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Andrey Pyatakov

PhD (Political Science), Senior Research Fellow, RAS Institute for Latin American Studies

By the middle of the second decade of the 21st century Latin America had experienced an integration boom. Four major integration associations were formed in a relatively short time, between 2004 and 2011: ALBA (the Bolivarian Alliance for the Peoples of Our America) and UNASUR in 2004, and the Pacific Alliance and CELAC in 2011. It was UNASUR that began to open the way for continental unity in this integration marathon. The bloc’s ambitious launch and the far-reaching plans of its early years turned into something of an integration slump and loss of dynamism, overcoming which is its historic challenge.

By the middle of the second decade of the 21st century Latin America had experienced an integration boom. Four major integration associations were formed in a relatively short time, between 2004 and 2011: ALBA (the Bolivarian Alliance for the Peoples of Our America) and UNASUR in 2004, and the Pacific Alliance and CELAC in 2011. It was UNASUR that began to open the way for continental unity in this integration marathon. The bloc’s ambitious launch and the far-reaching plans of its early years turned into something of an integration slump and loss of dynamism, overcoming which is its historic challenge.

From Latin American Community to Alliance: a Real Change?

The Union of South American Nations (UNASUR), which was founded by 12 South American states in December 2004, was an attempt to consolidate the countries in this region with a variety of political orientations and was originally called the South American Community of Nations (SACN). The main geopolitical reason for its creation was the need for a constructive response to the foreign policy challenges posed by the USA. By the beginning of 2005, it became obvious that the talks on creating a continent-wide Free Trade Zone (ALCA) that would meet the interests of its North American neighbour had reached a deadlock. The SACN was South America’s integration response to the US administration’s attempts to impose on the countries of Latin America its own plan for integrating the continent, which meant extending the standards and rules of the NAFTA to all states in the region, and in consequence to disband sub-regional groupings [1].

The SACN was South America’s integration response to the US administration’s attempts to impose on the countries of Latin America its own plan for integrating the continent, which meant extending the standards and rules of the NAFTA to all states in the region, and in consequence to disband sub-regional groupings.

The Cusco Declaration of 2004 proclaimed the “intention to develop the political, social, economic and infrastructural integration of the South American area and help to boost the role of the Latin American and Caribbean states in the world” [2]. For four years after this objective had been identified there was an internal conflict over the possible future of the bloc. Brazil, the main protagonist and initiator of UNASUR, proposed a “soft” subordination of the logic of the bloc’s development to its foreign policy interests. The South American giant hoped this would help it to achieve the status of a continental- and global-scale superpower. For Brazil, UNASUR was a political tool with which it could turn South America into its own zone of influence. The country’s rivalry with Mexico – the only power capable of competing with Brazil in terms of economic and geopolitical status, but situated in the orbit of North American foreign policy interests – was clearly a factor in this. But also within South America there was obviously no desire to give Brazilian interests complete control over the new integration association. Venezuela proposed that the two key integration associations in the region (the South American Common Market, MERCOSUR, and the Andean Community of Nations, CAN) be absorbed onto the SACN and integrated on an equal basis.

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As a result, it was only in May 2008 that the presidents signed a legal treaty to create the new bloc. A Solomonic decision was taken on the internal dispute between Brazil and Venezuela. The presidents approved a variant of the name proposed by Caracas (changing it from SACN to UNASUR), but there was no talk of dissolving MERCOSUR and CAN. The three strategic objectives of the association were then identified: first, to coordinate the foreign policy of the bloc’s member-states with the aim of turning South America into an independent entity in international relations. Secondly, to create a South American free trade zone (ALCSA), plans to create which went back to the beginning of the 1980s. Thirdly, to promote the so-called physical integration of the region by joining the region’s energy, communications, transport and infrastructure links.

The name itself – UNASUR – and also the intention to create the ALCSA clearly indicated that the states were taking the European model of integration as their guide (the European Free Trade Association was an evolutionary stage in the establishment of the EU). UNASUR positioned itself as a kind of Latin American equivalent of the European association. The further development and institutionalisation of UNASUR showed, however, that the final emphasis was on the first of the three strategic objectives.

The Creation of UNASUR: from a Project to… Projects

Bloc’s institutionalisation completed by 2012. By then the organisational structure included 12 councils [3]: on healthcare, energy, defence, social development, anti-narcotics work, education, culture, infrastructure and planning, economics and finance, the council for science, technology and innovation, the electoral council, and the civil security council.

The process of ratifying the UNASUR Founding Treaty, which was signed in 2008, run into difficulties. In order to achieve legal status the treaty had to be approved by a minimum of nine national parliaments. By August 2009, only Ecuador and Bolivia had ratified it. This gave sceptics grounds to say that UNASUR was not a valid international entity [4]. But there was a breakthrough in 2010: six parliaments at once [5] approved the treaty (not including Brazil). As a result, the UNASUR founding document came into force in March 2011, after which it was possible to talk of the bloc being finally institutionalised: its work became governed by regulations, it acquired its own budget and gained the opportunity to run financial activity, a headquarters and staff. The Ecuadorean capital Quito became its permanent base.

UNASUR positioned itself as a kind of Latin American equivalent of the European association.

In 2011, Hugo Chávez proposed adding an international tribunal for resolving economic disputes to the bloc’s structure, which would make it possible to strengthen political independence and self-determination in decision-making. The President of Ecuador gave the proposal his active support, but so far this initiative has remained at the discussion stage [6]. In August 2013, the presidents decided to create the South American Parliament, based in the Bolivian city of Cochabamba [7], but it is not functioning yet.

Separate mention should be made of UNASUR’s four main economic projects: the South American Free Trade Zone, the Bank of the South, the Big Gas Pipeline of the South (Gasur) and the Initiative for the Integration of the Regional Infrastructure of South America. The first two also remain at the planning stage for the time being, and the idea of ALCSA has dropped off the agenda for UNASUR summits and is unlikely to be picked up in the near future.

Banco del Sur positioned itself as a regional alternative to the dominant financial institutions (the Inter-American Development Bank, the IMF and the World Bank) and assumed that the central banks would join together to finance national economic development projects.

UNASUR’s main financial instrument was meant to be the Bank of the South (Banco del Sur), which was proposed in December 2007 by Hugo Chávez and his Argentinian colleague Néstor Kirchner [8]. Banco del Sur positioned itself as a regional alternative to the dominant financial institutions (the Inter-American Development Bank, the IMF and the World Bank) and assumed that the central banks would join together to finance national economic development projects. There were great hopes that “Banco del Sur would be able to maintain a regional balance, and that this in turn would enable the poorest countries with the least developed infrastructure to make a substantial leap forward in their development. … that Banco del Sur would be able to play a defining role in restoring the institutional structure after a period of neoliberalism” [9]. So far, however, these dreams have remained unfulfilled. By 2012, only five of the seven participants had ratified the agreement concerning the bank: Argentina, Bolivia, Venezuela, Uruguay and Ecuador. Brazil and Paraguay have not yet managed to secure approval of the project, since they are controlled by right-wing parties, and this remains a substantial brake on Banco del Sur’s progress. In July 2014, however, some signs of a “thaw” in this project appeared. Two meetings of the Banco del Sur Administrative Council were held at once (they elected an executive director and a president for the bank), and a third was planned for September of this year [10]. In the same month, Ecuador [11] and Venezuela [12] made the first contributions to Banco del Sur’s authorised capital, to the tune of 8 million and 80 million dollars respectively.

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Gas and Oil in South America

Construction of Gasur, the world’s biggest inter-state gas “ring”, is also so far in a state of suspension. Venezuela proposed this ambitious energy project in 2006, seeking an outlet for its gas into the enormous Brazilian market. Gasur would run for up to 15,000 km, covering six countries, with investment ranging from 17 to 23 billion dollars according to estimates. Experts believe it will take 10–20 years to create it [13]. The plan was to begin working in 2007–2008, but the megaproject still remains on paper. This is due firstly to the reduction in investment capacity in the context of the global crisis, and secondly to the growth of Brazil’s energy capacity (major deep-water deposits of oil and natural gas were discovered off the coast of Brazil in 2008–2009). The project is being partially implemented on a bilateral basis: an Andean branch of the gas pipeline between Venezuela and Colombia was built in 2008; a gas pipeline to Paraguay and Uruguay to transport Bolivian gas is in the final stage of construction [14]. But whether UNASUR will return to its plans for full-scale construction of this continental gas pipeline is an open question.

Another large-scale UNASUR project is the ambitious plan to develop a unified infrastructure for the states in the alliance, planned for the period from 2012 to 2022, which was adopted by the council for the development of infrastructure and planning (COSIPLAN) in November 2011. The plan was adopted as part of the IIRSA – a “platform for developing a general regional policy in the field of physical integration. These are the objectives that IIRSA, founded in 2000 and comprising 12 South American states and three regional financial institutions (Banco del Sur, CAF and FONPLATA [15] ), was meant to address. IIRSA’s competency includes issues related to developing strategic solutions, developing specific programmes in the field of infrastructure construction, and also organising financing for projects.” [16]

UNASUR’s plans include the construction of regional-level railways between strategic ports in Brazil (Paranagua and Santos) and Chile (Antofagasta and Arica), and between the capitals of Venezuela, Colombia and Ecuador.

The plan initially proposed that 31 major projects should be implemented in the coming decade, which would require an estimated 13.7 billion dollars’ investment [17]. But by 2014 the figures has risen steeply. According to Chile’s President Michelle Bachelet, COSIPLAN’s plans already include 101 projects costing a total of 17.3 billion dollars [18]. The project list includes infrastructure projects such as ports, canals, waterways, bridges, gas pipelines, roads and tunnels. In particular, UNASUR’s plans include the construction of regional-level railways between strategic ports in Brazil (Paranagua and Santos) and Chile (Antofagasta and Arica), and between the capitals of Venezuela, Colombia and Ecuador. Under the first project, a rail service will link the coastlines of the Atlantic and Pacific Oceans, which will make possible substantial reductions in the cost of transport services and will optimise commercial freight traffic within regions and for export. There are indirect signs that work is underway: in 2014, the COSIPLAN Coordination Council held five sessions. Which of these numerous UNASUR infrastructure projects will be implemented and which will remain on paper is again a matter of time.

UNASUR as a Political “Air Bag” for South America

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New secretary general Ernesto Samper

On the political level, the bloc is a political mosaic, and in my view it copes best with the function of a mechanism for regulating inter-state conflicts within UNASUR. Indeed, in the nearly ten-year history of the association quite a few conflicts have arisen that could have led to regional destabilisation. Until recently UNASUR acted as a shock absorber for the following pressure points: the attempted coups d’état in Bolivia (2008) and Ecuador (2010), the Ecuador–Colombia border conflict of 2008, the coup and violent and overthrow of the legitimally elected president in Honduras in 2009, the diplomatic crisis between Venezuela and Colombia in 2010, and the “parliamentary coup” in Paraguay in 2012. In all cases, UNASUR acted either as a mediator or as the arena for drawing up a consolidated position, which made it possible to stop the conflict escalating. UNASUR played an enormous role in organising international aid for Haiti after the disastrous earthquake of 2010 (it organised finance and practical assistance in restoring the country). UNASUR has recently acted as a mediator in the tense situation in Venezuela, which threatens to lead to internal political destabilisation. It promotes peaceful dialogue between opposition and authorities in every way, and this is why the latest UNASUR summit was convened in March 2014 [19].

UNASUR is one of the most active defenders of political stability in the region. And the main legal instrument here is the Democracy Clause [20], which was drawn up after the protests by the Ecuadorian police in 2010 and came into force in March 2014 [21]. It stipulates measures to prevent coups d’état and political destabilisation caused by violations of constitutional norms.

UNASUR Engages with BRICS

UNASUR acted either as a mediator or as the arena for drawing up a consolidated position, which made it possible to stop the conflict escalating.

It must be said that until recently UNASUR was a kind of “thing in itself” on the global stage of international relations. Perhaps the first consolidated involvement by members of the bloc in a meeting of global significance was the BRICS summit in Brazil (July 2014). The leaders of all 12 states in the association attended, not simply as presidents but as official representatives of UNASUR. In view of this, the BRICS summit in question may also be regarded as a joint inter-bloc forum.

This event literally breathed new life into UNASUR. Firstly, in Brazil the members of the bloc finally reached a consensus regarding a new secretary general – the post went to the Colombian ex-president Ernesto Samper (inauguration scheduled for 22 August 2014). Since the death of Néstor Kirchner in 2010, UNASUR had not been able to draw up an agreed decision on a common candidate. In the opinion of Ecuador’s foreign minister Ricardo Patiño, this could invest UNASUR with greater dynamism [22]. Secondly, the joint summit proposed that Banco del Sur cooperate with the newly established BRICS Development Bank. The UNASUR leaders expressed their consolidated support to the creation of the BRICS financial instrument [23], and the view began to prevail among analysts that the two banks could strengthen each other [24]. It cannot be ruled out that in the future their cooperation might lead to the creation of a new financial architecture for the global South and become a genuine alternative to the hegemony of the IMF and the World Bank.

UNASUR is one of the most active defenders of political stability in the region.

Before the current summit, the UNASUR countries limited themselves to only inter-state links with the BRICS states [25], with no cooperation between the blocs. The summit in Brazil may lay a strong foundation for developing this form of cooperation. In this sense, UNASUR could seize the initiative from CELAC, which is planning to create a permanent CELAC-China forum [26]. However, the borders between CELAC and UNASUR are so porous that both forms would be mutually complementary rather than competitive.

***

Despite the lack of clarity and incomplete nature of its economic initiatives, UNASUR has proved itself quite effectively as a political forum for discussing regional problems. Bearing in mind the complicated situation in the region, UNASUR, as an effective arena for negotiations which has already been tested in action more than once, could again show its worth in regulating conflict situations. As a dynamically developing association, UNASUR has great potential for development. Naturally, the bloc is not without its weakness and conflicts, and it has an excess of unfulfilled plans and projects. These, however, are weaknesses that could turn into strong aspects if the bloc moved into an upward phase of development. If UNASUR does not lose its unifying potential in the context of inter-state conflicts, it may be possible to speak of the prospect of it turning into a fully-fledged pole in the global system of international relations. This could be promoted to a considerable degree by establishing trans-continental links between UNASUR and BRICS. In view of the fact that China has already been playing the role of post-crisis shock absorber for many states in Latin America, the synergistic effect of BRICS could become a powerful factor in the global geopolitical genesis of UNASUR.

1. А.А. Lavut, ‘The SACN: a new economic and political bloc’, Latinskaya Amerika, No. 1, 2006, p. 19

2. URL: http://www.comunidadandina.org/documentos/dec_int/cusco_sudamerica.htm

3. URL: http://www.unasursg.org/inicio/organizacion/consejos

4. URL: http://dspace.uazuay.edu.ec/bitstream/datos/3473/1/10172_esp.pdf

5. The treaty was approved in 2010 by the legislative authorities of Argentina, Chile, Guyana, Peru, Suriname, Uruguay and Venezuela

6. URL: http://www.la-razon.com/mundo/Unasur-analiza-creacion-tribunal-regional_0_2018198179.html

7. URL: http://www.bolivia.com/actualidad/nacionales/sdi/69789/unasur-aprobo-proyecto-para-parlamento-sudamericano-en-cochabamba

8. URL: http://dspace.uazuay.edu.ec/bitstream/datos/3473/1/10172_esp.pdf

9. Yu.N. Moseykin, ‘Banco Sur: a new instrument of development’, Latinskaya Amerika, No. 10, 2006, p. 34

10. URL: http://www.pagina12.com.ar/diario/economia/subnotas/2-69023-2014-07-26.html

11. URL: http://www.eluniverso.com/noticias/2014/07/23/nota/3271346/ecuador-hara-primer-aporte-8-millones-banco-sur

12. URL: http://www.vtv.gob.ve/articulos/2014/07/23/venezuela-aporto-80-millones-a-fondos-del-banco-del-sur-2808.html

13. URL: http://es.wikipedia.org/wiki/Gran_Gasoducto_del_Sur

14. URL: http://energypress.com.bo/index.php?cat=278&pla=3&id_articulo=3352#.U-tvkhY2cW0

15. The Inter-American Development Bank (Banco Interamericano de Desarrollo, BID), the Andean Development Corporation (Corporación Andina de Fomento, CAF), the Financial Fund for the Development of the River Plate Basin (Fondo Financiero para el Desarrollo de la Cuenca del Plata, FONPLATA)

16. D.V. Razumovsky, ‘Integration in South America at the start of the new century: initiatives, difficulties, achievements’, Latinskaya Amerika, No. 4, 2011, p. 17

17. URL: http://veja.abril.com.br/noticia/economia/unasul-propoe-investir-us-13-7-bilhoes-em-obras-ate-2022

18. URL: http://tribunacampeche.com/internacional/2014/07/17/culmina-la-cumbre-con-soluciones-sustentables/

19. URL: http://www.caracol.com.co/noticias/internacionales/unasur-reacciona-con-la-crisis-venezolana/20140328/nota/2151565.aspx

20. URL: http://www.parlamento.gub.uy/htmlstat/pl/pdfs/repartidos/senado/S2012080621-00.pdf

21. URL: http://cancilleria.gob.ec/entro-en-vigencia-clausula-democratica-de-unasur-y-colombia-deposita-instrumento-de-ratificacion/

22. URL: http://www.elespectador.com/noticias/elmundo/cargo-de-ernesto-samper-unasur-dinamiza-el-trabajo-canc-articulo-505472

23. URL: http://www.eluniverso.com/noticias/2014/07/17/nota/3243001/lideres-unasur-elogian-creacion-banco-brics

24. URL: http://www.diarioregistrado.com/internacionales/94648-brics-y-banco-del-sur--una-posible-economia-de-integracion.html

25. For more detail see: V.M. Davydov (ed.), The BRICS – Latin America: Positioning and Interaction, Moscow: Russian Academy of Sciences Institute of Latin America, 2014. – 186 pp. URL: http://www.ilaran.ru/?n=928

26. URL: http://www.portafolio.co/internacional/foro-bilateral-china-y-america-latina

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