Latin American Integration in the Mirror of MERCOSUR
Presidents from the Mercosur nations
Uruguay's Jose Mujica, Brazil's Dilma Rousseff,
Venezuela's President Nicolas Maduro,
Argentina's Cristina Fernandez, Paraguay's
Horacio Cartes and Bolivia's Evo Morales pose
for an official photo during a summit in Caracas
July 29, 2014
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PhD in History, Senior Research Fellow at Political Studies Centre, Institute of Latin America, RAS
The 46th regular summit of Latin American states, members of MERCOSUR, the largest subregional integration bloc, was held in Caracas (Venezuela) on 29 July 2014. As Venezuela’s President Nicolas Maduro put it, it was the most “integrationist” summit ever held. In addition to issues connected with integration processes in Latin America, the member countries adopted a document in support of Argentina’s position on the debt problem and a resolution on the situation in the Gaza Strip.
The 46th regular summit of Latin American states, members of MERCOSUR, the largest subregional integration bloc, was held in Caracas (Venezuela) on 29 July 2014. As Venezuela’s President Nicolas Maduro put it, it was the most “integrationist” summit ever held. In addition to issues connected with integration processes in Latin America, the member countries adopted a document in support of Argentina’s position on the debt problem and a resolution on the situation in the Gaza Strip. The MERCOSUR summit was preceded by the 6th BRICS summit in Brazil and the Russian President’s trip to Cuba, Nicaragua, Argentina, and Brazil. All of these events are geopolitically interconnected and usher in a new era in the fate of Latin American integration and in the relations between the region’s countries and Russia.
The Past and Present of Latin American Integration
The phenomenon of Latin American integration is more than half a century old and largely manifests itself in the integration processes between individual states. These processes are aimed at encouraging mutual trade, forming a common trade and economic space, and eventually creating a common regional market for goods, services, and capital, as well as unified transborder economic systems.
The regional integration processes began in 1960 with the establishment of the Central American Common Market. Since then, 26 inter-state organisations have sprung up in Latin America, declaring their commitment to boost trade, pool the economic efforts of Latin American countries and bring about their political rapprochement. The development of integration, according to its architects, should produce a cumulative effect, ensuring accelerated economic growth and the modernisation of national production structures by building up inter-regional cooperation.
Latin American integration has passed through several stages that have differed in both content and results [1]. The current fourth stage of integration began in 2004 with the emergence of two regional groups: the South American Community of Nations—later transformed into the Union of South American Nations (UNASUR)—and the Bolivarian Alliance for the Peoples of Our America (ALBA) [2]. The Community of Latin American and Caribbean States (CELAC) formed in 2011 united for the first time in history all of the 33 countries in the region, but (unlike the Organisation of American States) did not include the USA and Canada. In 2012 the Pacific Alliance was formed, comprising Colombia, Mexico, Peru, and Chile.
An important feature of the present stage of Latin American integration is the broadening of its agenda by including a wide range of issues regarding political interaction and cooperation in the defence and security spheres.
Thus, Latin America has a diverse, mosaic-like picture of many integration entities. Indeed, attempts were made to unite the integration groups themselves (an “integration of integrations”), most notably by creating UNASUR and CELAC.
On the whole, one can identify three main integration models that differ as to their goals and methods and their readiness to engage in interaction with the external world.
The first model is represented by NAFTA and the Pacific Alliance, which to a large extent continue the neo-liberal economic policy trend. On the other extreme, the second model is embodied by the ALBA group, which unites the countries opposed to neo-liberalism and globalization. ALBA is in fact a marked example of the political line that gave impetus to the “left pivot” in Latin America in the first decade of the 21st century [3]. And finally, the third model is a moderate variant of integration bloc. It has seen its materialisation in MERCOSUR, whose members generally departed from the neo-liberal dogma as far as macro-economic policy is concerned but, for the most part, were not particularly inclined to politicise the process of economic rapprochement. The main tasks for them (above all for Brazil) have been, and still are, addressing trade and economic challenges and becoming more competitive in the world markets.
MERCOSUR at Crossroads
An important feature of the present stage of Latin American integration is the broadening of its agenda by including a wide range of issues regarding political interaction and cooperation in the defence and security spheres.
MERCOSUR is facing serious new challenges that demand a timely, adequate response from its member countries. Some of these challenges have to do with the expansion of the group. Thus, in 2012 Venezuela joined the group (with active Argentine support), which has resulted in the radicalization of MERCOSUR’s position on some regional and international issues and the strengthening of the ideological tilt characteristic of other integration groups of which Caracas is a member. As a result, in the opinion of the Latin American writer and political commentator Alvaro Vargas Llosa, MERCOSUR is increasingly marked by “the coexistence of moderate governments with socialist regimes, since Venezuela did not join the group alone: it brought its allies and satellites along with it” (1, 2).
The process of expansion may continue. As of today Bolivia, Colombia, Peru, Chile, and Ecuador are associated members, and Mexico and New Zealand are observers. In 2013 the Ecuadorian government started negotiations on joining the bloc. Bolivia is about to become a fully-fledged member of MERCOSUR (according to established procedure, the accession treaty has to be ratified by the parliaments of all of the member countries). Half of its exports already go to MERCOSUR countries, which is a strong argument in favour of admitting it as a full member.
Among the external challenges, one should note Latin America’s growing interest in the Pacific Alliance, whose development signifies not only stronger economic ties between its four members but also its potential to become a springboard for breaking into attractive Asia-Pacific markets. This explains why there are so many observer countries in the Alliance, which includes not only Latin American republics, but also the USA and Canada, countries of Europe, Asia, and Africa, and Australia and New Zealand. In other words, MERCOSUR may in the Pacific Alliance find itself a strong rival for leadership in the Latin American economic and political space.
To be sure, the future of MERCOSUR and its prospects in the context of Latin American integration processes are critically dependent on the position and actions of Brazil, which is the keystone of the bloc. The problem is that, as the economic potential and international weight of the South American giant grows (witness its participation in BRICS and G20), Brazil feels that MERCOSUR does not give it enough space. Nor should one discount Argentina’s current difficult financial and economic position, as well as the difficulties experienced by Venezuela. Buenos Aires is more and more resorting to protectionist measures to cushion the negative economic impact, while Caracas is clearly losing its former role of financial donor. This diminishes MERCOSUR’s integration appeal and prevents Brazil from getting additional resources and opportunities for a new economic leap forward.
Dim medium-term prospects of economic growth in the majority of Latin American states, the recent slowdown in their growth, and differences among the MERCOSUR member countries may be obstacles to further integration. The Latin American press reports that the task facing Brazil’s president Dilma Rousseff is to persuade the MERCOSUR partners to sign a free-trade agreement with the Pacific Alliance. In the opinion of the Brazilian leader, this may give MERCOSUR “a new lease on life” and speed up the creation of a common market in Latin America. However, according to the influential Spanish paper El País, Dilma Rousseff’s plans are meeting with resistance from Venezuela and Argentina, who see the members of the Pacific Alliance as ideological adversaries, followers of neo-liberalism and globalism.
It is clear that MERCOSUR in its current state is not very compatible with the Pacific Alliance. The MERCOSUR summit held in Caracas in late July 2014 must be viewed with the ideological and political rivalry between these two models in mind.
Will the Summit Decisions Be Implemented?
Among the external challenges, one should note Latin America’s growing interest in the Pacific Alliance, whose development signifies not only stronger economic ties between its four members but also its potential to become a springboard for breaking into attractive Asia-Pacific markets.
The 46th MERCOSUR summit will go down in the history of integration processes in the region as an attempt by its member countries to take a resolute step towards uniting Latin American integration groups within a new structure. The basis for this structure is thought to be provided by common ideological approaches (rejection of neo-liberalism) and a shared (critical) attitude towards the existing world economic order, in which developing countries are often unable to actualize their interests.
The summit was preceded by a special meeting of the ministers of MERCOSUR. The participants declared that they had gathered “to harmonise the integration strategies of the region’s countries and continue the policy of alliance-building”. However, the meeting of presidents showed that the development of common approaches is hindered by the differences in the positions of Brazil on the one hand and Argentina and Venezuela on the other. The summit made it clear that one of the dividing lines is whether the potential integration mega-bloc should be primarily an economic or a political association of Latin American states.
Brazil, the home of many locally based transnational corporations (“multilatinas”) [4], whose products can hold their own against practically any rivals, badly needs to expand its external markets. This is why Dilma Rousseff took pains to convince her colleagues of the need to promote trade and economic cooperation with all of the world’s countries. The Brazilian president said that “the regional bloc cannot be confined to its economic space” and advocated that a trade agreement between MERCOSUR and the European Union which has been unsuccessfully promoted since 1999 be signed as soon as possible [5].
During his visit to Brazil in July 2014, the head of the European Commission Jose Manuel Barroso said that the time had come to legalise relations between the two blocs. He said an agreement with the EU would enable the Latin American countries to increase their exports to Europe by 40%.
Along with Brazil, Uruguay and Paraguay have evinced a desire to reach an agreement with the European Union. However, the final resolution of the MERCOSUR summit contains only some general expressions of the countries’ hopes that they will get an agreed-upon offer from the European countries and will continue to exchange opinions on disputed trade and economic issues between the two blocs. This muted language indicates that serious differences among the MERCOSUR countries persist.
Jose Manuel Barroso and Dilma Rousseff, Brazil,
July 2014
Argentine President Cristina Fernandez de Kirchner told the summit that one could argue about the markets and economies of individual countries, but the integration of Latin American peoples “is a political issue to be solved by popularly elected presidents”. Thus the Argentine president backed the principle underlying Venezuela’s proposal to create a Complementary Economic Zone (ZEC) that would include MERCOSUR, ALBA, and Petrocaribe, an organisation set up in June 2005 upon the initiative of Caracas and Havana to supply Central American and Caribbean states with energy “at fair prices.”
The proposal was included in the text of the Joint Communiqué of the MERCOSUR summit (Clause 18). This was critical for the summit’s host, Venezuela, because the creation of a common MERCOSUR-ALBA-Petrocaribe economic space might enable it to expand its political influence to include the Southern Cone countries [6].
Most experts are sceptical about the ZEC project and see the MERCOSUR initiative as a piece of political propaganda. Nevertheless, in accordance with the summit resolution, the next temporary president of MERCOSUR (Argentina) has 60 days to create procedures for dialogue with the ALBA and Petrocaribe countries. Thus, further attempts are in the offing to move Latin American integration forward. But in what direction will it move? What will form the basis of these efforts to build new regional associations: economic practicability or political calculations?
MERCOSUR: a Strategic Partner for Russia
Dim medium-term prospects of economic growth in the majority of Latin American states, the recent slowdown in their growth, and differences among the MERCOSUR member countries may be obstacles to further integration.
Relations between Russia and Latin America are changing before our very eyes. One must bear in mind that Russia and Latin America have moved closer together against the backdrop of a deteriorating international situation caused above all by the events in and around Ukraine. The Russian Federation’s conflict with the USA and the European Union, both a political conflict over values and a trade and economic conflict, came to a head in the summer of 2014 and is growing. The gulf between these two sides is widening. This lends added importance to the ideas Russia and some key Latin American states share about the direction in which the geopolitical landscape should go and what the future world order should be.
MERCOSUR occupies a special place in the overall context of Russia-Latin America interaction, accounting for two-thirds of the trade between Russia and Latin America.
Moscow has been engaged in direct dialogue with this integration group since 2000. In December of 2003 Russian Foreign Minister Igor Ivanov attended the MERCOSUR summit that adopted a joint statement that launched the political dialogue. In May 2005 Moscow hosted a delegation of MERCOSUR led by the chairman of the commission of the bloc’s permanent representatives, former President of Argentina Eduardo Duhalde. The delegation also included six high-ranking officials from Argentina, Brazil, and Uruguay and 18 top Latin American businessmen representing the food industry, biotechnology, and high technology markets. In December 2006, during Russian Foreign Minister Sergey Lavrov’s visit to Brazil, a Memorandum of Understanding was signed regarding the creation of a procedure for political dialogue and cooperation between the Russian Federation and MERCOSUR. This memorandum established the legal framework for further interaction in all spheres. An agreement between the Federation Council of the Federal Assembly of the Russian Federation and the MERCOSUR parliament, aimed at expanding inter-parliamentary cooperation and the development of mutually beneficial ties between Russia and the major trade and economic blocs in South America, was signed in Buenos Aires in 2010. Therefore, the interaction between Russia and MERCOSUR has a solid legal basis.
Vladimir Putin and Cristina Fernandez de
Kirchner, Argentine, July 2014
The importance of the relations with the MERCOSUR countries was reaffirmed during a visit by Russian President Vladimir Putin to Argentina and Brazil in July 2014. The talks between the Russian leader and those of the big Latin American countries underscored the high level of cooperation achieved and laid down guidelines for its further development. The deteriorating geopolitical situation and virtual curtailment of economic interaction with the West has presented Russia with the need to take stock of these fundamental changes, to work out a new strategy in the international arena, and to expand the circle of its active foreign partners to include the states that are willing (and able) to cooperate with our country on an equal basis. The MERCOSUR countries are among these states. A rapprochement with them can strengthen Moscow’s negotiating position and make up for the economic damage caused by the discriminatory measures of the USA and the European Union.
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For a long time, Latin America has been a “broken space” both economically and politically, as the countries in the region have had stronger links with states in other parts of the world than among themselves. The development of integration processes, in spite of all the difficulties and obstacles, has brought a marked change to this state of affairs, bringing Latin American republics closer together economically and politically and enhancing their role in the world. Additional opportunities have presented themselves in the relations between Latin America and Russia.
The cases of MERCOSUR and the new integration groups that sprang up in the 21st century show the development and growing complexity of the international political landscape in the region and the emergence of new benchmarks and structures of cooperation. Obviously, with continuing international instability and growing competition, integration meets the objective need for Latin American countries to bond together, not only economically but also politically.
At the same time, the MERCOSUR summit in Caracas has revealed serious differences in the approach of its member countries to the goals and tasks of integration processes. Such factors as the priority of ideology and politics in the activities of MERCOSUR, the wish to solve top-priority tasks within the group, and trade and economic differences between the member countries can aggravate the already difficult tasks of moving integration forward and creating a common market on the continent. The region needs to work out new approaches before entering the next cycle of tackling regional problems.
1. In the first stage (1960–1978) there emerged 10 groups, chief of which was the Latin American Free Trade Association (1960), the Andean Community (1969), and the Latin American and the Caribbean Economic System (1975). The key event of the second stage (1980–1994) was the creation of the Common Market of the South (MERCOSUR) in 1991, which united Argentina, Brazil, Paraguay, and Uruguay. Another highlight was the signing of the North American Free Trade Agreement (NAFTA) in December 1992, which included the USA, Canada and Mexico. The third wave of regionalism (1995–2001) occurred during the climax and crisis of neo-liberal policy that had come to Latin American soil.
2. UNASUR united all 12 South American states, and ALBA, in which Venezuela plays the lead role, includes Bolivia, Cuba, Nicaragua, Ecuador, Antigua and Barbuda, Dominica, Saint Vincent and the Grenadines, and Saint Lucia.
3. The “Left Pivot” in Latin America / Ed. V.P. Sudarev. Moscow, Institute of Latin America, RAS, 2007.
4. P.P. Yakovlev. “Multilatinas”: The Transborder Leap of Latin American Business // Latinskaya Amerika. 2013. No. 6. pp. 89–104.
5. The European Union signed free trade agreements with 11 Latin American countries, with the exception of the MERCOSUR countries, which account for about 60% of the region’s GDP (http://economia.elpais.com/economia/2014/08/14/actualidad/1408038037_172328.html).
6. ALBA and Petrocaribe unite 21 countries with similar populist regimes. These were subsidised by Caracas until only recently.
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