Mercosur runs the risk of “collapse”, warn analysts

Mercosur runs the risk of collapsing because it keeps adding members without consolidating as a customs union or having solved the serious tensions between big and junior partners, according to regional analysts.

Brazilian Foreign Secretary Celso Amorim recently announced that in the coming Mercosur summit in Rio do Janeiro, Bolivia could be admitted, while Ecuador under the newly elected president has also become a candidate.

Earlier this year Mercosur admitted Venezuela but negotiations over norms regulating the group have been delayed.

Venezuelan president Hugo Chavez added confusion this month when he called on all members to “reformulate” the South American integration processes arguing that the Andean Community “is useless…and so is Mercosur”.

Junior members Paraguay and Uruguay are protesting against a system which forces them to sustain a high foreign tariff without giving them access to the senior members’ markets, and this has led them to ask for trade agreements with third countries.

Uruguay is also suffering from the Argentine pickets blocking access to bridges in protest over the construction of a pulp mill in a river that acts as a natural border between the neighboring countries. The Argentine government and environmentalists argue the pulp mill is damaging for natural resources, mainly water and air.

To find a way out to the controversy both sides have put claims before the International Court of The Hague and a dialogue “facilitating” mission sponsored by Spain’s King is currently underway.

Uruguay’s Economy minister Danilo Astori during a recent meeting in Rio do Janeiro seriously questioned Brazil’s “indifference” in the controversy.

President Lula da Silva “can’t argue this is a bilateral problem: it’s a dispute that involves the entire region, all the Mercosur project”, he said.

Argentina’s Economy minister Felisa Miceli said that Uruguay must decide if the block “is useful or not” but “we’re not going to give in to Uruguay’s moaning, or are we going to expel them from the group: they will have to make their minds up”.

Similarly Paraguay has ongoing trade conflicts with Brazil and a payments dispute involving the huge bi-national Itaipu dam which supplies almost the entire electricity to the Brazilian market.

“We are very concerned with the current situation. There seems a lack of political will to advance the process of real integration”, admits Ambassador Rubens Barbosa who is head of international relations for the all powerful Industries Federation from the State of Sao Paulo, FIESP.

Barbosa described the admission of new members into Mercosur as “symbolic gestures” and other similar initiatives such as a Mercosur Parliament or a regional support fund for junior members, which “only further delay the integration process”.

“If Mercosur does not find outside solutions it’s heading for a fracture as happened with the Andean Community, which is pathetic”, said Gabriel Tokatlian from the Argentine university of San Andrés.

Tokatlian described as a “major mistake” the attempt by the South American Community of Nations, (CAN plus Mercosur, Surinam and Guyana) to consolidate since it “would add up to a crisis and a collapse”.

However Tokatlian downplayed fears of a “left wing wave” in the region, “it’s not a red tsunami, but rather a pinkish wave”. The region is facing “nationalisms with protectionist tendencies, looking inwards, not an international left wing coordinated movement”.

However Tokatlian cautioned that Mercosur, which is suffering from a leadership crisis, must bear in mind that its main objectives are economic and trade, while political integration comes on a second stage.

Brasilia University Professor Jose Flavio Saravia points out that “regional integration processes are not ruled by a formal classic logic” but rather adapts to the strategic circumstances of time and place.

But “if asymmetries and conflicts are not addressed properly, they will leave deep wounds that will finish destroying confidence and bilateral relations”, warns Professor Saravia.

The late Milton Friedman was once asked about Mercosur and admitted he was not much in touch with the group, however he did mention, following on the four founding members, that if “you have four sick people in the same bed, it won’t be very useful”.