Mercosur: Eroding Integration

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By: Alberto Müller | Source: Resumen Latinoamericano | December 26, 2016

The conservative governments of Argentina, Brazil, Paraguay and Uruguay want to turn the regional bloc into an irrelevant institution. Suspending Venezuela is a sign of support to the country’s political opposition.

The governments of Argentina, Brazil, Paraguay and Uruguay have decided to separate Venezuela from the Mercosur alleging breaches of the economic agenda. This has been illustrated by the recent aggression towards the Venezuelan Chancellor in Buenos Aires. It is clear that the governments of Argentina, Brazil and Paraguay do not sympathize with Nicolás Maduro. But this episode is not just an attack on Venezuela and its government. It is much more than that: it is a step towards the end of Mercosur as a regional bloc.

The initial act of this tragedy, or farce, was the decision to prevent the Venezuela from assuming the pro-tempore presidency this year. This was a notoriously irregular decision, clearly intended to harass the government of Nicolás Maduro. The Venezuelan president was put under question for the internal political convulsion of his country, which is undeniable but can’t be considered an impediment to be a part of the bloc. This criticism was supported by no other than the coupist government of Brazil, who had just ousted President Dilma Rousseff in a clownish process, with no legality nor coherence. 

But the overt motive of harassment towards Maduro’s government is not the root cause of these movements, nor is Venezuela’s eventual non-compliance with trade rules something that would expose anyone in particular.

The economic benefit of a common market occurs when it connects countries with complex and diversified productive apparatuses, which can thereby access broader markets and further specialize their production. But the Mercosur is not useful to sell primary goods to the world—the main dish on the export menu of all Mercosur countries. Venezuela doesn’t need access to a common regional market in order to export oil. This is not the reason why Venezuela chose to integrate Mercosur. Most of its exports easily enter the United States.

In fact, there seems to be a paradox: the Mercosur has been created and institutionally strengthened over the last two decades, while its member countries turned away from specialization and back to primary exports. This tendency wasn’t reversed even during the last decade, which was marked by governments that were more or less opposed to the Globalization model. The only exception is the car industry, where there was a process of specialization.

But the paradox is only apparent, because in many cases the economic blocs are a result of decisions made by political actors, moved by their projects and interests, and not to serve business interests. That was in fact the origin of Mercosur: it was intended as a sort of safeguard against coups d’état. Hence the clause that states that trade agreements are cancelled if a country diverts from democratic institutional standards. It was a way of discouraging the support that the business sectors had given to coups d’état in the past.

Some time later, under the governments of both Fernando H. Cardoso and the Workes’ Party, Brazil’s interest in Mercosur acquired a different nature: it was a way to help Brazil become an emerging power. This was met with growing protests by the country’s business organizations, who advocated a unilateral opening to the world. Argentina was largely behind during this period, because it lacked any robust project in international terms.

But Brazil —led with a shaky hand by Michel Temer and José Serra— has now veered towards policies that satisfy the economic establishment: indiscriminate openness and unconditional alignment with the Western powers. There is no longer room for autonomy; there is a complete submission of politics to the economic power, as in Argentina.

In this scenario, Mercosur becomes an obstacle. Venezuela is nothing more than an anecdote, or in the best case scenario, an opportunity to achieve two goals with a single measure: to support the Venezuelan opposition and to erode Mercosur. As if this weren’t enough, President Macri has explicitly stated his intention to open commercial relations with the Trans-Pacific Partnership.

These episodes show that the Mercosur is marching toward its extinction if there is no political turn in the near future. The extinction might not happen in a formal way. Only in exceptional circumstances would the Mercosur be explicitly declared non-existent. It is easier to render it useless, like other regional and international institutions.

But the scenario where the Mercosur is explicitly vanquished: subordinated elites are prone to grandiloquent gestures when they have no project to defend. We have recently seen this in Argentina as well as in Brazil. Who knows, perhaps just as Asuncion, the capital of Paraguay, once gave birth to the treaty that originated the Mercosur, Brasilia or Buenos Aires could be the scenario of the contrary movement that dissolves it.

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