Category Archives: Uruguay

Pointed analysis of Mercosur from former Uruguayan President Sanguinetti

Former Uruguayan president Julio Maria Sanguinetti (1985-1990, 1995-2000) has published a very insightful article about the state of Mercosur on the Infolatam.com site.

Sanguinetti starts with a quick review of the bloc, noting that the first eight years from 1991 to 1998 were marked by numerous successes, but when Brazil devalued the real in 1999, the institutional fragility of the bloc became clear. Dispute resolving systems were barely in place and didn’t work. Argentina then shifted to a highly protectionist trade policy within a common market. What little institutional and legal strength Mercosur retained took a serious blow with the opportunistic suspension of Paraguay earlier this year.

The Treaty of Ushuaia was implemented to vouchsafe the democratic nature of member-states after a nearly successful attempted 1996 coup in Paraguay. This is the mechanism that was used by Argentina and Brazil to suspend Paraguay and let Venezuela into the bloc. But, as Sanguinetti points out, the Treaty requires that extensive consultations with the questioned country take place before it is suspended. His problem with the procedures followed in Mendoza is that these consultations did not take place and that massive political pressure was used to silence Uruguayan objections to a clear violation of the Mercosur treaties by Argentina and Brazil.

As intrinsically distasteful as Lugo’s impeachment may have been, Sanguinetti reminds us that it took place through the constitutionally appropriate mechanisms in what amounted to a political trial. It should not have mattered that Lugo was seen as something of a friend by Dilma and Cristina.

A quick Google Translate rendition of Sanguinetti’s last paragraph is worth including for the non-Spanish reading:

“What happened in Mendoza is a setback in the process of regional integration and the international validity of the statutes and the recognition of their underlying principles. In the name of democracy, [Argentina and Brazil] have ignored all the values ​​that underpin it. There are no laws or principles. In the name of solidarity or political enmities, [they are] acting without the constraints of law. Neither has the principle of nonintervention been left standing. From now on, anything goes.”

What Sanguinetti is getting at is a much deeper systemic problem with inter-American affairs and a central remaining challenge to total democratic consolidation in the region. Elections are an important part of democracy, but their significance is limited when you have an attitude in the political class that because they are in charge they can do whatever they want.

The operating concept here is what Guillermo O’Donnell called ‘horizontal accountability‘, the idea that there are rules, procedures and institutions that restrain the arbitrary actions of the state in a clear and predictable manner. There are clear signs from Argentina and Brazil, let alone Paraguay, that elected leaders at all levels have not quite internalized the idea that in a fully consolidated democracy there is a system of checks and balances that restrain executive caprice. Indeed, the big story right now in Brazil is about the mensalão corruption scandal, which charges that political advisers around Lula were running a ‘cash retainer’ system to buy votes in congress to get the get governmental legislation through.

The short-shrift given to regulatory and legal restraints by some political actors is amplified when we turn to the international arena. The open secret in inter-American affairs is that most issues are settled through presidential diplomacy, hence the large number of regional summit meetings. Legal and institutional structures are not put in place to effectively govern bilateral and multilateral relations (for example, what is the institutional and juridical strength of CELAC and Unasur?), and when they are in place, they are either ignored or marginalized. This latter case is exactly what we see happening in Mercosur. We don’t have the bandwith to list all of the unresolved intra-Mercosur trade spats that have blithely ignored the bloc’s internal dispute resolution and juridical mechanisms. Suffice it to say that member-countries have had to either threaten or go to the WTO dispute body to get satisfaction. Sanguinetti’s point, which is particularly problematic for a small country like Uruguay, is that the legal frameworks for important groupings such as Mercosur have become just so much window dressing in the face of presidential want and desire in big countries such as Brazil.

There is also an important foreign policy point in Sanguinetti’s comments. Brazilian diplomats are very clear that the international sovereignty norm is sacrosanct — one state may not intervene in the internal affairs of another state. Yet, this is precisely what has happened in the Paraguayan case. Indeed, the deeper irony is that while the historical case was that the political right pushed hardest for regime change, the tide has now shifted and it is the left that has the most pronouncements and interventions for its neighbours. This has been particularly evident in the Brazilian case where the willingness of Brazilian presidents and presidential advisors to make direct intervention in the internal political developments of other regional countries has been rising since 2003.

Taken its totality, the critique leveled by Sanguinetti goes a long way to explaining why the increasingly technocratic and regulatory sound states of Chile, Peru, Colombia and Mexico have bound together to for the Pacific Alliance rather than tying themselves more tightly to the ever-more politicized groupings such as Mercosur and even the now predominantly political Unasur. Why to the expense and pain of negotiating and signing onto rules and norms when they are unlikely to have any impact?

–Sean Burges

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Filed under Analysis, Argentina, Brazil, Democracy, Foreign Policy / Diplomacy, MERCOSUR, Paraguay, Uruguay

Paraguay’s suspension from Mercosur: Implications for Australian trade policy

ANCLAS Senior Associate Sean Burges has just had a short analytical article published by the site The Conversation looking at what impact Paraguay’s presidential disruptions might have on Australian trade policy in the region. His conclusions are that there could be problems:

“Brazil’s enormous internal market and large economy is the real prize for Australian trade policy, with Uruguay being a pleasant addition. The catch is that any trade agreement with Brazil or Uruguay would have to come through a deal with the entirety of Mercosur. Venezuela’s full membership in Mercosur makes a deal with Australia as likely as a 2014 repeat of Uruguay’s 1950 World Cup defeat of Brazil in Rio de Janeiro’s Maracanã stadium.”

The full article, entitled “Paraguay’s ‘coup’ puts a dent in Australian-South American trade dreams” can be seen here.

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Filed under Brazil, Democracy, MERCOSUR, Trade, Uruguay, Venezuela

Lugo’s ouster in Paraguay — the Mercosul implications viewed from Uruguay and Brazil

More details are starting to come out with respect to last week’s Mercosur summit meeting and the decision to suspend Paraguay’s political rights. The online newspaper Mercopress has a series of fascinating reports on Uruguay’s reaction to the whole process, which can be summarized as follows:

Story #1 — Uruguay agreed to Venezuela’s July 31 entry into Mercosur as part of a negotiation to prevent Argentina and Brazil from imposing economic sanctions on Paraguay. Why? The political class staged the disruption so why punish the people, mused Uruguay.

Story #2 — There was not a unanimous agreement between the three remaining Mercosur presidents (Dilma, Kirchner, Mujica) that Venezuela should join the bloc, although Argentina and Brazil contest this.

Story #3 — Brazil and Argentina will benefit most from Venezuela’s accession to Mercosur. Brazil has a large trade surplus with Venezuela (and its firms get paid with regularity).

Story #4 — Uruguay vice president Astori is calling the outcome of the last Mercosur meeting a major blow against the already fragile institutional framework of the bloc.

Story #5 — Uruguay is claiming that it was Brazil that pushed so hard to bring Venezuela into the bloc. (This fits with much of the sustained pressure from various presidential advisors in Brasília.)

Story #6 — Former Mercosur cheerleaders and ex-Brazilian diplomat, Rubens Barbosa is now publicly worrying that Argentina is going to kill the trade bloc. Barbosa is currently head of the foreign trade council of the São Paulo Federation of Industrial Entreprises (FIESP), one of Brazil’s most important business groups.

Story #7 — The opposition in Brazil’s congress is complaining that the Dilma government is reducing Mercosur to little more than a political plaything. The bloc was once a critical part of Brazil’s foreign economic engagement strategy.

 

Rapid Analysis: Mercosur is not really in any more trouble than it has been for the last several years. The difference with this latest instance is that the internal discord and contradictions are now becoming very public. Ultimately, it will take a political decision from Brazil that trade deals with other countries are critical for things to move in Mercosur. Argentina matters and Paraguay and Uruguay have demonstrated they can exercise a veto, but none of these countries, or Venezuela for that matter, will be willing to block a major shift in Mercosur policy direction if it is something that Brazil really wants.

–Sean Burges

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Filed under Analysis, Argentina, Brazil, Foreign Policy / Diplomacy, MERCOSUR, News brief, Paraguay, Trade, Uruguay, Venezuela