside the Gulf Cooperation Council or GCC, MERCOSUR represents the second deepest integration project after the European Union in having a customs union and hence a common external tariff (CET). That is, all nations within apply similar tariffs to goods entering the customs union. Following Bela Balassa, there are said to be gradations of integration from a free-trade area, a customs union, a common market, an economic union, to complete economic integration.
Since inking a membership agreement in March 2006 with MERCOSUR, Venezuela has been trying to join Argentina, Brazil, Paraguay, and Uruguay who formed the grouping in 1991. Unlike the European Union whose erstwhile conditionality for membership is via the stability and growth pact (SGP), MERCOSUR's is mostly political in the form of requiring ratification for membership among all existing members. It is no surprise that the Peronists in Argentina signed on early, as did Uruguay's left-leaning leader Tabare Vazquez. Given his flair for the melodramatic, Chavez made a show of it in July of 2007, saying that he would pull his bid to join MERCOSUR if Brazil and Paraguay didn't ratify Venezuela's entry in short order.
In any event, Chavez didn't leave, and things rambled on until late last year. Given that Lula's party does not command solid majorities in Brazil's legislature, Chavez made matters difficult for himself by calling Brazil "a puppet of Washington." A loose cannon doesn't necessarily have diplomatic chops, eh? However, conservative opposition was sufficiently softened in the months to come to allow a still-close 35-27 vote on 15 December 2009. From Bloomberg:
Brazil’s congress approved Venezuela’s admission to Mercosur, South America’s biggest trade bloc, as the Senate turned aside arguments that President Hugo Chavez had made his country ineligible by smothering democracy. The 81-lawmaker chamber voted 35-27 with President Luiz Inacio Lula da Silva, who had pushed to admit the biggest oil exporter in the Americas to the group that Brazil, Argentina, Paraguay and Uruguay formed in 1991. Approval by Paraguay is the last hurdle Venezuela needs to clear for full membership.This leaves Paraguay. Alike Brazil, it is led by a left-centre leader, Fernando Lugo, who nonetheless does not have a solid domestic legislative majority to automatically push through the ratification of Venezuelan membership in MERCOSUR. Oxford Analytica describes the political challenges for Lugo in supporting Hugo:
“To have Venezuela in Mercosur is important in every aspect, not only commercially,” said the leader of the government coalition in the Senate, Romero Juca. “Isolating the country doesn’t solve the democracy problem in Latin America, on the contrary, we must promote integration in the region”.
Opposition lawmakers had argued that under Chavez, Venezuela had lost its democratic character with regards to the press, courts and legislature, disqualifying the country from membership under Mercosur’s charter. The bloc’s leaders had agreed to admit Venezuela in 2006 and took the recommendation back to their respective congresses for ratification.
Approval from Paraguay now remains the final hurdle. However, there is considerable opposition to such a move among the deeply conservative Paraguayan Congress. This opposition spans the political spectrum and includes virtually the totality of the various factions inside the two main parties (Colorado [the previous conservative ruling party] and Partido Liberal Radical Autentico, PLRA [the largest bloc in Lugo's coalition]) as well as Patria Querida.For all the show, I would be surprised if Paruguay held off indefinitely as a major energy source like Venezuela would be a welcome member for any regional grouping.
Only a handful of representatives belonging to smaller left-wing parties are in favor of Venezuelan entry, in addition to a few opposition members who, while critical of President Hugo Chavez, see Venezuela as an important counter-balance to Brazilian hegemony in the regional bloc.
Within elite circles there is also hostility to Venezuelan entry. Ever since President Fernando Lugo came to power in August 2009, Paraguay's leading daily paper, ABC Color, has carried out a relentless media campaign denouncing Lugo's alleged objective of introducing "21st century socialism" into Paraguay under Chavez's auspices. In August 2009 Lugo was forced to withdraw a bill in Congress seeking approval of Venezuelan entry to Mercosur when it became clear that he could not muster the majority needed.
Brazil is likely to exercise considerable pressure now on Lugo to approve Venezuela's entry to Mercosur. Yet, this could prove a hard task for Lugo. Although the Paraguayan Congress has a reputation for venality, and the sale of votes remains commonplace, such a strategy would be anathema to the Brazilian Foreign Ministry. The cost of any such attempt would be beyond the government's financial resources.