Prizes and prices for Venezuela’s entry into Mercosur

As expected, Venezuela was formally admitted to the South American trade bloc Mercosur yesterday despite concerns from Paraguay, which is politically suspended from the bloc on charges of being anti-democratic. Indeed, Paraguay is thinking challenging Venezuela’s entry through a judicial review of the decision using the Mercosur institutional frameworks and may (being very optimistic here) get the newest member kicked out. Don’t hold your breath.

It does look like Chávez is moving quickly to settle his debts with Dilma over his admission to Mercosur. He arrived (fashionably late) in Brasíila for the summit meeting with signed contracts in hand. What was the initial payment on his account? Six Embraer 190 aircraft priced at US$271.2 million, with an option to buy 14 more for a total cost of US$904 million. One of the interesting sidelines to this deal will be the US reaction, who may be able to block the purchase through its control of licensing on key parts of the aircraft systems such as navigation aids. This is precisely what the US did when it blocked the sale to Venezuela of 24 Super Tucano prop fighters in 2006.

More to the point, Brazil is getting set to move quickly to take advantage of this new market. Buried at the end of a story on Brazil’s industrial policy is the strong hint from Minister for Development, Industry and Foreign Trade Fernando Pimentel that an August mission to Venezuela is in the works to explore the new opportunities opened by Mercosur’s enlargement.

Speaking of enlargement, the Brazilian foreign ministry Itamaraty noted that Venezuela’s entry might prompt other observer countries to think about becoming full members, which would fulfill ambitions from as far back as the 1980s to create some kind of a viable South American trade bloc centered on Brazil. In all likelihood Itamaraty planners were thinking of Bolivia and Ecuador as the next entrants, but it is interesting to note that the other observer members are Chile, Colombia, Mexico and, the surprise, apparently New Zealand.

Finally, the prize for neatly working a trenchant editorial line into upstanding newspaper journalism goes to O Estado de São Paulo. A major story on Venezuela’s joining of Mercosur started with the line: “Quatro presidentes anunciaram nesta terça-feira, 31, em Brasília que o Mercosul agora tem cinco integrantes,” which translates to “This Wednesday the 31st in Brasília four presidents will announce that Mercosur now has five members.” Never has Paraguay had such a loud voice in Mercosur deliberations.

–Sean Burges

Leave a comment

Filed under Analysis, Brazil, Ecuador, Foreign Policy / Diplomacy, MERCOSUR, News brief, Paraguay, Trade

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s