Paraguay, Venezuela, Mercosur: ironies abound
There is not inconsiderable irony in the sense that the removal of President Fernando Lugo by Paraguay’s Congress last month and his replacement by Vice-president Federico Franco, has actually been of some benefit to Mr Lugo’s leftist ally, President Hugo Chávez of Venezuela.
The Southern Common Market (Mercosur) has a “democratic clause,” which, if invoked because of a breach of the democratic order, can result in the suspension of the offending member. Thus, not only did Paraguay’s Mercosur partners (Argentina, Brazil and Uruguay) declare the new Paraguayan president unwelcome at their summit in Mendoza, Argentina, the week following what Mr Lugo and his supporters are calling a “parliamentary coup,” but they also suspended Paraguay’s membership. Then, as if to rub salt in the wound, they announced that Venezuela would become a full member of the trade bloc at their next summit in July 2013.
Part of the irony lies in the fact that it was the Paraguayan Congress, dominated by the right wing Colorado Party, that was blocking Venezuela’s accession to the Treaty of Asunción, Mercosur’s founding agreement named for the Paraguayan capital – another little irony – which stipulates that the congresses of all four Mercosur states have to approve new members. The Paraguayan Congress had objected to Venezuela becoming a member on the grounds that it did not meet Mercosur’s democratic standards. With Paraguay suspended and absent from Mendoza, however, the way was suddenly clear for Venezuela’s entry, with little heed paid to the questions raised about the propriety or ethics of the decision.
But the Mercosur club of leaders, Cristina Fernández de Kirchner of Argentina, Dilma Rousseff of Brazil and José Mujica of Uruguay, leftists all, would have had their reasons for choosing to ignore the irony of the double standard of debarring Paraguay from participating in Mercosur, because they felt that the constitutional order had been cynically manipulated in order to oust President Lugo, only to admit Venezuela, whose president himself faces widespread accusations of increasing authoritarianism, constitutional shenanigans and subversion of the democratic process.
The conventional wisdom appears to be that Argentina, Brazil and Uruguay are opening Mercosur’s doors to Venezuela not so much to attract Venezuelan exports as to gain access to a new, large and ready market for their products in a country beset by supply-side problems, such as inflation, currency overvaluation, high production costs and decreasing international competitiveness. Mercosur’s dominant member, Brazil, would seem to be particularly well set to benefit from opportunities to sell more goods to Venezuela.
Indeed, beyond a diplomatic coup for President Chávez, it is difficult to determine what exactly would be the benefits to Venezuela of joining Mercosur, when it may be limited to exporting petroleum and could end up becoming a net importer of food products and manufactured goods from Mercosur.
The ultimate irony may well be that by embracing Venezuela in the face of criticism that it is placing its economic interests ahead of democratic principles, Brazil may actually be taking a very pragmatic approach to rein in Mr Chávez’s influence in the region, as argued by some, including, Dr Julia Sweig of the influential American foreign policy think-tank, the Council on Foreign Relations, who contends that Brazil’s realpolitik is intended to “pull Venezuela and Chávez into the institutional tent of South America” and “to bring him into the existing institutions of diplomatic and economic integration.” As to whether this has already “neutralized Chávez’s Bolivarian vision,” as argued by Dr Sweig, remains to be seen.
There is further irony in Venezuela seeking to join a free trade grouping, founded on free market principles, when President Chávez is championing “21st century socialism” and his “Bolivarian” state is premised on full control of the economy. For instance, the Treaty of Asunción allows for “the free circulation of goods, services and factors of production” via “the elimination of customs duties and non-tariff restrictions to the circulation of merchandise and of any other equivalent measure.” In Venezuela, to give just one example of a potential sticking point, exchange control is a fundamental part of its economic policy, which would constitute a non-tariff barrier to free trade because it limits access to foreign exchange and restricts imports.
On the other hand, the common market it is joining is by no means perfect, as regular spats between Brazil and an increasingly nationalist and protectionist Argentina demonstrate. It may well be that if Mercosur’s founding members can water down their democratic principles to welcome Venezuela, they can equally find a way to accommodate that country’s non-adherence to the free market.