Sunday, August 19, 2012

MERCOSUR: Toward Latin American Integration

By Juan Diego Nusa Peñalver:

JULY 31, 2012 will be recalled in the history of Latin America and the Caribbean as a landmark, a giant step, with Venezuela’s full entry into the Common Market of the South (MERCOSUR), in the first extension of this customs association in the 21 years of its existence.

It will also be recalled as a resounding failure of the imperial policy of the United States in relation to a region which it can no longer dominate at its whim.

For Argentine political economist Atilio A. Borón, from the geopolitical point of view, Venezuela’s inclusion in MERCOSUR after a six-year wait constitutes the greatest U.S. diplomatic defeat since the disastrous Free Trade Area of the Americas (FTAA).

Beatriz Miranda, columnist in the Colombian El Espectador, defines it as a strategic accomplishment, given that the new entrant concedes the bloc a greater economic and commercial weight. Analysts consider that in geopolitical terms, Caracas’ arrival represents the possibility of increased Brazilian insertion in the Andes and Caribbean and Venezuelan access to the South Atlantic. Thus MERCOSUR is facilitating strategic integration, giving the group an Amazonian, Atlantic, Caribbean and Andean identity, and a strong energy component.

Doubtless, this bold step will affect U.S. interests in the region in the long term, given that it prevents Venezuela from signing a free trade treaty with this country, still set on re-conquering the Bolivarian Republic’s oil wealth.

It is no secret that with Venezuela‘s energy potential – according to the Organization of Oil Producing Countries (OPEC) it has the largest certified oil reserves in the world: 297,570 million barrels – the industrial vigor of Brazil (the sixth largest world economy), and the agricultural potential of Argentina and Uruguay, this regional bloc will acquire a strategic role. Created March 25, 1991 by the Treaty of Asunción, it promotes the free circulation of goods and services, common external tariffs and trade policy, as well as coordinated macroeconomic policies among member states and compatible legislation.

In effect, the United States was unable to prevent MERCOSUR, now including Brazil, Argentina, Uruguay and Venezuela (Paraguay’s membership is suspended due to the parliamentary coup d’état against President Fernando Lugo), from growing in strength and promoting sovereign economic and social policies in accordance with national interests, far removed from the dictates of the discredited financial institution of Bretton Woods and the anti-democratic Washington consensus.

The U.S. maneuver to utilize the Paraguayan oligarchy, entrenched in the country’s Senate, to block Venezuela’s entry backfired. In fact Paraguay’s suspension and Venezuela’s participation could make MERCOSUR more attractive to Bolivia, Ecuador and other nations in the region.

From the Planalto Palace, headquarters of the Brazilian government, Venezuelan President Hugo Chávez emphasized the historic importance of the unity of Latin American countries in terms of promoting their independent development, within which MERCOSUR represents a platform for the changes needed.

"We are exactly in our historic position, our North is our South, we are where we always should have been, we are where Bolívar left it to us to arrive," the Bolivarian leader affirmed during the extraordinary session of the bloc in Brasilia.

What is being reconfigured is a balance which will allow South America to address, on more equal footing, other centers of power such as the United States and the European Union, which have demanded subordination and an anti-national submission to their transnationals.


According to analysts, Venezuela‘s incorporation into MERCOSUR makes the bloc the world’s fifth largest economic power, extending from Patagonia to the Caribbean over an area of close to 13 million square kilometers, linking more than 270 million inhabitants (70% of the population of South America) to form an impressive and gigantic bloc with the largest oil reserves, booming industrialization and excellent potential for food production.

It will have a Gross Domestic Product (GDP) of $3.3 trillion at current prices, equivalent to 83.2% of the Southern Cone GDP, and the largest global biodiversity and fresh water reserves, a reality very much to be borne in mind in terms of world geopolitics by the select club of the G-8 and emerging giants such as China and India, two nations which have a more constructive position in international economic relations.

In the internal context, Venezuelan José Gregorio Piña emphasizes that while, initially, the country was only offering MERCOSUR oil and hard currency, "the panorama has changed, given that it can develop its productive potential through a more complete relationship with bloc members, which includes complementary trade, a innovative financial architecture, internal regional investment and the free circulation of persons and jobs, among others."

Caracas has already invited MERCOSUR enterprises to participate in housing provision for the Venezuelan people, with a target of three million family units, as well as conjoint work with the state to promote other social, industrial and agricultural development projects. The new Venezuela wishes to leave behind the private model to which it was subjected by the United States, the only legacy of which was enormous social inequality and widespread poverty.

This effort will benefit from the bloc’s creation of a Structural Convergence Fund to reduce imbalances among its members, in a necessary spirit of solidarity with the less developed nations. "This is an experiment to reduce the imbalances of our countries and promote equitable regional development," stated Brazilian President Dilma Rousseff during the extraordinary summit. She also noted that 40 regional projects have been approved, with an initial start-up fund of $1.1 trillion, good news further boosted by MERCOSUR’s announced expansion of credit to promote the economy of this part of the world.


Given the blows the United States delivered to progressive processes in Honduras and Paraguay, a reaction to Venezuela’s inclusion in MERCOSUR is also anticipated. The country will use any possible means to prevent a united, prosperous and strong South America capable of defying its political hegemony and global economy.

This warning was given by Argentine President Cristina Fernández de Kirchner, who urged the member countries present at the summit "to create, sooner rather than later, the instruments and institutions which will make this new pole of power indestructible and indivisible." The Argentine leader strongly attacked attempts by imperialist nations to weaken South America.

MERCOSUR is thus moving ahead to create the Patria Grande to which Latin American and Caribbean nations rightly aspire.

August 16, 2012