SOUTH AMERICA: Mercosur Leaders – ‘No Common Front’ vis-a-vis IMF

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Jul 5 2002 (IPS) - Presidents Eduardo Duhalde of Argentina and Fernando Henrique Cardoso of Brazil said Friday that although financial turmoil is currently threatening all of the countries of South America’s Mercosur trade bloc, there will be no “common front for negotiations” with the multilateral lending institutions.

At the conclusion of the 22nd Mercosur (Southern Common Market) summit, Duhalde and Cardoso told a news briefing that the bloc’s leaders had agreed that each member country must carry out its own negotiations with the International Monetary Fund (IMF) and other multilateral financial institutions.

“There is no common front for negotiating,” said Duhalde, who added that within the overall financial crisis, Argentina is in a “very different” situation than the rest of the countries in the region. The proposal of a common stance in the negotiations had been put forth by the Argentine Foreign Ministry.

Also taking part in the two-day summit were presidents Luis González Macchi and Jorge Batlle of Paraguay and Uruguay, the two smaller members of the bloc. Ricardo Lagos of Chile and Jorge Quiroga of Bolivia attended as the leaders of the bloc’s two associates, while Mexican President Vicente Fox was there as a special guest.

Argentina is caught in the grip of a profound economic, social and political crisis. Duhalde decided this week to move the presidential elections forward six months, in order to calm the mounting social unrest and to facilitate an agreement with the IMF, which the country’s caretaker government has been seeking since it took office on Jan 1, after the collapse of the administration of Fernando de la Rúa.

Cardoso said “it is not necessary to propose a coalition for negotiating” with the multilateral lenders, because “each country is facing its own specific situation,” and some are not even holding talks at present. However, he stressed that on the trade front, the Mercosur has the intention of acting as a bloc in international forums.

The financial turbulence is affecting “the region to different degrees,” said Cardoso, referring to the current tension in Brazil, ascribed by most analysts to the strong lead in the polls enjoyed by leftist Workers’ Party presidential candidate Luiz Inácio Lula da Silva for the October elections.

“I wouldn’t want to blame anyone or any single factor. It is a complex question, and the markets sometimes perceive the data in a hasty manner,” he added.

The presidents of the Mercosur member countries and associates signed a joint declaration. In addition, Argentina and Brasil reached an agreement on trade in automobiles that will enable Argentina to export more cars to its northern neighbour.

A new pact also guaranteed that Brazilian exporters will be paid outstanding debts owed by importers in Argentina, and the differences arising from obstacles put in place by Argentina to importst of chicken, pork and textiles from Brazil were ironed out.

The heads of state also agreed to deepen “economic complementation” accords with Chile, and signed a pact for trade in automobiles between the Mercosur and Mexico.

A framework accord for a future trade association between Mexico and the South American bloc was agreed as well.

The presidents of the full members and associates of the Mercosur reported in their joint declaration that they had discussed, “with great concern,” the current behaviour of the international economic and financial system, “one of the sources that contributed to the instability in the region.”

The joint declaration also highlighted the region’s “solidarity with Argentina,” a country where “the negative effects (of the crisis) have taken on a greater magnitude.” The leaders pledged “every effort to overcome the adverse economic and financial situation,” with the help of the “international community.”

The presidents expressed their concern over the “substantial” increase of farm subsidies around the world, which they said hurt “the prospects for exportation and growth” by the countries of the Southern Cone region, which are “efficient exporters of food.” They demanded significant improvement in access to the markets of the industrialised North.

Finally, they agreed that at the present juncture, “effective action based on solidarity is increasingly needed, which ratifies the full relevance of the Mercosur and the expanded Mercosur, and the need to deepen it in its operational and institutional aspects.”

“We presidents are very optimistic with respect to the future of the Mercosur,” Duhalde told the press conference.

For his part, Cardoso said the globalisation process had given rise to new phenomena that require changes in the global financial institutions. “We need new institutions, capable of swiftly and effectively counteracting the negative effects of financial turmoil,” he underscored.