Chávez: into Mercosur by a side door

| Jul. 3, 2012 | Caracas, Venezuela

Published by Financial Times

Jonathan Wheatley

So, four weeks from now Venezuela will become a full member of Mercosur, the dysfunctional trade block set up in 1991 by Argentina, Brazil, Paraguay and Uruguay. The enlargement, however, looks like a stitch-up. Venezuela is getting in now only because Paraguay was “suspended” from the block after its dubious regime change last month. Paraguay’s congress had refused to ratify Venezuelan entry for the past six years.

But if Caracas thinks it has snatched legitimisation from the jaws of ostracism, it should think again. Mercosur is a club where the big boys bend the rules and Venezuela will soon find out what free trade with Argentina and Brazil is all about.

The deal, in fact, is not quite done. Luis Almagro, Uruguay’s foreign minister complained publicly that last Friday’s agreement only happened after foreign ministers were overruled and bundled out of the room so that Dilma Rousseff, Brazil’s president, could talk privately with Cristina Fernández of Argentina and José Mujica of Uruguay.

“Nothing is definitive” Almagro told MercoPress, a sometimes feisty news agency. “If everybody had been so sure about it, Venezuela would have become a full member last Friday in Mendoza. That is why country members are taking their time until July 31st.”

Argentina, it emerged on Monday night, has a different version of last Friday’s events. But whatever happened, if Venezuela does join up, Brazil and Argentina will be the winners.

The virtual dismantling of Venezuela’s private sector has made it dependent on imports for just about everything, creating demand Brazilian and Argentine producers are already happy to supply. Removing remaining barriers to trade will only speed up the northwards flow of goods.

Furthermore, as spats between Brazil and Argentina have repeatedly shown, neither of Mercosur’s guiding members is averse to abandoning its free trade principles when their interests are threatened. And as regional blogger boz pointed out last December, Mercosur does actually have some rules which, though often not strictly applied, would not work in Venezuela’s favour.

When Chávez was told of Friday’s decision, he was delighted. “This is a historic day for… [regional] integration… This is win-win for everybody.”

Regional integration is a big theme in Chávez’s dream of Bolivarian revolution. Being accepted by Mercosur gives Venezuela a role in regional power that had seemed lost as the left-leaning alliance many thought would lead Latin America in the 21st century failed to take shape. As Mercosur wanders further away from its founding principles, even this role will be devalued. But Venezuela risks paying the price anyway.

Additional reporting by Girish Gupta in Caracas