4-12-05, 8:58 am

From Council of Hemispheric Affairs

At a summit held on March 29 in Puerto Ordaz, Venezuela, heads of government from Spain, Colombia, Brazil and Venezuela gathered to discuss an array of topics, ranging from security issues to regional economic integration. Venezuelan President Hugo Chávez declared the summit’s intent to “accelerate the South American integration project as a geopolitical component because it is the only path that we have: the Latin American Union.” Displaying his usual rhetorical panache, Chávez said this path would lead to a “new geopolitical map . . . to counterbalance the global dominance of the United States.” While eschewing the more feisty rhetoric of his colleague, Brazilian President Luiz Inácio “Lula” da Silva chimed in with a subtle barb to Washington by stating that “all we want to do is occupy our space in the world, show respect for all nations but also [want] to be respected by them.”

Affirming the Cuzco Declaration

One main purpose of the summit was to affirm the agenda articulated at an earlier regional summit held last December in Cuzco, Peru. There, 12 South American countries signed an accord to merge the region’s two main trading blocs, the Andean Community of Nations (CAN) and the Southern Common Market (MERCOSUR) into a single unified bloc, the South American Community of Nations (CSN). The political significance of the Cuzco meeting was that it was the biggest step the continent has yet made towards the centuries-old ideal of a unified South America. At the meeting, CAN Secretary-General Allan Wagner told the IPS news service that, “Our ultimate goal is the United States of South America.” As reported in the Economist, former Argentine President Eduardo Duhalde noted, “Our mirror will be the European Union, with all its institutions.” Peruvian President Alejandro Toledo, invoking standard Chavista bravura, declared, “We are here to give flesh, bone, soul, heart and life to the dream of Bolívar.” Economically, Cuzco’s significance lies in its unification of the two formidable trading blocs MERCOSUR and CAN, which combined serves a population of 360 million, a $1.3 trillion GDP and an export market of $181 billion.

Haven’t We Been Here Before?

Calls for South American unity like President Toledo’s, whether based on trade or cultural ties, are nothing new to the continent. Dating back to Bolívar’s inter-American congress in 1826, regional leaders have frequently gathered at conferences intended to create regional trade blocs and continental alliances. But flourishing declarations of Latin unity, with very little to show for them, have provided ample food stock for cynics among both observers of Latin America as well as its leaders. For example, commenting on the Cuzco meeting, the former Ecuadoran vice president, Blaso Penaherrera, observed, “The presidents live from summit to summit. They’re going to turn into mountain climbers, passing from summit to summit.” Speaking in a more pragmatic vein, in a recent NPR broadcast discussion with the author of this piece, Peter Hakim, president of the Inter-American Dialogue, noted that, “one can talk about trade agreements among the countries of South America as a very useful advance, but let’s be real as well – the biggest market in the hemisphere is the U.S. market. There’s not enough of a market in South America to really provide the growth that these countries need to break out of the cycle of poverty.”

In contrast to this skepticism, what stands out regarding the March summit in Puerto Ordaz and last year’s meeting in Cuzco is that the plethora of obstacles, which historically have proven to be the bane of South American unity are now, for the first time, within reach of being surmountable. Moreover, most of South America is, to some degree, ideologically aligned along the same democratic, center-left political axis (except Colombia). This ideological alignment may prove to be a necessary if not a sufficient condition for regional unity.

Why the Current Drive for Unity May Succeed

The most immediate obstacle to intra-regional trade and unity has always been the twin barriers of harsh geography and the lack of a sufficient technological and industrial infrastructure needed to subdue it. As observed by Brazilian Foreign Minister Celso Amorim, “North America has been an integrated continent since the 19th century. We have only recently begun this process ourselves. The Atlantic-Pacific gap, which doesn’t exist in North America, is dramatic in South America, because of the need to cross the Andes or the Amazon.”

To overcome such problems, the leaders at Cuzco pledged $4.2 billion to finance the construction of 32 regional infrastructural projects, scheduled for completion within the next five years. The projects, which include pipelines, highways, railways, airports and an array of telecommunications upgrades, are meant to facilitate a freer intracontinental flow of goods across geographic divides. If these projects are completed, they will represent an unprecedented step forward towards the goal of South American unity and economic self-sufficiency.

Why South America is Pursuing Regional Integration

There are two main reasons why South American countries are attempting to coalesce into a regional trade bloc: first, on the economic front, the region’s leaders view integration as a boon to their interests; second, on the political front, the continent’s majority of center-left governments see South American unity as a way to counteract Washington’s self-serving designs for the region. These reasons are highlighted in Latin America’s general frustration towards the proposed Free Trade Area of the Americas (FTAA), the interhemispheric trade initiative proposed in Miami eleven years ago.

As the most concrete manifestation of the vaunted “Washington Consensus” of the early 1990s, the FTAA is viewed by proponents and detractors alike as the extension of NAFTA to the rest of the hemisphere. To Washington’s dismay, however, most of South America has become extremely wary of the FTAA and has been probing the path of intrahemispheric trade as an alternative to Washington’s preferred plans for bilateral trade agreements, with Chile being the notable exception. The region’s center-left governments typically view the FTAA as a possible threat to their fragile economies, environments and workers’ rights.

For example, regarding patents, South American countries have witnessed the effects of NAFTA on Mexico and the potentially harmful aspects of its protection clauses in the NAFTA-inspired Central America Free Trade Agreement (CAFTA). Writing on the patent issue in the Washington Post on March 30, Harold Meyerson accurately observed that “CAFTA imposes a five-to-ten year waiting period on generic competitors . . . CAFTA thus effectively ensures the drug companies an extension of their monopoly on high-priced medications. It also ensures that thousands of Central Americans in need of such medications will have to go without.” On the unjust nature of U.S. trade agreements, Meyerson further notes “the fundamental reality of most of our trade accords: They are designed to maximize corporate profits no matter the cost to the peoples of the signatory nations.”

Not surprisingly, South America’s leaders have chosen strength via economic integration rather than allow foreign drug companies to pillage their public health sectors. So long as they see the FTAA as curtailing their control over their own economies by such means as patent controls, elimination of social subsidies, and the privatization of the public sector by foreign investors, they are likely to pursue continental solidarity as an alternative to Washington’s strategy of divide and conquer.

It’s the Hypocrisy, Stupid Though the above issues are partly responsible for pushing the region towards unity, Washington’s egregious double standards in preaching open markets and free trade as the miracle cure for economic woes while subsidizing the U.S. agricultural industry are South America’s chief points of contention with the FTAA. These subsidies, which have cost U.S. taxpayers $131 billion since 1995, make it impossible for farmers in countries like Brazil to fairly compete on the global market. When Washington adds tariffs and quotas to the subsidies, the result is a virtual U.S. shut-down on South American agro exports. Arguing for the termination of farm subsidies in Investor’s Business Daily, Dr. Benjamin Powell, director of the Center on Entrepreneurial Innovation at the Independent Institute, noted that “Ending farm subsidies in America would also aid impoverished parts of the world [and] abolishing farm subsidies in rich countries would add $100 billion to global income.”

Given the subsidies and the FTAA’s privileging of transnational corporate interests, South America’s leaders have begun proposing intrahemispheric alternatives in order to protect local economies. In October 2003, Presidents Lula and Kirchner proposed “The Buenos Aires Consensus,” a 22-point manifesto for regional integration and a proclamation of MERCOSUR as “not only a commercial bloc but a catalyzing space for shared values, traditions, and futures.” Similarly, in 2004, Venezuela proposed Bolivarian Alternative for Latin America and the Caribbean (ALBA) as a counter to the FTAA.

According to the Venezuelan Bank of External Commerce, ALBA “prioritizes Latin American integration and sub-regional blocs [and corrects] the disparities that disadvantage economically weaker countries in the face of the main economic powers.” On the subsidy issue, ALBA asserts that “It is unacceptable that the negotiation of agriculture is confined exclusively to the elimination of tariffs on the part of the developing countries, while the main powers refuse to eliminate the subsidies and internal aids.” Accordingly, the Puerto Ordaz and Cuzco summits should be seen in the broader context of the region’s discontent with Washington’s flawed FTAA.

Regional Leaders Reject Washington’s Revanchist Designs on Chávez

As far as the Bush administration and its defenders are concerned, the most galling aspect of South America’s push for unity is the role President Chávez is playing in the process. Peter Hakim, during the aforementioned interview, most likely articulated how the administration wishes the region would perceive Chávez when he said that the Venezuelan leader “is very little respected anywhere in Latin America; to compare him at all . . . to a Lula or a Lagos or a Kirchner is really defaming the others. There’s just no comparison between them.”

The problem with Hakim’s statement is that there is scant evidence to support it but plenty to contradict it. If Hakim were correct, then what we ought to be seeing is a subtle or deliberate distancing of the region’s leaders from Chávez. Such disengagement could take the form of easing him out of trade agreements, lending rhetorical support to Washington’s incessant attacks on the Venezuelan leader, or publicly siding with Washington in its diplomatic spats with Caracas. However, the evidence suggests that the continent’s leaders are moving in the exact opposite direction.

In an interview with COHA, Deborah James, economic director of the San Francisco-based human rights group Global Exchange, maintained that Venezuela’s admission to MERCOSUR as an associate member last July – just one month before the recall referendum on his presidency – was a clear message of regional support for Chávez and his movement. In her words, “They wanted to help make sure he wouldn’t be defeated – it was a show of solidarity.” Statements from heads of state at the time substantiate James’ thesis. In President Kirchner’s words, “for Argentina, it is not only an honor, it is above all a necessity to have Venezuela with us [in MERCOSUR], so as to deepen the changes that we want to bring about.”

More significantly, at the Puerto Ordaz summit, President Lula expressed unwavering support for Chávez against the barrage of Washington’s criticisms by declaring, “we do not accept defamations and insinuations against compañeros.” He defended his colleague further by stating, in response to Secretary of Defense Donald Rumsfeld’s allegations that Chávez is initiating a regional arms race and Assistant Secretary of State for Western Hemisphere Affairs Roger Noriega’s accusations of Chávez’s “suspect relationship with destabilizing forces in the region,” that “I [Lula] believe that Venezuela has the right to be a sovereign country. [It] does not need to be accused of things that those who are with you know is not part of your thought nor of your behavior.”

Lula’s embrace of Chávez should be viewed as part of the region’s consistent pattern of firming up support for the Venezuelan leader against Washington’s ill-conceived plan to isolate him. Moreover, Uruguayan president Tabaré Vazquez’s immediate post-inauguration signing of energy and telecommunications accords with Chávez is further evidence of this regional pattern.

Particularly irksome to the Bush administration must be knowing that the only center-right regime in the region, Colombia, also is – if not exactly with Chavez – not prepared to be Washington’s ram against him. If Bogotá were entirely on Washington’s side in the latter’s anti-Chávez crusade, then the recent diplomatic row between Uribe and Chávez over Colombia’s kidnapping in Caracas of FARC leader Rodrigo Granda would have played out much differently and in a more bellicose fashion; Uribe certainly would not have personally solicited Castro’s help to end the dispute. Confirming his support of Chávez, on 4 April Uribe said, “Every day we see a more favorable evolution of the Venezuelan government.”

The only tepid support Washington wracked up against Venezuela for its recent arms purchases is Argentina, whose defense minister, José Pampuro, reacted to the Bush administration’s position by saying, “Let us hope that the Venezuelan president’s decision to buy arms does not represent an [arms] escalation in the region.” In accord with the regional pattern, former Argentine President Eduardo Duhalde immediately countered Pampuro when he said, “Why should we be asking why Venezuela has bought arms while we ask no questions about the arms industry of the U.S.? Venezuela has a democratically elected government and Chávez has sailed through a coup undoubtedly supported by the U.S.”

Solidarity with the Social Movements over the FTAA

With South America firmly on the path towards regional unification, we can speculate on what kind of trade bloc the CSN will eventually look like. In an interview with COHA, Dr. Hazel Henderson, professor and author of Beyond Globalization, observed that South America’s leaders are “just not buying the FTAA. Instead, they’re going the way of Europe. Up to now there hasn’t been a viable model of economic integration but the EU is such a model. It’s not like the FTAA or NAFTA – it’s a much more social model than the neoliberal, free-market paradigm.”

Unlike traditional South American governments, today’s center-left democracies are generally fused to the region’s new left social movements. Beverly Bell, director of the Center for Economic Justice, has written that the objectives of the social movements “go beyond lessening poverty and redistributing income. They include transforming the nature and application of power. Political and social organizing among grassroots movements today strives to redefine power between people, place, state, class and social groups – what it is, how it is shared, and how it is used.” This push for more participatory democracy is seen in the growing alliance between the region’s grassroots political movements and the state, most notably visible in the Bolivarian circles of Venezuela. These locally organized cooperatives work with the state on projects that range from literacy outreach and adult education programs, to building medical clinics and providing government micro-credits to small business entrepreneurs.

Because many of these governments count the social movements, like the Bolivarian circles, Landless Workers Movement of Brazil (MST), and numerous indigenous rights groups as part of their core constituencies, they will be much more attentive to the social impact of any trade agreement than past governments. Such attentiveness is clearly seen in Chávez’s ALBA, which asserts that “the provision of public services must be governed by the social necessities of the individual and not by their capacity of payment. [Venezuela] does not accept renouncing the use of public policy . . . to regulate prices and to assure access of the great majority to essential services.”

As a result of the unfulfilled promises rendered by the “Washington Consensus” and the quite understandable drive to carve out greater regional autonomy, South America is closer to an authentic unification than ever before. Most of the region’s countries share similar economic urgencies as well as the ideological goal of distancing themselves from Washington’s political gameplan. In the coming years, observers of the region will be closely examining how successful its leaders are in making the somewhat imprecise outlines of a unified continent, as seen in CSN, into an operating reality.



--Seth R. DeLong is a COHA Senior Research Fellow