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Latin America

Latin American trade dispute reveals changing landscape

Venezuelan President Nicolas Maduro in Caracas, 2 August 2016. Venezuela has vowed to hold the rotating presidency of trade bloc Mercosur despite rival member states effectively blocking it from taking up the position.
Venezuelan President Nicolas Maduro in Caracas, 2 August 2016. Venezuela has vowed to hold the rotating presidency of trade bloc Mercosur despite rival member states effectively blocking it from taking up the position. Reuters

Mercosur, South America’s largest trade bloc, has been without a president since Monday, after Argentina, Brazil and Paraguay effectively blocked Venezuela from holding the rotating chair.

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With new governments in the protesting countries and Venezuela itself in upheaval, the dispute is the sign of shifts in the continent’s political landscape.

The presidency of Mercosur rotates every six months in alphabetical order through member states, meaning Venezuela was to have assumed the spot after Uruguay’s tenure ended on Saturday.

However, the summit where power was to be transferred was cancelled after Brazil and Paraguay said they would not attend.

“The country presiding Mercosur must represent all member states,” said Paraguay’s Foreign Minister Eladio Loizaga, arguing the Venezuelan president Nicolas Maduro’s crackdown on the country’s opposition went against the spirit of the bloc.

“[Venezuela] cannot silence criticism from members of the opposition. Freedom of expression is fundamental, and it can only be put into question under certain very specific cases in criminal law. "

Behind the protests are profound political changes within the protesting countries, and there are reasons for the dispute to be found on both sides.

“In Paraguay, Argentina and Brazil, there are no more leftist governments, they are centre-left or centre-right governments, so they’re less keen on making it easier for Venezuela,” says Alfredo Valladão, a Brazilian political scientist at the Paris Institute of International Affairs.

“But the main reason is that Venezuela is not a total member of Mercosur,” he adds. “It has not signed about a hundred rules, regulations and standards of the bloc, and it cannot do so, because it has a completely different economic model.”

Venezuela vows to hold presidency

Venezuela has vowed to assume the presidency, if only in hopes of emphasising the relevance of the model it built under former President Hugo Chavez, which it shared with its neighbours just a few years ago in 2012, when it became a full member of Mercosur.

“Venezuela had political and business alliances with [former Brazilian President] Lula and [former Argentine President Cristina] Kirchner, all of whom are today accused of corruption,” says political scientist Natalia Brandler

“Maduro, I think, wants to demonstrate that he has the political power to continue doing what Chavez did, creating parallel relations, buying its entrance into UN organisations, and doing business not only inside Latin America but with Europe.”

But if Venezuela is isolated in a way it was not just a few years ago, its future in the bloc also depends on how far its rivals will go to oppose it.

“It will have to be a strong pressure from these countries to really confront Venezuela and make the decision of opposing the government to the point of saying ‘we’re not accepting you’,” Brandler says. “Up to now, Chavez could solve all the problems with its chequebook, and now the situation is different, but maybe he will find a way to get some kind of compromise.”

Mercosur’s future under question

Although in the meantime Mercosur is able to negotiate trade deals and function as before, the dispute over the presidency does raise questions of what direction the bloc will take.

“The bloc has done its work to put these countries together, and there are still a lot of political, economic, educational and cultural agreements that you cannot just throw out the window,” says Alfredo Valladão.

“Right now the bloc is waiting for some new initiatives. Maybe if the negotiations with the European Union on an association agreement could bring a revival. But right now the bloc is waiting to see what is going on with the new governments in Paraguay, Brazil and Argentina.”

There are some rumblings of efforts to work towards a compromise on the presidency, with sources in Argentina’s foreign ministry telling AFP agency its diplomats have proposed talks to settle the dispute, although no specific date or deadline have been proposed.
 

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