In Uruguay 22,414 people have been displaced by the floods that have affected the countries of the Mercosur trade bloc. Credit: Sistema Nacional de Emergencias (Sinae)

By Fabiana Frayssinet
BUENOS AIRES, Jan 4 2016 (IPS)

The flooding that has affected four South American countries has underscored the need for an integrated approach to addressing the causes and effects of climate change.

Above and beyond joint emergency response plans, global warming poses common problems like deforestation and the management of shared rivers.

Some 180,000 people have been evacuated since the worst flooding in years hit the region over the year-end holidays.

The floods caused when the Paraná, Paraguay and Uruguay rivers overflowed their banks did not respect the borders between the nations of the Mercosur (Southern Common Market) bloc, and have brought them together in a shared environmental catastrophe.

The same scenes of flooded streets, rescue teams and evacuation centres have filled the news from the provinces of northeast Argentina, cities in northern Uruguay and southern Brazil, and riverbank communities near the capital of Paraguay.“There is indifference towards environmental problems in the Mercosur. So much so that a Mercosur summit was held just recently, and this issue, which was a tragedy foretold, was not even addressed.” -- Enrique Viale

“It is difficult to avoid associating the severity of the floods with the modifications that have to do with climate change,” said Jorge Taiana, vice president of Parlasur, the parliamentary institution of the Mercosur bloc, which is made up of Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela.

“A serious joint response by the region is absolutely essential with respect to the two major strategies for confronting climate change, mitigation and adaptation to its effects,” Taiana, a lawmaker from Argentina’s “Front for Victory”, the left-leaning faction of the Justicialista (Peronist) Party, now in the opposition, told IPS.

“There is indifference towards environmental problems in the Mercosur,” Enrique Viale, president of the Argentine Association of Environmentalist Lawyers, told IPS. “So much so that a Mercosur summit was held just recently, and this issue, which was a tragedy foretold, was not even addressed.”

A number of experts have blamed the heavy rainfall on the El Niño-Southern Oscillation (ENSO), a cyclical climate phenomenon that affects weather patterns around the world.

The World Meteorological Organisation (WMO), a specialised United Nations agency, had forecast that its effects would be among the strongest seen since 1950.

On Dec. 24 the U.N. General Assembly urged member states to draw up national and regional strategies to address El Niño’s socioeconomic and environmental impacts, suggesting the implementation of early warning systems and the adoption of prevention, mitigation and damage control measures.

Viale, however, said: “The El Niño phenomenon was announced, but it isn’t the only cause.”

“The four countries (affected by the severe flooding) are the world’s biggest soy producers, along with the United States. It is not just by chance that the map of deforestation caused by soy production coincides with the map of the flooding,” he said.

The U.N. Food and Agriculture Organisation (FAO) reported that Brazil, Paraguay and Argentina were among the 10 countries with the highest levels of deforestation in the last 25 years. Between 1990 and 2015, Argentina lost more than 7.6 million hectares of forest.

In the Misionera or Paranaense jungle, also known as the Mata Atlantica, through which the Uruguay, Paraná and Iguazú rivers run, only seven percent of the original forest cover remains in Argentina, while this ecosystem in Paraguay and Brazil has been almost completely destroyed.

Greenpeace campaign coordinator in Argentina Hernán Giardini said in a statement that “Forests and jungles, besides concentrating considerable biodiversity, play a critical role in climate regulation, maintenance of water sources and flows and soil conservation.

“They are our natural sponge and protective umbrella. When we lose forests we become more vulnerable to heavy rains and run a serious risk of flooding,” the statement by the global environmental watchdog added.

Viale said: “This, added to direct seeding, the method used to plant transgenic soy, has turned the fields into veritable green deserts without any capacity for absorbing water.”

Soy production, which has boomed since 1990, is seen as essential to these South American economies, as soy is one of their chief export products.

As it expanded, soy also replaced other traditional crops, while pushing stockbreeding into marginal areas like jungles and forests.

Argentine environmentalist Jorge Daneri said “The expansion of the agricultural frontier, driven in particular by the expansion of genetically modified soy monoculture, the enormous deforestation of the Paranaense jungle, and the construction of dams on a giant scale by Brazil on the Paraná, Iguazú and Uruguay rivers – with many more under construction or planned – has greatly aggravated the environmental crisis throughout (South America’s) Southern Cone region.”

To address what he described as “regional ecocide,” Daneri, with the Argentine organisation “M´Biguá, Ciudadanía y Justicia Ambiental” (M´Biguá, Citizenship and Environmental Justice), called for the river basin committees of the Paraná, Uruguay and Paraguay rivers to work together.

“There isn’t a single river basin committee that includes the three Argentine provinces in question and the national state, and there is only CARU (the Uruguay River Administrative Commission), which includes Argentina and Uruguay, but not Brazil,” he said.

“This is a serious problem, because of the total lack of coordination,” he said. “We see the river basin committee as the main institution that should be focused on here. It has been clearly demonstrated that Mercosur has failed to play a serious role coordinating proactive, sustainable policies.”

Daneri stressed the urgent need for “a new environmental management and zoning system, and the reestablishment of biological corridors, as well as a system to recuperate riverbank areas through reforestation using native species of trees, and to restore native forests.”

He also proposed a reorganisation of zoning plans in every province, together with the national authorities, as well as environmental assessments of every river basin, at a regional level.

In the short term, Taiana suggested the Parlasur help coordinate contingency plans for those affected by the flooding, and in the longer term, he said local governments should study together construction projects and other initiatives financed by Mercosur.

He pointed out that the bloc has a Structural Convergence Fund to finance projects to improve infrastructure and boost the competitiveness and social development of the member countries.

“The most important aspect of these non-reimbursable funds that facilitate integration is that they acknowledge the asymmetries between member countries,” he said.

Taiana said the fund, of some 100 million dollars a year, could be invested in projects financed in border areas to mitigate or prevent flooding, like dikes or diversion channels.

“It seems to me that there are many common issues that are urgent, where the Mercosur as a whole still has a lot to do,” he said.

Daneri said “The projects needed are not cement works, they are not megadams or megadikes. It’s not about channelising rivers. Only making efforts during an emergency, or for emergencies, is a mistake.”

“Part of meeting this challenge is working towards a transition to leave the current oversimplified model of monoculture behind and moving in the direction of agroecology. The causes need to be addressed,” he added.

“The causes lie in a productive model that does not depend on nature’s cycles but on the cycles of the market, which is devastating for ecosystems,” he said.

By Fabiana Frayssinet
BUENOS AIRES, Aug 13 2015 (IPS)

It’s pouring rain in the capital of Argentina, but customers haven’t stayed away from the Bonpland Solidarity Economy Market, where family farmers sell their produce. The government has now decided to give them a label to identify and strengthen this important segment of the economy: small farmers.

Norma Araujo, her husband and son are late getting to the market in the Buenos Aires neighbourhood of Palermo Hollywood because the heavy rains made it difficult to navigate the dirt roads to their farm, in the municipality of Florencio Varela, 38 km from the capital.

They quickly set up their fruit and vegetable stand as the first customers reach the old warehouse, which was closed down as a market during the severe economic crisis that broke out in late 2001. Today, 25 stands offer products sold by social, indigenous and peasant organisations, which are produced without slave labour and under the rules of fair trade.

“Our vegetables are completely natural. They are grown without toxic agrochemicals,” Araujo told IPS. She is a member of the Florencio Varela Family Farmers Cooperative, which also sells chicken, eggs, suckling pig and rabbit.

Across from Araujo’s stand, Analía Alvarado sells honey, homemade jams, cheese, seeds with nutritional properties, natural juices, olive oil, whole grain bread, organic yerba mate – a traditional caffeinated herbal brew – and dairy products.

“The idea is to give small farmers a chance, and here we have people from all around the country, who wouldn’t otherwise have the possibility of selling their goods,” Alvarado said.

The ministry of agriculture, livestock and fishing took another step in that direction with the creation in July of the “Produced by Family Farms” label, “to enhance the visibility of, inform and raise awareness about the significant contribution that family farms make to food security and sovereignty.”

According to the ministry, there are 120,000 family farms in this country of 43 million people, and the sector is “the main supplier of food for the Argentine population, providing approximately 70 percent of the daily diet.”

“A label identifying products grown on family farms not only makes the sector more visible but foments a dialogue between consumers and farmers who have a presence in the countryside across the entire nation, generating territorial sovereignty,” said Raimundo Laugero, director of programmes and projects in the ministry’s family agriculture secretariat.

In the category of family farmers the government includes peasants, small farmers, smallholders, indigenous communities, small-scale fisher families, landless rural workers, sharecroppers, craftspeople, and urban and periurban producers.

In his interview with IPS, Laugero said the label will not only identify products as coming from the family agriculture sector, but will “guarantee health controls, chemical-free and non-industrial production, and production characterised by diversity, unlike monoculture farming.

“When we’re talking about a product from family agriculture, the symbolic value is that they are produced through artisanal processes and with work by the family, and one fundamental aspect is that behind the product are the faces of people who live in the countryside,” he said.

Agriculture is one of the pillars of the economy of this South American nation, accounting for 13 percent of GDP, 55.8 percent of exports and 35.6 percent of direct and indirect employment.

María José Otero, a pharmacist, has come a long way to the market on her bicycle, but she doesn’t mind. For her family she wants “the healthiest and most natural diet possible, free of chemicals.”

She also shops here because of “a social question” – she wants to benefit those “who produce natural food without so much industrialisation, while avoiding the middlemen who drive up food prices.

“Besides, I’m really interested in the impact caused by the act of consuming something with awareness,” she added. “That means taking care of the environment where you work, respecting animals. It’s not the same thing to consume eggs from animals that walk about and eat naturally as from animals that are cruelly treated and packed into warehouses, fed in horrible ways.”

Otero said the new label was “great.” “There’s a lot of deception in this also, from people who say they’re selling organic products or products made with a social conscience, and it’s a lie. This label gives you a guarantee,” she said.

“This will especially help the public become aware of what it means to help small farmers. So they can realise that what they pay and what they consume really goes to them, and for the people who do the work to really get paid what they are due,” Alvarado said.

Laugero also stressed that a significant aspect of the new label is that it is linked to “participatory guarantee systems for agroecological products.”

He pointed out that normally when farmers apply for a label recognising their products, they need to turn to a company that carries out the certification process, while the concept “agroecological” has other components.

He mentioned six pilot projects in Argentina, of participatory guarantee systems – basically locally focused quality assurance systems – for agroecological products, which involve organised farmers and consumers, and which the state will now support as well.

“With the label, they’re going to do much better, because they’ll have a more massive reach, and more people will be included,” he said.

At the Bonpland market, Claudia Giorgi, a member of the La Asamblearia cooperative, which works as part of a network with other social organisations, is preparing shipments to another province which will use the same transportation to send products back, to cut costs.

Giorgi makes papaya preserves. But she also sells products from other cooperatives like natural cosmetics, lavender soap, medicinal herbs, pesticide-free tea, mustard and different kinds of flour.

“What is produced in each social organisation is traded for products from other groups, at each organisation’s cost, which is the producers’ costs plus what is spent on logistics,” she explained to IPS.

She said she didn’t have any information yet about the new label, but believes that it will be a good thing if it proves to be “functional” and if it differs from labels that “are profit-making schemes” and “have a cost.”

The resolution creating the new label states that one of the aims is to “promote new channels of marketing and sales points.”

Laugero noted that besides accounting for 20 percent of agricultural GDP, family farming represents 95 percent of goat production, 22 percent of cattle production, 30 percent of sheep production, 33 percent of honey production, 25 percent of fruit production, 60 percent of fresh vegetables, and 15 percent of grains.

“But that doesn’t always translate into profits,” he said. “We need to work hard on those aspects so that income also ends up in the hands of family farmers.”

In her case, Araujo puts the emphasis on solving even more simple problems, such as finding transportation for her vegetables to the market, even when it rains.

“They should fix our dirt roads,” she said, clarifying that small farmers themselves have offered to participate in the task.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

The Itaipú hydrower complex, an example of bilateral energy integration that cannot go beyond the borders of Paraguay and Brazil. Credit: Darío Montero/IPS

By Marianela Jarroud
SANTIAGO, Oct 31 2013 (IPS)

Energy integration efforts in Latin America have been made in fits and starts, even though many clearly understand that the only way to solve the region’s energy shortages and high costs is by working together.

Experts who spoke to IPS agreed that the main difficulties in achieving energy integration lie in the differences between national energy supply systems. In the region there are countries with centralised state management and others with mixed public-private systems.

Other factors that affect integration are differences in fuel prices, uncertain availability of natural gas supplies, and socio-environmental conflicts over major energy projects such as mega-dams.

To move forward towards integration, they say, commercial and technical regulations must be adopted for a viable international market for electricity, to operate interconnected systems, harmonise national regulations, and coordinate planning for connected systems, in order to develop a regional market.

Common criteria for reliability standards, rationing priorities, and distribution of congestion pricing revenues also have to be defined.

The first in-depth study on these questions in Latin America was carried out in 1964, when the Commission for Regional Electricity Integration (CIER) was founded. It is currently made up of 10 countries, including the founders – Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay – as well as Colombia, Ecuador, Peru, Venezuela, and seven companies.

CIER has carried out more than 20 studies that have outlined the concrete possibilities for unifying the region’s power grids.

But Latin America is far from achieving energy integration, Oscar Ferreño, CIER international coordinator for generation, told IPS.

Among the factors standing in the way of integration are a lack of political will and the privatisation of a number of major power production and distribution companies and oil companies since the 1990s.

Ferreño pointed out that there is one interconnected area, among the founding members of the Mercosur (Southern Common Market) trade bloc – Argentina, Brazil, Paraguay and Uruguay (Venezuela recently became the fifth full member).

But he warned that “there is a natural barrier that is difficult to overcome: the Andes mountains.”

At any rate, several bilateral or multilateral initiatives for interconnection have been studied, and some of them could be implemented, he added.

One example is the electric power interconnection between Uruguay and Brazil, which involves a 420-km power line with a capacity of 500 MW and a high-voltage direct current converter station, that is to come onstream in mid-2014.

The Brazilian government is also discussing with Argentina and Paraguay the construction of a 321-km power line with a capacity of 2,000 MW to interconnect two binational hydroelectric dams: Yacyretá, shared by Argentina and Paraguay, and Itaipú, between Brazil and Paraguay.

The problem is that the Itaipú contract prohibits the sale of energy to a third country.

In the Andean region, meanwhile, two projects are still only on paper. One arose from a 2007 United Nations Development Programme (UNDP) study on the complementarities of energy resources in Bolivia, Chile, Colombia, Ecuador and Peru.

The other is the Andean Electric Interconnection, which would involve the five Andean countries and has the backing of the Inter-American Development Bank.

But the idea of establishing a regional energy network focuses on tapping the oil reserves of Argentina and Venezuela, the gas reserves of Peru and Bolivia, the hydroelectric systems of Chile and Brazil, and the region’s solar and wind power potential.

Ferreño said “energy integration is fundamental,” principally because of the variation in non-conventional renewable energies, like solar and wind power, which have a vast potential in Latin America.

“Wind can blow in the south at one point and not in the north, or it could be cloudy, so integration facilitates the homogenisation of the production of the different natural energies, which is essential,” he said.

The director of the TNS Latam consultancy, Fernando Meiter, agreed that “regional energy integration is still far off.

“It is impossible if there is no framework so that if one country has a surplus, it can be given to a neighbour. That’s basically the problem,” he said.

“Argentina has several gas pipelines to Chile and one to Uruguay, which are currently not in use. In the short term, I don’t think integration will be achieved,” Meiter said.

Argentina exported natural gas regularly to Chile until 2006, when it began to sell only small quantities because it had to cover its own domestic needs first.

Chile, even without resolving the question of the diversification of its energy mix, could turn to Bolivia, another large gas supplier. But there is constant diplomatic tension between the two countries over Bolivia’s long-standing demand for an outlet to the Pacific Ocean, which it lost to Chile in the 1879-1883 War of the Pacific.

Bolivia currently exports significant volumes of natural gas to Argentina.

According to the Latin American Energy Organisation (OLADE), regional energy consumption amounted to 1,073 terawatt hours in 2010 at high prices, both for residential and industrial uses.

Official figures indicate that in 2011, Chile was the country with the sixth highest prices for the industrial sector in the Organisation of Economic Cooperation and Development (OECD), at 154 dollars per megawatt hour.

Meiter noted that one of the benefits of energy integration is the ability to negotiate prices as a bloc.

“For example, if Argentina, Chile, Brazil and Uruguay could jointly purchase natural gas from any of the Arab producers, if they went together to negotiate volumes, the prices would come down,” he said.

In his view, the Andes are not an obstacle for integration, “because the infrastructure is already there. That means it’s a question of political will,” he said.

Brazil still looks almost exclusively to the Atlantic - where this grain pipeline operates in the Suape Port complex - turning its back on the Pacific. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Jul 3 2013 (IPS)

The Mercosur and Pacific Alliance blocs can strengthen Latin American integration rather than weaken it, analysts say.

The Pacific Alliance, which groups Chile, Colombia, Mexico and Peru, “opens up new prospects for Latin America,” including more balanced integration, said Peruvian sociology professor Enrique Amayo from the Paulista State University in Araracuara, 270 km from São Paulo.

Mercosur (Southern Common Market), made up of Argentina, Brazil, Uruguay and Venezuela – along with Paraguay, which has been suspended since President Fernando Lugo was ousted in June 2012 – is “a closed bloc, where the size of the country is absolutely decisive.”

Brazil has consistently attempted to impose its rules on the rest of the members, which has stood in the way of agreements, said Amayo, who specialises in economic history and Latin American international studies.

The emergence of an association of four important regional economies – the Pacific Alliance was launched in June 2012 – with a strategic geopolitical location on the Pacific Ocean establishes “a balance of power in South America and Latin America, which favours horizontal negotiations by giving a sense of reality” to Brazil and Mercosur, he said.

This could foment closer ties between the two blocs, in conditions of equality, with neither “unelected leaders nor charismatic informal leaders,” said Amayo. But Mercosur´s current problems make that unlikely.

Retired Brazilian ambassador José Botafogo Gonçalves said Brazil would have to “modify its vision of regional integration.” But, he said, that will not happen under the government of Dilma Rousseff, and “dynamic opportunities” offered by the countries of the Pacific, like Peru and Colombia, whose economies are now growing much faster than Brazil´s, will be missed.

Mercosur served the needs of Brazil “in the historical context” of the 1980s and 1990s, when the import substitution model was being abandoned, the country faced a severe financial crisis, and it was forced to overcome the isolation of its internal market.

Brazil´s opening up of trade made sense. It began with Argentina in 1988 and expanded to Paraguay and Uruguay when the bloc was founded in 1991, “an important step for Brazilian industry and agriculture, which became more competitive,” said Botafogo Gonçalves, vice president emeritus of the Brazilian Centre on International Relations (CEBRI).

But Mercosur “no longer responds to Brazil´s needs” in the current changing global economic situation, he said. Its industry has lost competitiveness and the bloc´s market “is not enough to help it recover,” he said.

Industry now needs to be integrated in global production chains, without insisting that “100 percent of the inputs must be national,” because competitiveness of exports will not be achieved that way, the ambassador said. For example, Mexico, by opening itself up to the maquila – for export assembly plants – in the past few decades, chose a path that today is bearing fruit, he said.

In Botafogo Gonçalves’ view, “there is still space for a broad, pragmatic accord” that would promote production chains that include countries of the Pacific Alliance, boosting the efficiency of Brazilian industry.

What is needed is not just an agreement on reducing tariffs, which have scant importance today because all duties have been drastically reduced, but “a real policy on integration, comprising regulations, energy, investment, infrastructure, intellectual property and communication,” he said.

But the diplomat said he did not see “brilliant prospects” in that area, because of “the irritated reactions” he has observed in the government, which prefers to seek ties with Bolivia and Ecuador, rather than with more promising economies like Peru and Colombia.

The biggest problem in Mercosur, which is still essential for Brazil´s foreign trade despite the sharp drop in exports to Argentina, is that these two large partners abandoned their integration and free trade policies over the last decade, he said.

Argentina did so because of its financial difficulties, not because of opposition to its giant neighbour. But in Brazil´s case, both former president Luiz Inácio Lula da Silva (2003-2011) and Rousseff turned their back on regional integration in practice, while continuing to support it rhetorically, Botafogo Gonçalves criticised.

Amayo´s concern, on the other hand, focuses on Brazil´s attitude as an emerging power towards small countries, which it grants unequal treatment in negotiations. He mentioned the example of Paraguay and Uruguay, in Mercosur.

He also said the expansion of Brazil´s multinational companies, backed up by abundant credit from this country´s state development bank, has drawn negative reactions.
The Pacific Alliance was not created with the intention of “dividing” the region, but to address the interests of its members and their long history of relations across the Pacific region, “and not just China and Japan,” Amayo said. “No one ever asked whether Mercosur divided Latin America,” he added.

Little attention is paid in Brazil to the history and reality of the countries of the Pacific region, in the country´s diplomacy and in research institutions, which rarely approve financial support for studies about the other side of the continent, he lamented.

The new bloc got off to a dynamic start with Costa Rica and Panama asking to join, and many others requesting observer status, which Uruguay, for instance, has already been granted.

Brazil should waste no time in understanding that strategic position “matters more than size,” Amayo said. The Alliance is not only in the Pacific region, but is “bi-oceanic,” with privileged access to the fastest-growing area in the global economy – the Pacific rim – as well as to the Atlantic, he noted.

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.

To go down fighting in the Andean Community (CAN), with a combined market of 92 million consumers, or move up to the big leagues of Mercosur, with 275 million? This was the dilemma faced by Bolivia’s foreign trade strategists when it came to pursuing full membership in the bloc formed by its neighbours to the south.

The contrast is remarkable: last year, Bolivia’s exports to its partners in CAN – Colombia, Ecuador and Peru – totalled 774 million dollars, resulting in a trade surplus of 88 million dollars.

In the meantime, Bolivia purchased 2.427 billion dollars in goods from the countries of the Southern Common Market (Mercosur) that same year, while its sales to the bloc – excluding the main export, natural gas – were a mere 232 million dollars, according to figures from the National Institute of Statistics.

It should be kept in mind, as well, that these figures refer to trade with the founding members of Mercosur – Argentina, Brazil, Paraguay and Uruguay – and do not include Venezuela, which did not become a full member until mid-year.

This sizable trade deficit reflects an already consummated “invasion”, which many fear will be exacerbated by Bolivia’s entry as the sixth full member of the bloc.

“Before Bolivia has even entered Mercosur, the bloc has already entered Bolivia, and it is doing so to a growing extent,” through bilateral trade agreements, observed Gary Rodríguez, general manager of the Bolivian Institute of Foreign Trade (IBCE).

When natural gas, which represents 96 percent of Bolivia’s exports to Mercosur, is added to the equation, the balance is reversed, leaving Bolivia with a 1.692-billion-dollar trade surplus.

But gas exports are based on operations and agreements between national governments and do not involve the private sector, stressed Rodríguez in an interview with IPS at the IBCE headquarters in Santa Cruz, where he shares the same concerns and the same office tower with powerful business owners in the eastern Bolivian department (province) of the same name.

His greatest concern is for the future of Bolivian private companies. Last year, for example, 30 million dollars worth of shoes were imported from Brazil. In conditions like these, “we won’t be able to continue manufacturing ourselves,” said Rodríguez, who fears that the Bolivian market will be flooded with these and other goods in the event of a devaluation of the Argentine peso and Brazilian real against the dollar.

But Mercosur membership, the path chosen by the government of leftist President Evo Morales, could open up new prospects for Bolivian business owners “especially those involved in big agribusiness in eastern Bolivia,” Tullo Vigévani, a professor at Paulista State University in Brazil, told IPS.

CAN has been showing signs of weakening for decades, and the Pacific Alliance recently established by Chile, Colombia, Mexico and Peru “does not offer very promising horizons for Bolivia,” since these countries are also oil and gas producers and their economies “are closely integrated with the United States,” explained Vigévani, a specialist on integration processes, and particularly on Mercosur.

Joining Mercosur will help Bolivia “avoid isolation” and open up the possibility of tapping into a large regional market. Nevertheless, concerted efforts by the governments of the countries involved to ensure balance will likely be required, based on the prior experience of Mercosur itself, he added.

This assessment is backed by Jerjes Justiniano, the Bolivian ambassador to Brazil. “If we join Mercosur, we will have significant opportunities to grow as a nation and to improve working conditions,” he said.

In any event, Vigévani stressed that the incorporation protocol signed by Morales on Dec. 7 at the bloc’s summit in Brasilia falls far short of signifying full membership in Mercosur, its customs union and its common market. This will require a lengthy period of negotiations which could stretch out for years.

The analyst pointed out that Venezuela signed the same agreement in 2006, and only became a full member six months ago. Venezuela’s full entry came after Paraguay – whose legislature was the only one in the bloc opposed to it – had its membership suspended due to the ouster of President Fernando Lugo, which the other members considered a violation of the Mercosur “democratic clause”.

There are a number of complex issues that must be dealt with in order for Bolivia to take its place in the trade bloc, such as adaptation to all of the legislation created by Mercosur in almost 22 years of existence, and the country’s current status as a full member of CAN.

According to Vigévani, it is “legally impossible” for Bolivia to be a full member of both CAN and Mercosur, as its government intends.

Rodríguez, however, hopes that the Bolivian government will keep its pledge to maintain its trade agreements with CAN while complying with its new commitments to Mercosur.

Whatever the case may be, Bolivia’s entry into South America’s biggest trade bloc fulfils a destiny that dates back almost half a century: in 1969 the La Plata Basin Treaty was signed in Brasilia by Bolivia and the four founding members of Mercosur, Vigévani recalled.

In political terms, Mercosur will be strengthened as “an axis of South American and Latin American life,” he said. However, the “solidity” of its incorporation will depend on the response of Bolivian institutions, so that the decision comes from the state and not only the current government, and reflects a national consensus, he stressed.

Vigévani also believes that Bolivia’s full membership would be advantageous for the economy of Mercosur, by fostering closer relations and helping to avoid obstacles such as those which recently affected the production and purchase of gas by Argentina and Brazil, paralysing infrastructure and industrial projects that would have been beneficial to all, he added.

With regard to the Morales administration, the Brazilian expert believes that it has renewed its priority focus on regional integration, after briefly placing its faith in the alternative of closer ties with the Asia-Pacific region, particularly China.

Although the Bolivian economy may be small, with a total gross domestic product of some 25 billion dollars (around one percent of Brazil’s GDP), its incorporation will enhance the consistency of the economy of all of the Mercosur countries, while giving the bloc greater political weight, he concluded.

* Additional reporting by Franz Chávez in Santa Cruz, Bolivia.

Lugo's supporters demonstrating in Asuncion. Credit: Natalia Ruiz Díaz/IPS

By Natalia Ruiz Diaz
ASUNCIÓN, Jul 6 2012 (IPS)

Paraguyan rights groups are disappointed at being denied access to a delegation of the Organisation of American States (OAS) sent in this week to discover the facts behind the impeachment and removal of President Fernando Lugo on Jun. 22.

The mission, headed by OAS secretary-general José Miguel Insulza, is expected to make public, on Jul. 29, its official report to the permanent council of the 35-member OAS that has its headquarters in Washington.

The country “is peaceful” and the situation “is not serious, although it is delicate,” Insulza said during the delegation’s Jul. 1-3 visit to Paraguay.

While the delegation held consultations with a range of social, economic and political actors, to learn the circumstances leading to  Lugo’s ouster and his replacement by former vice-president Federico Franco, rights groups were kept away from the OAS team.

Representatives of political parties, agricultural producers, business  media, campesinos (peasants), indigenous people and the Catholic church were seen filing in and out of the hotel in downtown Asunción where the OAS delegation held consultations.

Prior to his departure, Insulza said, “We are leaving under the impression that there was openness from everyone to provide us with information on the case.”

He admitted, however, that the delegation “would have liked to have met with some other social sectors.”

Human rights organisations criticised the fact that the mission did not receive them despite their requests, and staged a demonstration at the airport when the OAS representatives left.

“In our capacity as organisations recognised by the OAS itself, as well as by the United Nations, we asked to talk to the OAS observers, but they did not receive us and that is regrettable,” complained Elba Núñez, a member of the Paraguayan Human Rights Coordinating Committee (CODEHUPY).

Núñez, coordinator of the Paraguayan chapter of the Latin-American and Caribbean Committee for the Defence of Women’s Rights (CLADEM), regretted “the biased view the OAS mission is taking away with them, as they have not heard all the voices, nor have they met with all sectors.

“The human rights movement cannot be disregarded in this way in the case of a parliamentary coup d’état such as we have just experienced,” she told IPS.

“We had high hopes of this visit, but now we have low expectations of their conclusions,” she said.

She also said that social activists were being persecuted more than ever since Lugo’s removal, to the point where activists were the targets of threats. “It is reminiscent of the Alfredo Stroessner dictatorship (1954-1989).”

Political analyst José Carlos Rodríguez said the main outcome of the OAS mission may be to mitigate the harshness of external sanctions against Paraguay.

“The international community has formed a vacuum around the Franco government,” he told IPS, because the legitimacy of the new leader “has still not been recognised by countries like the United States, Canada and Mexico.”

Neither has Asunción confirmed diplomatic recognition by Germany or Spain – as some international media had reported. Only Taiwan and the Vatican have actually recognised the new government officially.

Paraguay has been suspended from the membership of Mercosur (the Southern Common Market), as also from the 12-nation regional Union of South American Nations (Unasur).

Rodríguez said this is worrying as it means the country cannot defend its interests in any international forum. “At the moment, Paraguay is a pariah state,” he told IPS.

In the view of former Liberal senator Gonzalo Quintana, now one of Franco’s advisors, the OAS visit was “a slap in the face” for ambassadors from countries of the Americas that have diplomatic representation in Paraguay.

“Rather than being seen as under punishment, Paraguay is currently being admired because, although it is such a small country, it has stood up to two giants – Brazil and Argentina,” he told IPS.

The Franco government went on a diplomatic offensive against its neighbours on Tuesday, accusing Venezuelan foreign minister Nicolás Maduro of interfering in the country’s internal affairs.

María Liz García, the new defence minister, claimed that on Jun. 22 Maduro met with commanders of the Paraguayan armed forces and urged them to rally in defence of Lugo.

As evidence, she displayed a video, with no soundtrack, showing Paraguayan military commanders, and shortly afterward Maduro, walking through the corridors at the seat of government, as Unasur foreign ministers flew into Asunción to seek a solution to the crisis.

When the OAS observers arrived in Paraguay they were met by protesters claiming that Lugo was the victim of “a parliamentary coup,” and also by pro-Franco supporters objecting to Paraguay’s Mercosur and Unasur suspensions.

Some 20,000 people demonstrated in support of Lugo on the streets of Asunción and in the provinces last week, mobilised by civil society organisations and leftwing political activists.

Rodríguez estimates that pro-Lugo demonstrators represent 20 percent of the electorate but lack cohesion as a group. “They are progressive sectors that lack structure, and so they are like leaves that can be blown by the wind in any direction,” he said.

On the other hand, the movement backing Franco lacks enthusiasm, he said. He cited a demonstration in support of the new government that was cancelled at a short notice with no explanation offered.

Coverage of the crisis by the Paraguayan media has been harshly criticised by Lugo supporters.

Rodríguez said privately-owned media clearly favoured the dismissal of Lugo, a former Catholic bishop. “The media supported the trial and are betting that Franco will stay in power until next year’s elections (due in April 2013). But there is actually no guarantee that he will last that long,” he said.

In contrast, ‘Televisión Pública’, the state channel created by the Lugo government two years ago, has a different slant. Its main offices have become the focal point for the pro-Lugo movement called ‘Resistance to the Coup’.

The channel’s “open microphone” programme has served as an outlet for expressing rejection of the new government ever since the president was deposed.

Núñez said the private media “avoid portrayal of what is really happening in the country; they do not reflect all the views and voices. And this prevents people from getting a clear overall picture.

“Private media are helping to propagate a state of fear in the population. That is why people are not holding mass demonstrations – because of fear,” she said.

The leaders of South America’s Mercosur trade bloc decided to set up a committee to facilitate the incorporation of new members, adopt a mechanism to defend democracy in case of a coup, and ban vessels from the Malvinas/Falkland Islands from docking in member countries’ ports.

Mercosur leaders express solidarity with Argentina's historic claim to the Malvinas/Falkland Islands. Credit: Office of the Uruguayan president

At Tuesday’s summit, the presidents of Argentina, Brazil, Paraguay and Uruguay also signed a free trade agreement with Palestine, seen as mainly symbolic, and expanded the list of products from outside the bloc that will pay import tariffs.

In their speeches, the Mercosur (Southern Common Market) leaders acknowledged the contradictions and hurdles faced by the region’s largest trade bloc, while stressing the need to continue to forge ahead with the process of integration.

At the bloc’s headquarters in Montevideo, host President José Mujica met Cristina Fernández of Argentina, Dilma Rousseff of Brazil and Fernando Lugo of Paraguay, as well as Hugo Chávez of Venezuela and Rafael Correa of Ecuador, whose countries are in the process of joining as full members.

“Our path is full of contradictions and difficulties,” Mujica said. “Woe to us if the contradictions disillusion us and we abandon this project. We would soon become a leaf in the wind, in this world of colossal forces.”

The Uruguayan president emphasised that the bloc represents not only economic, but political, integration. “Without politics, there will be no Mercosur in the long run, and there will be no convergence, because this is not only an economic equation.

“Alas for us if we fail to understand that the underlying issue is a question of power, and that this question makes it necessary to move towards convergence,” he said.

Mujica also confirmed the creation of a high-level committee to analyse the admission of Venezuela and Ecuador as full members.

Venezuela, whose admission process began in 2006, is only awaiting approval by the Paraguayan Congress, where legislators opposed to the left-leaning Lugo hold a majority. For its part, Ecuador formally requested full membership on Tuesday.

Chávez said the incorporation of his country as a fifth full member has been blocked “by just five lawmakers” in Paraguay.

“These people who have been opposing (Venezuela’s admission) for five years, I don’t know if they are aware of the harm they are causing, not to Venezuela, but to everyone, to the Paraguayan people themselves,” he said. “There are only five people who don’t want it. I think that behind them there must be a very powerful hand, moving who knows what mechanisms of pressure,” he maintained.

Chávez underlined that Venezuela’s incorporation would mean “opening Mercosur to the Pacific.

“We are members of OPEC (Organisation of Petroleum Exporting Companies), we have gas and energy reserves, we have things to contribute,” he added. “We have to expedite this, spurred on by the global crisis that is threatening us.”

Lugo also referred to the case of Venezuela and the resistance put up by a handful of legislators in his country.

“This government of Paraguay is respectful of its institutions, but it is making an effort to strengthen integration. The incorporation of Ecuador and Venezuela would work in favour of our bloc,” he said.

Rousseff, meanwhile, highlighted the agreement reached at the summit “to expand the list of products included in the common foreign tariff” applied to imports from outside Mercosur, and to adopt various mechanisms to foment intra-bloc trade.

Correa, for his part, stressed the signing of the “Montevideo Protocol”, a mechanism providing for a mutual response in defence of democratic institutions in case of a coup d’etat in any of the member countries.

The summit agenda, which was to include public ceremonies, such as the signing of the agreement with Palestine – signed in private in the end – was interrupted by the tragic news of the death of Argentina’s deputy trade secretary, 33-year-old Iván Heyn. The newly appointed official was found hanged in his room in the Montevideo hotel where most of the Argentine delegation was staying. The police said his death appeared to be a suicide, but that the investigation continued.

When Fernández was notified, she was so upset that her private doctor was called to attend to her.

Malvinas/Falklands

The summit also approved a resolution to close the bloc’s ports to vessels flying the Falkland Islands flag. The islands, known as the Malvinas in Argentina, have been held by Britain since the 1830s, and were the subject of a brief war between the two countries in 1982, when Argentina sought to assert its sovereignty over them.

In a column posted on the Uruguayan president’s web site Tuesday, Mujica explained his decision to ban the boats from docking in Uruguay, arguing that his country’s foreign policy has always been based on national interests, but also on the principle of solidarity with the region.

Mujica said solidarity with Buenos Aires also benefited Montevideo. “Uruguay’s political history shows that every time relations with Argentina have soured, the economy and labour have been enormously impaired,” he wrote.

Fernández expressed her appreciation for the member countries’ decision to block boats from the Malvinas.

The Malvinas “are not just an Argentine cause, but a global cause, because (the British) are taking oil and fishing resources, and when they need more resources, whoever is the strongest will go to find them whenever and however,” she said, as Rousseff nodded.

“When they sign something involving the Malvinas, they are doing so as if the Malvinas belonged to them. There are many countries here with great natural wealth, and this wealth must be defended. Let’s be smart enough to understand that, by taking care of each other, we are taking care of ourselves,” she added.

At the end of the summit, Mujica handed over the rotating six-month presidency of the bloc to Fernández.