Development & Aid, Economy & Trade, Headlines, Latin America & the Caribbean

URUGUAY: Brazil Has Reassuring Words for ‘Little Brother’

Raúl Pierri

PARQUE ANCHORENA, Uruguay, Feb 27 2007 (IPS) - Brazilian President Luiz Inácio Lula da Silva assumed the role of elder brother and visited his Uruguayan counterpart, Tabaré Vázquez on Monday with the sole purpose of soothing the rising discontent of this country with the Mercosur trade bloc.

“Brazil must play its role as the largest economy in the Mercosur (Southern Common Market) and create conditions for trade (within the bloc) to be as balanced as possible,” Lula told reporters after a number of bilateral agreements were signed.

The Brazilian leader stressed the need to reach agreements regardless of the differences in size between the member nations of the regional bloc, to which Argentina, Paraguay and Venezuela also belong, by seeking balances and benefits “so that the aspirations of all of the countries are taken into equal consideration.”

For his part, Vázquez said he had found the Brazilian president very understanding, and willing to overcome the imbalances between their two countries in terms of their economies, geography and populations, so that the claims and demands of the smaller members of the bloc could be addressed.

Uruguay has a population of 3.2 million, compared to Brazil’s 188 million.

In 2006 Brazil again became the biggest importer of Uruguayan goods, as it had been in the mid-1990s. It purchased 14.7 percent of Uruguayan exports, to the value of 583 million dollars, which represented an increase of 27 percent with respect to 2005.

But Uruguay imported 1.08 billion dollars’ worth of goods from Brazil in 2006, leaving a trade deficit of over 495 million dollars, according to figures released on Friday by the Central Bank.

“We don’t want handouts or charity from the larger countries, but merely fair treatment for the smaller partners, so that all the countries in this integration process can experience concrete benefits,” Vázquez said.

Brazil’s reason for concern about Uruguay was obvious. Lula arrived at the presidential estate of Anchorena, in southwestern Uruguay, barely two weeks before a scheduled visit by U.S. President George W. Bush, in the context of a historic rapprochement between Washington and Montevideo.

The meeting between Lula and Vásquez had been postponed several times, which created a certain distance between the two leftist governments. Lula was absent from the last Ibero-American Summit, held in November in Montevideo, saying he was exhausted after his successful reelection campaign. He then postponed two further visits.

Vázquez, for his part, avoided meeting Lula at the latest Mercosur summit, held in Rio de Janeiro in January.

At the Mercosur summit, Uruguayan authorities asked for greater flexibility to reach trade agreements outside of the bloc, so that smaller countries could compensate for internal trade imbalances, but their arguments fell on deaf ears.

Meanwhile, Montevideo was making progress in negotiating a Trade and Investment Framework Agreement (TIFA) with the United States, which was signed in January.

In strengthening its ties with the Uruguayan government, Washington appears to be making the most of Mercosur’s deepening problems, at a time when the bloc is also expanding. Venezuela recently joined, and Bolivia – an associate member – has applied for full membership.

Mercosur’s unity has been damaged by a two-year-old dispute between Argentina and Uruguay over the installation of a paper pulp mill on the Uruguayan side of a border river.

Argentine residents and environmentalists have held frequent roadblocks on bridges between the two countries to protest construction of the plant, and the Argentine government has taken no preventive action, despite the economic damages suffered by the Uruguayan tourism industry as a result.

The large members of Mercosur have shown little willingness to address the relative disadvantages suffered by Paraguay and Uruguay in the bloc since its creation in 1991, which has also hampered the integration process.

“We must ease conditions for the smaller partners so that they have the same opportunities, and so that there are benefits for all in the bloc,” a conciliatory Lula emphasised.

“In all modesty and humility, we can say that during this visit by the president of Brazil and his prestigious delegation, the proposals that we have made at previous Mercosur meetings have been very favourably acknowledged,” Vázquez said.

At the meeting, Brazilian and Uruguayan ministers signed five bilateral agreements to promote trade and investment and cooperation in biofuel development, and for the creation of a permanent commission on energy and mining.

The ministers also agreed to rebuild the old Barón de Mauá bridge over the Yaguarón river, joining the eastern Uruguayan city of Río Branco with the southern Brazilian city of Jaguarao.

During the course of these meetings, more good news arrived from Brazil. On Monday, police there arrested retired Uruguayan Colonel Manuel Cordero, who has been a fugitive from Uruguayan justice since 2004. He is wanted for alleged human rights violations during the military dictatorship (1973-1985).

But in spite of the smiles and handshakes, statements by ministers and the fact that the private meeting between Vázquez and Lula was extended for the rest of the day indicated that significant differences in their views on the regional bloc still remain.

Uruguayan Economy Minister Danilo Astori reiterated his defence of his government’s intention to negotiate trade agreements outside the region.

Astori said that the Vázquez administration had not ruled out the possibility of signing a free trade agreement with the United States, and this Monday Lula was called on to “be more flexible in the enforcement of the rules” of the South American bloc.

The economy minister reported that at the Anchorena meeting the Uruguayan government stressed that Mercosur should allow the smaller countries access to international markets and to seek trade agreements outside the region.

Brazilian Foreign Minister Celso Amorim declined to comment on the possibility of a bilateral free trade agreement between Montevideo and Washington, saying only that “the most important thing is to respect countries’ decisions.”

“We all want a bigger and better Mercosur, as President Tabaré said, and that is what we have been working on today,” he added.