Looking south

Addressing a summit of leaders from the Common Market of the South (Mercosur), in Brasilia, on December 7, President Donald Ramotar alluded to our fabled continental destiny in his assertion that while Guyana attaches “significant importance” to its membership of Caricom, his government also believes that “continental integration has become more relevant and necessary for further development.” In this respect he signalled that Guyana is considering a closer relationship with the regional trading bloc.

Mercosur comprises Argentina, Brazil, Paraguay, Uruguay and Venezuela. Venezuela became a full member in July this year after Paraguay was suspended in June for having been found guilty of violating Mercosur’s ‘democracy clause’; this cleared the way for Venezuela’s accession, which had been blocked by Paraguay’s Senate. Bolivia, Chile, Colombia, Ecuador and Peru also currently have associate member status, with Bolivia becoming an accessing member at last week’s summit, with full membership awaiting ratification by the legislatures of member states.

All these countries, along with Guyana and Suriname, comprise the Union of South American Nations (Unasur), a fact recognised by President Ramotar when he said that that there was taking place a “process of an inevitable marriage between Mercosur and Unasur,” resulting from “a logical progression of convergence.”

Mercosur represents a market of some 275 million people and a combined GDP of around US$3.3 trillion. It should be noted, however, that Brazil alone has a population of some 195 million and a GDP approaching $2.5 trillion. Indeed, the regional colossus dominates Mercosur to such an extent that the more recent Brazilian strategy, under President Lula da Silva and now under his successor Dilma Rousseff, of unifying the Southern Cone and then all of South America, via Unasur, in an economic bloc, appears to be aimed at not only providing more trading security for the region but also extending Brazil’s sphere of influence on the continent.

This consideration apart, there are serious challenges facing Mercosur. While its main objective is trade liberalisation, momentum has slowed in recent years, with Argentina moving towards protectionist measures and Brazil retaliating. According to an article in The Economist in July, although internal trade has risen in absolute terms, it only represents a small percentage of members’ total exports and the bloc “has not evolved into the seamless single market its founders dreamed of.” The increasing politicisation of the organisation, brought to a head with the suspension of Paraguay and the admission of Venezuela, a country ideologically opposed to free trade, would also seem to indicate that the grouping has lost sight of its original purpose.

For the moment though, it appears that Venezuela’s membership will, in the area of trade, principally affect increased petroleum flows from that country to other Mercosur members in exchange for agricultural products, with Brazil, one of the biggest food producers in the world, poised to be the main beneficiary. In geopolitical terms, Venezuela’s membership serves to reorient the Common Market of the South towards the north, including the Caribbean and Central America, with Brazil again positioned, by virtue of its geographical location, to benefit most.

As noted by President Ramotar, Mercosur’s embrace of Venezuela may well open up the possibilities for all the countries of the continent to accelerate progress towards the customs union and deeper integration envisioned in the creation of Unasur. For this to become a reality, however, there will have to be a reconciliation of Mercosur’s current left-of-centre political inclinations with the centre-right policies of the fastest growing economies of South America, Chile, Colombia and Peru.

President Ramotar’s declared interest in Mercosur and deeper integration with the continent appears to be a logical progression from the prominent role Guyana enjoyed in Latin America, under his predecessor, in particular as a founding member of Unasur in 2008 and of the Community of Latin American and Caribbean States (CELAC) in 2010, and as host of the 19th Summit of the Rio Group in 2007 and chair of Unasur in 2011. Indeed, physical integration and development cooperation and trade with the rest of the continent should, if managed properly, help to unlock Guyana’s vast potential. In this respect, the Memorandum of Understanding on infrastructural integration, signed last week by Foreign Minister Carolyn Rodrigues-Birkett and her Brazilian counterpart, would seem to be another step in this direction. One wonders though whether this strengthening of ties with Brazil and this outreach to Mercosur may reflect a growing perception that Caricom may have, for the time being, reached the limits of its possibilities.

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