By Roberto Savio
SAN SALVADOR, Aug 1 2015 (IPS)

In recommendations to German Chancellor Angela Merkel at the end of July, the German Council of Economic Experts outlined how a weak member country could leave the Eurozone and called for strengthening the European monetary union.

German Finance Minister Wolfgang Schäuble wants Greece out because he does not believe that it will ever be able to refund the loans it has received so far, and because he thinks it is question of principle to be strict. In an interview with Der Spiegel a few days after the historical date of Jul. 13, at the end of negotiations on Greece, he said: “My grandmother used to say: benevolence comes before dissoluteness.”

Roberto Savio

Explaining the recommendations of the Council of Economic Experts, however, its chairman Christoph M. Schmidt expressed another opinion. “To ensure the cohesion of monetary union, we have to recognise that voters in creditor countries are not prepared to finance debtor countries permanently … A permanently uncooperative member state should not be able to threaten the existence of the euro.”

This is the best illustration of Germany’s Europe. Any country which does not fit into the German scenario will have to quit. Europe is no longer a question of solidarity, it is all about fiscal and monetary considerations.

Germany now says that federalism has exceptions – whenever a member of the Eurozone is perceived to be challenging the rules of the monetary union, it will be subject to complete annihilation of its state sovereignty and national democracy. This is the kind of federalism that Germany has now proclaimed.

This German position on its vision of Europe, where political and ideal considerations are no longer the basis of the European project, has triggered a strong response from a normally obedient France.“We should all realise that the idea of Europe as a political project, based on solidarity and mutual support, is on the wane. Monetary union is no longer just a step towards a democratic political union”

President François Hollande, who appears to have suddenly woken up, has come out with a call to reinforce European integration through the establishment of a “Eurozone government”, which run in the opposite direction from that of Berlin.

Germany will of course go ahead and pursue its own course, but the Paris-Berlin axis which was conceived as the fulcrum of European integration has now been seriously weakened after Germany’s imposed agreement on Greece on Jul. 13. So we have now a major realignment.

France has been the country which has always blocked any substantial progress on European integration, by continually voting against any radical step towards integration in order to preserve as much of its national sovereignty as possible.

Now it is Germany which is intent on changing the course of integration, from a political project to a fixed exchange monetary system based on creditor countries – a system in which some democracies are more equal than others.

Schäuble has been reported as expressing concern over the European Commission’s increased political role, interfering in political issues for which it has no mandate. And it is a stark fact that the Jul. 13 Brussels agreement has sought to remove politics and discretion from the functioning of the monetary union, an idea that has long been very dear to the French, and now are the French who want more European integration as protection from a German Europe.

We should all realise that the idea of Europe as a political project, based on solidarity and mutual support, is on the wane.

Monetary union is no longer just a step towards a democratic political union, as Helmut Kohl and François Mitterand sought at the reunification of Germany, and the creation of the Euro.

We are, in fact, going back to a more toxic version of the old exchange-rate mechanism of the 1990s that left countries trapped in a mechanism which worked primarily for Germany, and which led to the exit of the British pound and the temporary exit of the Italian lira.

But the euro, as Nobel laureate in economics Paul Krugman says, “has turned into a Roach Motel, a trap that’s hard to escape.” Once you’re in, you cannot get out, and you have to accept the diktat of the creditors.

Another Nobel laureate in economics, Joseph Stigliz, who was Chief Economist of the World Bank, says that the current European policy of austerity at any cost, is like going back to a “19^th century debtors’ prison. Just as imprisoned debtors could not make the income to repay, the deepening depression in Greece will make it less and less able to repay.”

Of course, what is never said openly (except by Stigliz) is that in the Greek bailout one central reason for the extremism of the new package of conditions was to teach a lessons to a radical left-wing party, Syriza, and to the Greek people who had had the audacity to reject the calls from European leaders to vote against that party.

It is not by chance that countries like Poland, which were asking to be admitted to the Eurozone, have withdrawn their applications.  The euro has become a rallying political issue, with parties from all over Europe asking to withdraw. It has become the first line of action for those who oppose European integration.

Until now, the answer of European governments has been that withdrawal is impossible under the European constitution. But now that the German Council of Economic Experts has come out with a concrete proposal on how to do that, that line of defence is crumbling.

According to many analysts, Angela Merkel is playing with fire. Germany cannot remain a credible leader of a coalition of Northern and Eastern European countries and ignore the realities and needs of Southern Europe. This is unsustainable, even in the medium term.

Meanwhile, the world goes on. Within seven years India will have overtaken China as the most populous country in the world, while within a few decades Nigeria will have a larger population than the United States.

And Europe? Europe will have become the continent with most old people and lower productivity, and will have to face its four horses of the apocalypse:

• a solution to relations with Russia;
• common agreement on how to deal with the dramatic flow of immigrants, when countries are not even able to relocate 40,000 people in a region of 450 million;
• a real policy on the explosive Middle East and terrorism; and soon
• the request of United Kingdom for a new agreement on the European Union, or else it will exit Europe.

We can safely bet that those negotiations, which will be based purely on economic issues, will be the kiss of death for the original European dream. (END/COLUMNIST SERVICE)

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Yilmaz Akyüz
GENEVA, Feb 16 2015 (IPS)

After a series of crises with severe economic and social consequences in the 1990s and early 2000s, emerging and developing economies have become even more closely integrated into what is widely recognised as an inherently unstable international financial system. 

Both policies in these countries and a highly accommodating global financial environment have played a role. Not only have their traditional cross-border linkages been deepened and external balance sheets expanded rapidly, but also foreign presence in their domestic credit, bond, equity and property markets has reached unprecedented levels.

Yilmaz Akyuz

New channels have thus emerged for the transmission of financial shocks from global boom-bust cycles.

Almost all developing countries are now vulnerable, irrespective of their balance-of-payments, external debt, net foreign assets and international reserve positions, although these play an important role in the way such shocks could affect them.

Stability of domestic banking and asset markets is susceptible even in countries with strong external positions.

Those heavily dependent on foreign capital are prone to liquidity and solvency crises as well as domestic financial turmoil.

The new practices adopted in recent years – including more flexible exchange rate regimes, accumulation of large stocks of international reserves or borrowing in local currency – would not provide much of a buffer against severe external shocks such as those that may result from the normalisation of monetary policy in the United States. “The surge in capital inflows that started in the early years of the new millennium, and continued with full force after a temporary blip due to the collapse in 2008 of the Lehman Brothers financial services firm, holds the key to the growing internationalisation of finance in developing countries”

And the multilateral system is still lacking adequate mechanisms for an orderly and equitable resolution of external financial instability and crises in developing economies.

This process of closer integration was greatly helped by highly favourable global financial conditions before 2008, thanks to the very same credit and spending bubbles that culminated in a severe crisis in the United States and Europe. The crisis did not slow this process despite initial fears that it could lead to a retreat from globalisation.  Integration has even accelerated since then because of ultra-easy monetary policies pursued in advanced economies, notably in the United States, in response to the crisis.

The surge in capital inflows that started in the early years of the new millennium, and continued with full force after a temporary blip due to the collapse in 2008 of the Lehman Brothers financial services firm, holds the key to the growing internationalisation of finance in developing countries.

It has resulted in a rapid expansion of gross external assets and liabilities of developing economies. More importantly, the structure of their external balance sheets has undergone important changes, particularly on the liabilities side, bringing new vulnerabilities.

The share of direct and portfolio equity in external liabilities has been increasing. An important part of the increase in equity liabilities is due to capital gains by foreign holders. In many developing countries presence in equity markets is greater than that in the United States and Japan.

While still remaining below the levels seen a decade ago as a percentage of gross domestic product (GDP), external debt build-up has accelerated since the crisis in 2008. This is mainly due to borrowing by the private sector, which now accounts for a higher proportion of external debt than the public sector in both international bank loans and security issues. A very large proportion of private external debt is in foreign currency. There is also a renewed tendency for dollarisation in domestic loan markets.

As a result of a shift of governments from international to domestic bond markets and opening them to foreigners, the participation of non-residents in these markets has been growing. The proportion of local-currency sovereign debt held abroad is greater in many developing countries than in reserve-issuers such as the United States, the United Kingdom and Japan. It is held by fickle investors rather than by foreign central banks as international reserves.

International banks have been shifting from cross-border lending to local lending by establishing commercial presence in developing countries. Their market share in these countries has reached 50 percent compared with 20 percent in developed countries.

These banks tend to act as conduits of expansionary and contractionary impulses from global financial cycles and increase the exposure of developing economies to financial shocks from advanced economies.

One of the key lessons of history of economic development is that successful policies are associated not with autarky or full integration into the global economy, but strategic integration seeking to use the opportunities that a broader economic space may offer while minimising the potential risks it may entail. This is more so in finance than in trade, investment and technology.

For one thing, the international financial system is inherently unstable in large part because multilateral arrangements fail to impose adequate discipline over financial markets and policies in systemically important countries which exert a disproportionately large impact on global conditions.

For another, the multilateral system also lacks effective mechanisms for orderly resolution of financial crises with international dimensions.

Thus, closer integration of several into the international financial system in the past ten years, after a series of crises with severe economic and social consequences, is a cause for concern.

In all likelihood, these countries will be facing strong destabilising pressures in the years ahead as monetary policy in the United States returns to normalcy after six years of flooding the world with dollars at exceptionally low interest rates.

In weathering a possible renewed instability, they cannot count on the more flexible currency regimes they came to adopt after the last bouts of crises or the reserves they have built from capital inflows or the reduced currency exposure of the sovereign.

It is important that they, as well as the international community, avoid going back to business-as-usual in responding to a new round of financial shocks, bailing out investors and creditors and maintaining an open capital account at the expense of incomes and jobs.

They need to include many unconventional policy instruments in their arsenals to help lower the price that may have to be paid for the financial excesses of the past several years

They should also take the occasion to rebalance the pendulum and to bring about genuine changes in the international financial architecture. (END/IPS COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

* This column is based on Internationalization of Finance and Changing Vulnerabilities in Emerging and Developing Economies, South Centre Research Paper 60, January 2015, which is available here.

Excerpt:

Samah Shaheen (right), one of Gaza’s many disabled young people, joined the Irada programme to acquire expertise, learn computerised wood carving and escape social marginalisation. Credit: Khaled Alashqar/IPS

By Khaled Alashqar
GAZA CITY, Jan 17 2015 (IPS)

The Israeli attacks that the Gaza Strip has suffered in recent years have left in their wake a large number of young people who have come up against a further barrier to their creative energies – physical disability caused by military aggression.

Institutions here are increasingly facing the challenge of developing rehabilitation programmes to help support these physically disabled Gazan youth cope with living under the existing harsh political, economic and social conditions.

One of these programmes – known as “Irada” (“will” in Arabic) – is providing young people who have been disabled by war with vocational training with the ultimate objective of helping them earn their own livelihoods.

Launched by the Islamic University of Gaza, the Irada programme aims to support, train and reintegrate physically challenged young people in social and economic terms and boost community trust in the abilities of this so far marginalised group. More than 400 persons with all types of disabilities have already received rehabilitation and training.“After I joined the [Irada] programme and learnt computer skills for carving and decoration on wood, I now have a career, earn well and I am seriously thinking of opening a workshop” – Samah Shaheen, a 33-year-old physically disabled woman from Al-Bureij refugee camp

Irada project director Emad Al Masri told IPS that the project concept was initially developed for the massive number of young people who became disabled as a result of the Israeli war against Gaza in 2008. The project received support from the government of Turkey for the building construction to house Irada’s academic and vocational training programmes.

“The basic idea of the project is to help disabled people and reintegrate them into the community and help them to be productive instead of being seen as a burden,” Al Masri said.

Samah Shaheen, a 33-year-old from Al-Bureij refugee camp, has a physical disability that makes it difficult for her to engage in community activities. She joined the Irada programme in an attempt to acquire expertise and learn computerised wood carving. She spent more than six months in training before moving on to practice her new skills within the community under Irada supervision.

“I spent several years of my life jobless due to my disability, and also because I had no experience,” Samah told IPS. “After I joined the [Irada] programme and learnt computer skills for carving and decoration on wood, I now have a career, earn well and I am seriously thinking of opening a workshop because of the overwhelming response to the ornate wood furniture products that I have made.”

Central to the Irada rehabilitation programme is to follow up with the disabled people who have received training after leaving the programme in order to ensure their integration and participation in the labour market.  Part of this follow-up strategy also includes monitoring their progress in the workshops and factories where they are employed, and offering professional support if needed.

Because of its success, the Irada programme has been awarded funding by the United Nations Development Programme (UNDP) to help programme graduates start up small business projects, develop their economic independence and enhance their production profile.

Tariq Sha’at, NGO Coordinator for UNDP, told IPS that “UNDP allocated 150,000 dollars to establish centres for the production of home furniture throughout the governorates of the Gaza Strip and help 90 disabled trainees to manage their own businesses, continue their lives and reintegrate into the society naturally.”

Adding further success to the promising and successful Irada programme, three female information technology (IT) students from the Islamic University of Gaza have designed the first application to enable visually impaired people to write in Braille language on smart phones in Arabic.

Seen as a major breakthrough, visually impaired people can now download and install the application for performing all operations, including calls and text messaging. It also allows physically impaired people to use smart phones with high efficacy and facilitates communications with people in the wider society.

Dr. Tawfiq Barhom,  Dean of the Faculty of Information Technology, explained to IPS that “this group of female students was able to provide a great service to the community of visually impaired people, in addition to winning a global competition in which the application was selected as one of the five best projects for developers from among 2500 projects.”

Students are now trying to develop this application even further by increasing the number of languages supported to facilitate use by larger groups worldwide. Israa Al Ashqar, one of the students on the project team told IPS that the project came about because of the marginalisation experienced by visually impaired people in society and their increased isolation as a result of their inability to use social media and smart phone applications.

“The application will provide a Braille keyboard for every programme used by visually impaired people on mobile phones which will allow them to use social media and communicate with their community naturally. This will in turn increase the chances for this marginalised group to integrate into local and global society,” she said.

Together, the Irada programme and the Braille smart phone application represent a serious attempt by universities and students in Gaza to support an important section of the community that has not only suffered from wars and traumas but also hopelessness and isolation within Gazan society.

They are a tangible demonstration that the people of Gaza have the will and the talent to work together and develop opportunities, where possible, for an inclusive society.

Edited by Phil Harris   

Sit-in of Syrian migrants in Athens, demanding that they be granted permission to move on to other European countries. Many of them are sleeping rough on the ground during the night, covered only with blankets to face temperatures under 10 degrees Celsius. Credit: Apostolis Fotiadis/IPS

By Apostolis Fotiadis
ATHENS, Nov 29 2014 (IPS)

A sit-in protest by Syrian refugees on Syntagma Square opposite the Greek parliament in the heart of Athens has turned into a demonstration of the stalemate faced by both Greek as well as European immigration policy.

About three hundred men, women and children have been on the same spot for over a week now, demanding that they be granted permission to move on to other European countries to the northwest of Greece.“Given that the refugee population will keep increasing, it is necessary to identify appropriate policy initiatives to promote integration now. This is necessary both for refugees as well as for social cohesion in Greece” – Giorgos Tsarbopoulos, Head of the UNHCR Office in Greece

Many of them are sleeping rough on the ground during the night, covered only with blankets to face temperatures under 10 degrees Celsius. Tens have already been transferred to hospital to be treated for minor symptoms, mostly due to hypothermia. Medical incidents have increased after many of the protestors decided to start a hunger strike six days ago.

Throughout the protest, the Greek authorities have been communicating with them, repeating the official line that there exist no legal provisions for travelling to other European countries unless they have formally acquired refugee status.

However most of the Syrians taking part in the sit-in appear unwilling to apply for asylum in Greece.

They have refused to do so even after it was made clear to them that asylum would be granted to them with fast track procedures. This would help secure the travelling documents, which they desperately want, but at the same time would deprive them of the right to seek asylum in other European countries in which refugees enjoy access to better integration services.

Indeed, the Greek authorities are facing a unique situation. The Secretary-General of the Ministry of Interior, Aggelos Syrigos, told IPS from Syntagma Square where the protest is taking place that the situation seems irresolvable. “We explained to them that what they ask is not possible. We advised them to apply for asylum, so we can offer shelter to families. Many of them seem to believe that other Europeans can intervene to resolve their problem, which is not the case,”

Some years ago, when Greece was receiving mostly economic migrants, the country implemented a policy that limited access to asylum claims because irregular migrants were abusing the system.

Syrian migrants protesting in Athens. About three hundred men, women and children have been on the same spot for over a week now, demanding that they be granted permission to move on to other European countries. Credit: Apostolis Fotiadis/IPS

The crisis transformed the country into a non-desirable destination for refugees and migrants. Now it appears to be the authorities that are pushing refugees, which are the vast majority of arrivals these days, to enter the system and claim asylum.

The change in policy came after the authorities established an effective asylum system in cooperation with UNHCR, the U.N. refugee agency, and after pressure from the European Commission on the country’s authorities.

But this change of policy has not been followed up by establishment of the effective integration services and infrastructure that the country needs.

A recent reportby the Hellenic Foundation for European and Foreign Policy (ELIAMEP) on the cost-effectiveness of irregular migration control policy in Greece between 2007 and 2013 shows that Greece has prioritised an expensive system of border controls, detention and returns.

It has invested most of the available resources from European funds and the national budget in such a system at the expense of a less costly and more proactive system without such punitive measures. As a result, it now lacks facilities that would help manage new waves of arrivals.

The Head of the UNHCR Office in Greece, Giorgos Tsarbopoulos, told IPS that Greece never really attempted to implement an integration policy in the first place, but now, “given that the refugee population will keep increasing, it is necessary to identify appropriate policy initiatives to promote integration now. This is necessary both for refugees as well as for social cohesion in Greece.”

Tsarbopoulos believes that the government’s decision to precondition any protection offered to Syrian protestors on first applying for asylum might prove counterproductive by polarising the situation.

Many Syrians who come from an urban middle class background understand that claiming asylum in Greece will connect them to a future that leads to social marginalisation, a situation that they clearly find very difficult to accept.

A few nights ago, this correspondent was party to a conversation between Mohammed A., who has been sleeping rough in Syntagma Square since the beginning of the sit-in, and a Greek man, both of the same age.

The conversation ended with the Syrian saying: “I don’t want anything from Greece. What I want is just to be able to go where I want. You can go anywhere you want. I want this too.”

Both Syrigos and Tsarbopoulos agreed not only that the issue will deteriorate but also that the time frame for adequate solutions is limited.

According to the latest official Greek estimates, more than 5000 Syrians entered Greece last month and just a few days ago Greece sent a military search and rescue operation south to Crete to save an immobilised container ship believed to be carrying about 700 refugees.

The Greek Council of Refugees issued a response to the government’s position to push Syrians to submit asylum applications. According to the organisation, the asylum process “should not be a tool and a prerequisite for the provision of material reception conditions and immediate humanitarian assistance to people fleeing war conflicts”.

In an analytical press release circulated by UNHCR Greece five days ago, Europe is being urged to open legal pathways for refugees and start a dialogue on a Europe-wide refugee solution that puts the emphasis on solidarity among the European Union’s member states.

For two years, the Greek government, together with Italy and Malta, has repeatedly been asking the European Council to discuss responsibility-sharing between member states in the north of Europe and those in the south, but this has not yet happened.

(Edited by Phil Harris)

July will mark the start of a new era for the Common Southern Market (Mercosur), when it will expand to five full members, if the South American bloc manages to overcome the commotion caused by the admission of Venezuela and the suspension of Paraguay.

But Mercosur’s underlying problems will continue to block progress towards integration, experts warn.

There is a “legal vacuum” surrounding Paraguay’s eventual return as a full member of Mercosur – South America’s largest trade bloc – said Tullo Vigévani, a São Paulo State University (UNESP) professor of political science specialising in international relations.

Venezuela’s admission as a fifth full member was approved at the Jun. 29, 2012 summit, when Argentina, Brazil and Uruguay took advantage of the absence of Paraguay, which was suspended at the same meeting because of the Paraguayan legislature’s ouster of then President Fernando Lugo earlier in June.

Lugo was impeached in what was considered a “summary trial” that violated the bloc’s democracy clause.

The Paraguayan Senate, which was blocking Venezuela’s inclusion by refusing to ratify the admission agreement signed in 2006, finally voted against it in August in a vote that was more symbolic than effective.

But a political agreement will likely be reached to sort out the institutional mess after Paraguayan President-elect Horacio Cartes takes office in August, since the bloc’s powerhouses, Argentina and Brazil, will exert strong pressure on Paraguay due to economic interests, Vigévani told IPS.

The new government, which represents the return to power of the rightwing Colorado Party that ruled Paraguay from 1947 to 2008, is expected to get Congress to ratify Venezuela’s admission.

However, Venezuela adds a new element of uncertainty in the bloc because of the opposition’s challenge to President Nicolás Maduro’s Apr. 14 victory, in the wake of Hugo Chávez’s death from cancer on Mar. 5.

But the challenges faced by Mercosur are mainly due to the “conflict-ridden relations” between Argentina and Brazil, which are both experiencing processes of deindustrialisation, according to Vigévani.

Argentina lost a large part of its industries in a lengthy process that began in the 1970s, he pointed out. Privatisation and trade liberalisation policies adopted in different periods, such as the 1976-1983 dictatorship or the administration of Carlos Menem
(1989-1999), led the country to disaster.

The problem is that Argentina is now trying to carry out “old-fashioned reindustrialisation,” protecting non-competitive sectors without the technological innovations that could help create a sustainable future for the country, although the pressure to generate jobs is understandable, Vigévani said.

Disputes between Argentina and Brazil have occurred constantly since Mercosur was created in 1991, such as in the case of attempts to achieve ambitious goals like macroeconomic harmonisation, complementary supply chains, free circulation of goods and services, and a common currency, which have proved elusive.

Trade between South America’s two giants grew 13-fold since the Asunción Treaty, which founded Mercosur, was signed. But it appears to have reached a limit in 2011, when Brazil exported 22.7 billion dollars worth of goods to Argentina and imported 16.9 billion, according to official figures from Brazil.

The imbalance in Argentina’s favour began in 2004. And last year, Brazil’s sales fell 20.75 percent, while Argentina’s only slipped 2.73 percent.

Bilateral relations have also suffered because large Brazilian investors have pulled out of Argentina.

Brazil’s state oil company Petrobras is selling its assets in Argentina, where it had a string of service stations, while Brazilian mining giant Vale, privatised in 1997, suspended a potassium mining project in Rio Colorado, drawing an angry reaction from Buenos Aires.

But Brazil is also caught up in its own process of deindustrialisation, although less dramatic and more recent than the one Argentina experienced in the past.

For that reason, it is trying to defend some industries with measures such as tariff hikes, minimum national content rules for government purchases, tax cuts, and reductions in energy prices, in order to sustain the near full-employment achieved thanks to the fast expansion of the services, agriculture and construction industries.

The industries that the Brazilian government is trying to shore up are, however, “backwards,” such as the metallurgical industry, while sectors with greater technological innovation, like electronics and chemistry, are not as strong, said Julio de Almeida, an economist with the Institute for Studies on Industrial Development (IEDI).

With China’s boom in the world economy, industrial output has shrunk as a proportion of Brazil’s GDP and exports.

In fact, this problem is faced by Mercosur as a whole, which has increasingly become an exporter of primary products and an importer of manufactured goods.

The challenge faced by the entire bloc is to develop “policies that strengthen members’ processes of innovation and training, to boost competitiveness in production that incorporates new technologies,” said Vigévani.

This view is more and more widely expressed by analysts. But no viable short-term solutions are in sight.

Venezuela’s incorporation as a full member of Mercosur doesn’t improve the outlook in this sense. With its growing trade imbalance and heavy dependence on oil exports and on imports for just about all other products, Venezuela is already a major importer of food and manufactured goods from Argentina and Brazil.

For example, Brazil exported 5.06 billion dollars worth of goods to Venezuela last year and only imported 997 million dollars, according to statistics from Brazil.

Brazil’s investment in Venezuela is also sliding, with several companies pulling out of the country.

Brazilian companies have only made four investments in that country in the last five years, compared to 20 in Colombia, 19 in Chile and eight in Peru, according to the Centre for Integration and Development Studies (CINDES) in Rio de Janeiro

The economic slowdown forecast for Venezuela – from last year’s 5.6 percent to 2.5 percent this year, according to the United Nations report World Economic Situation and Prospects 2013 – and a 20 percent inflation rate exacerbate the uncertainty of what Venezuela’s admission will mean for the bloc.

Nor does the negotiation of a trade agreement with the European Union, which is back on the table, promise many benefits, because it is basically a question of opening up that market to Mercosur’s farm products, as a counterpart to increased access by European industrial goods and services to South America’s two largest economies, which would merely aggravate the bloc’s problems.

In addition, the severe economic crisis facing the EU further limits the ambitions of the trade talks between the two blocs.