South America: towards union or disintegration?

Justin Vogler
19 July 2006

The knife-edge – and still contested – win for the conservative Partido de Acción Nacional candidate, Felipe Calderón, in the Mexican elections on 2 July 2006 is yet another sign that two political spheres exist in Latin America. In Mexico, Central America and Colombia, Washington's hegemony remains strong and the region's politics align accordingly. Meanwhile, in South America increasing autonomy is leading to the formation of a political community based loosely around a Brazilian-Argentinean axis.

Formed in 1991, Mercosur (Mercado Común del Sur; in Portuguese, Mercosul / Mercado Comum do Sul) is one of two long-standing "southern common market" integration projects on the sub-continent. It now has five permanent members – Brazil, Argentina, Uruguay, Paraguay and, from July 2006, Venezuela – and represents 75% of South America's GDP. The other bloc, the Andean Community, includes Bolivia, Peru, Ecuador and Colombia, with Venezuela in the process of leaving in protest at Bogotá and Lima signing bilateral free-trade agreements with Washington. A Brazilian plan to fuse Mercosur and the Andean community, to form the South American Community of Nations, has yet to get off the ground.

A third group, the Alternativa Bolivariana para las Américas (Alba), was launched by Venezuela and Cuba in 2005, with Bolivia joining earlier this year. This is not technically a South American project, as its stated aim is to unify the whole of Latin America and the Caribbean in opposition to Washington's proposed Free Trade Area of the Americas. While the interchange of Cuban medics for Venezuelan oil is undeniable attractive, most conventional governments are put off the Alba by the pervasive revolutionary and anti-American rhetoric.

The limited appeal of the Alba and the apparent crumbling of the Andean Community leaves Mercosur as the only serious framework for South American integration. But there is dispute as to how solid Mercosur is. While advocates see a nascent common market and political alliance, most western analysts describe Mercosur as, at best, an imperfect customs union and free-trade zone. Two internal disputes since the most recent presidential summit, in Montevideo in December 2005, have not helped the bloc's image.

First, Argentina and Uruguay have been involved in a protracted quarrel over the construction of two pulp mills in the Uruguayan city of Fray Bentos on the Uruguay river which separates the two countries. Argentina – claiming that the mills will pollute the common waterway and damage the area's tourism and agriculture – has filed against Uruguay in the international court of justice in The Hague.

A second front opened on 1 May, when the Bolivian president, Evo Morales, nationalised the country's gas reserves to the detriment of Brazil's Petrobras which controlled around 40% of Bolivia's gasfields. The technical and financial support lent to Morales by Venezuela's Hugo Chávez angered many Brazilians and led to charges in the region's conservative press that Chávez was challenging Brazil's regional leadership.

Justin Vogler works as a freelance journalist in Chile. He writes regularly in the Santiago Times.

Also by Justin Vogler in openDemocracy:

"Michelle Bachelet's triumph"
(January 2006)

"Small-country power: Chile and the Iraq war" (January 2006)

"Latin America: woman's hour" (March 2006)

"Ollanta Humala: a Peruvian gamble"
(April 2006)

"Mapuche: the other Chile" (June 2006)

Indeed, press coverage of Mercosur has become almost universally negative, particularly since Venezuela's membership was confirmed. In a widely circulated newspaper column that reflected the dominant line, the Peruvian author and political commentator Mario Vargas Llosa wrote: "Chávez, having scuppered the Andean Community, is now set to wreak Mercosur".

Despite such dire predictions, there is a positive mood ahead of the summit, which marks the handover of Mercosur's six-month rotating presidency from Buenos Aires to Brasilia. Relations between the senior partners, Brazil and Argentina, are said to be in excellent shape with Argentina's President Kirchner openly backing Lula da Silva's re-election in Brazil in October 2006, and both men intent on deepening the integration process. All the full member-states and most of the associate members – Chile, Colombia, Ecuador, Peru and Bolivia – have confirmed their leaders' attendance. Fidel Castro is also expected to make a guest appearance.

The agenda is busy. It includes:

  • fixing a common position on the WTO's Doha round negotiations
  • the formal launch of a Mercosur parliament
  • the adoption of a new common customs code
  • the finalisation of two, somewhat controversial, free-trade agreements with Cuba and Israel
  • Venezuela's accession, with full voting rights by 2010.

An official parallel summit – a "meeting for a social and productive Mercosur" – will be held by Somos Mercosur (we are Mercosur) an umbrella coalition of unions, small businesses, farmers, universities and NGOs, whose aim is to promote citizen participation in the integration project.

A historical perspective

So is South American integration doomed, as much of the press reports? Or is there steady progress towards wider and deeper union, as the agenda of the Cordoba summit suggests? I put these questions to one of Brazil's leading historians and political scientists, Luiz Alberto Moniz Bandeira. Author of over twenty books, Moniz Bandeira was named Brazilian intellectual of 2005 for his book Formação do Império Americano – Da Guerra contra a Espanha à Guerra no Iraque. He is widely regarded as a foremost authority on Brazilian and South American diplomatic relations, as well as being a contributor to openDemocracy (see "Brazil and the United States: from dependency to equality", 20 November 2003).

I first asked whether Venezuela's withdrawal from the Andean Community was a step forwards or backwards on the path to regional union. "I think it's a positive move. The free-trade treaties Columbia and Peru are signing with the US basically annul the bloc", replied the 70-year-old professor. "Furthermore, Venezuela's admittance into Mercosur is strategically important due to its position between the Amazon basin and the Caribbean and its huge reserves of oil and gas. Any viable integration project must revolve around Brazil and Argentina, that's to say, Mercosur."

But wasn't there a risk that the outspoken Hugo Chávez, and his apparent challenge to Lula da Silva's authority, will be a destabilising factor within the bloc? "There is no rivalry between Lula and Chávez", was the categorical reply. "Brazil is territorially, economically, industrially, and demographically the major power in the region. Chávez can conduct his own foreign policy and lead the more radical left, that's fine. Lula doesn't need to exert authority; Brazil's regional leadership is a fact due to her size and power."

Describing western media representation of South America as often "distorted, stereotypical and biased", Moniz Bandeira says the coverage given to the Uruguay-Argentina feud and the hullabaloo over Bolivia's gas nationalisation has been disproportionate. "The problems over the pulp mills in Uruguay and the nationalisation of Bolivia's gas are not going to cause war", he says wearily. "On the contrary, the two disputes are being resolved diplomatically (…). The media, both nationally and internationally, likes these kinds of conflicts because they make good headlines, sell newspapers and boost television ratings."

Okay, I couldn't argue with that, but wasn't he being unduly sanguine about Mercosur's prospects? The Uruguay and Bolivian issues aside, the bloc shows little signs of moving towards macroeconomic convergence, and intra-bloc trade has actually fallen following the 2001 Argentinean crisis. I reminded the professor of an interview he gave in 2004 when he said that Mercosur was moving towards a common currency and the free movement of goods, services and labour within a supranational framework. He had concluded saying: "We will get to our own Maastricht treaty, and soon." Given all the problems facing Mercosur today, wasn't this overly optimistic?

"It's not about optimism", Moniz Bandeira replied. "Integration is a historic process and it will not be achieved quickly or easily. Look at the process of European unification which began in 1948-49. Look how many decades it took to get to Maastricht. Look at all the fights there were between France and Germany; the "empty chair" crisis in the 1960s; the row over Iraq; the constitutional crisis; the Kosovo war; the Basque and Northern Ireland questions; and to this day countries like Britain, Denmark and Sweden still haven't joined the common currency.

"To understand contemporary South America, and above all the moves towards greater union, you have to study the region's historic processes in perspective and not just focus on the day to day politics", he concluded.

I conceded the point; the European integration process has rarely been smooth or predictable. But then Europe never had the convergence of progressive governments that appears to exist in South America today.

"The emergence of progressive governments in South America was inevitable after the failure of the Washington Consensus", says the professor. "But the region is not uniform and there are diverse, and often contradictory, interests. Many of the region's leaders don't have a strategic vision and often follow their short term interests and pamper their own national interest groups."

Integrating a region with dire income inequality, poor internal infrastructure, widespread corruption and shaky political institutions, is clearly a challenge. But Moniz Bandeira is confident that the region's leading power, Brazil, remains focused on greater union as a strategic objective.

"The Itamaraty (Brazil's foreign office) is very aware of the need to form a Community of South American Nations, and follow a similar path to that of the European Union", he says. "It's not about transforming Brazil, it's about transforming the whole of South America into a political and economic world power."

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