Year LXII, 2020, Single Issue, Page 107

 

 

MERCOSUR: A FUTURE IN THE BALANCE

 

 

In August 2017, the former Uruguayan president, Luis Alberto Lacalle, interviewed in the Argentinian newspaper La Nación, declared “Mercosur is in agony and no longer good for anything”.[1] In 1991, the same Lacalle, as president of Uruguay, had, together with the presidents of Argentina, Brazil and Paraguay, signed the Treaty of Asunción that created Mercosur. As repeatedly emphasised in the preparatory documents to that founding treaty, the original intention had been to pursue a project of economic and political integration along the lines of the European Union. But now, three decades on, Mercosur is in the throes of a crisis so deep that, also in view of the events of recent years, it can be feared to have run completely off course. To understand what has happened, and is happening, in that part of South America, it is necessary to analyse a series of issues, and to do so without forgetting, crucially, that it was not until the mid-1980s that democracy first made an appearance in the region. The creation of Mercosur served to consolidate the economic and political development of several young democracies, but in recent years, resurgences of nationalistic sentiment, populism and military nostalgia are undermining this integration project. 
 

The Parlasur.

Back in December 2005, the Mercosur Common Market Council (CMC) drew up a roadmap with the objective of arriving at direct elections of the Mercosur Parliament (Parlasur). It was envisaged that, in the first phase, sessions of the Parliament would be attended by elected members of the respective national parliaments. In accordance with the planned timeline, the first meeting of the Parlasur took place in 2006. Elections by universal suffrage, to elect the Parlasur members directly, were meant to take place in a second phase, specifically in 2014.[2] However, even though this proposal had been renewed in 2011 by the Mercosur Summit of Heads of State, in April 2019, the presidents of Argentina, Brazil, Paraguay and Uruguay, in a joint declaration, announced the decision to drop the plan for direct elections. By postponing the project indefinitely, they effectively abandoned the idea of a parliament directly elected by the peoples of the region.[3]

Each Mercosur state had, and still has, 18 representatives in the Mercosur Parliament, who meet once a month at the Parlasur headquarters in Montevideo. Under the terms of its 2005 proposal, the CMC wanted to move towards direct elections by universal suffrage, along the lines of the method used for electing the European Parliament, which had been introduced in 1979. But thorny problems immediately arose, the first being the number of representatives each state should be granted. Were this to be decided on a simple proportional basis, taking into account solely the size of the population, Brazil would immediately have an absolute majority in any voting scenario. Having more than 200 million inhabitants, it is far more populous than Argentina (45 million), Paraguay (7 million), Uruguay (4 million) and Venezuela (33 million). It was therefore necessary to find a formula that would allow all citizens to be represented, yet without handing any single state a ready-made majority. While the experts in electoral systems carefully analysed the various options, the politicians repeatedly deferred the question of Parlasur elections. When an agreement was finally reached on the number of MPs each country would be entitled to have (43 for Argentina, 75 for Brazil, 18 each for Paraguay and Uruguay, and 32 for Venezuela, making a total of 186), there arose the problem of the need to draw up, within each state, an ad hoc electoral law and create new electoral colleges. In the end, only Paraguay actually wrote its own electoral law and proceeded with the election, in 2018, of its 18 representatives. But, together with the aforementioned decision to drop the plan for direct elections, it was also decided to retain the current structure of the Mercosur Parliament, whose members therefore still have a dual (national and supranational) mandate.

The real problem with all this is that the Parlasur’s powers have remained purely formal. Over the years, the Parliament has never assumed legislative power or been assigned a supervisory role vis-à-vis the Summit of Heads of State, and as a result even its directly elected representatives (those from Paraguay) have admitted to feeling futile, arguing that while the Parliament needs to be endowed with “legislative and control powers, the key characteristics of a legislative body, [...] these powers are currently assigned to the Summit of Heads of State, therefore our role is totally useless”.[4] This state of affairs is perhaps not surprising, given that the Protocolo Constitutivo of the new parliament gave it only purely formal and consultative functions;[5] that said, it should also be added that, within the Parlasur, no group of parliamentarians has ever come together to speak out and fight for real powers. The situation that has evolved is well illustrated by the words of the Paraguayan foreign minister, Castiglioni, who declared that abandoning the idea of direct elections had been necessary in order to work out a better way of organising the activities of the Parlasur, “...even though there are [still] no plans to do so”.[6]

Although the events of recent years culminated in the drastic decision to rule out direct elections of the Parlasur, this outcome must also be attributed to the profound divisions that have opened up between the member states on the future of Mercosur, with enlargement of the bloc to other countries leading to serious disagreements within the Summit. Nevertheless, it has been made quite clear that sovereignty in the region remains firmly in the hands of the single member states, as the events of 2019 indeed confirm.
  

Venezuela’s Accession to Mercosur.

Mercosur, just like the EU, is open to the possibility of accepting new members. In 2007, Venezuela became the first new country to apply to join the bloc, following its decision, the previous year, to withdraw from the Andean Community of Nations (CAN).[7] Before a prospective new Mercosur member state can become a full member, however, a transition period is envisaged, during which it is required to attend meetings and sessions of the Summit and Parliament as an observer. Venezuela was formally granted admission to Mercosur in July 2012, but its membership triggered a fierce dispute between the member states that, even today, remains unresolved. In brief, Paraguay opposed Venezuela’s membership from the outset, arguing that the anti-US policy, economic policy and social policy pursued by Venezuelan President Chavez went against the founding principles of Mercosur. Since a new country can become an active member of Mercosur only if this transition is approved unanimously by the parliaments of the member states, Paraguay’s opposition should (and would) have made Venezuela’s entry into the bloc impossible, had it not been for another dramatic turn of events the previous month. In June 2012, Paraguay had been temporarily suspended from Mercosur under the terms of the trade bloc’s Protocolo democratico, which allows member states, through a unanimous vote of their parliaments, to temporarily suspend any state accused of violating democratic principles. In Paraguay’s case the decision was prompted by an internal political crisis that saw President Lugo forcibly removed from office in the midst of fierce and widespread protests over his re-election.[8] Because it was decided to hold the vote on Venezuela’s permanent membership during the period of Paraguay’s suspension, Venezuela was able to join the bloc. By the time Paraguay was readmitted at the end of 2012, Venezuela’s membership was already a fait accompli. The presence of Venezuela in Mercosur immediately sowed deep discord and divisions, not least because of the divisive figure of its president, Chavez, whose anti-USA stance and frequent public outbursts fueled domestic foreign policy positions that were not aligned with those of the other member states, with the exception of Uruguay. Following Chavez’s death in 2013, and the crisis that blew up in Venezuela in 2017, leading the Caribbean nation to the brink of civil war, it was decided, again through recourse to the aforementioned Protocolo democratico mechanism, that Venezuela should be suspended from Mercosur.[9] But just as Venezuela’s admission to the community had been decided in the face of opposition, its suspension, too, was not straightforward: indeed, it took a joint intervention by the presidents of Argentina and Brazil to secure Uruguay’s agreement to this move. Uruguay believed that a US-led international conspiracy against Maduro (the new President of Venezuela) was under way, and held out for several months before finally bowing to the pressure from the two regional powers.Enlargement continues to be at the heart of political debate between the Mercosur member states, as indeed does the more general question of the region’s foreign policy, especially given the imminent entry of Bolivia and Chile. Barring new unforeseen events and delays, these two countries, currently assigned observer status, will become full members within the next two years.
 

The Next Countries in Line to Join Mercosur: Bolivia and Chile.

For both Bolivia and Chile, 2019 was a year of dramatic strife. It brought public protests and fierce clashes between demonstrators and police during which Bolivian president Morales was forced to flee the country in an attempt to quell the anger of crowds besieging the presidential palace and, in Chile, a military-enforced curfew following attempts to attack President Piñera.All this paints a very bleak and frightening picture with regard to the future of these two nations whose histories include repeated coups (in Bolivia 150 in just under 200 years) and, in the case of Chile (under Pinochet), a harsh dictatorship. On examination of the tragic events, sparked by completely different issues, that have taken place in these two countries in recent times, there emerges an important new element to consider, namely the role, also different in each of them, of the armed forces.The protests in Bolivia were triggered by the attempts of its president, Morales, to stand for an unconstitutional fourth term of office. Morales, wanting the Constitution changed precisely so that he might stand again, managed to obtain a referendum on the question. Although he lost the referendum, he was not deterred, and took his case to the Supreme Court. The Court, disregarding the referendum result, declared that Morales could stand for election, because to deny him the possibility to do so would amount to a contravention of the fundamental rights and freedoms of the individual. It should be noted that the Supreme Court was comprised mainly of judges close to Morales’ party. At this point, the streets and squares across the entire country exploded with protesters demanding Morales’ immediate resignation in the name of defence of the Constitution. The most important aspect to underline here is that Morales, during his years as president, had actually enjoyed broad popular support thanks to his successes in the economic field, which had resulted in a general improvement in living conditions throughout the country. Nevertheless, his extreme attempts to hold on to power angered the people, who, contrary to similar situations in the past, this time found support in the military, to the point that the head of the armed forces put pressure on Morales to leave the country in order to avoid further public unrest. That the army should champion the democratic constitution in this way was certainly a novel turn of events, not only for Bolivia but for the region as a whole. Meanwhile, Uruguay took a stand in support of Morales, and in this regard found itself isolated within Mercosur.[10] In Chile, too, the role of the army in the face of public protests was significant. Again, the protesters wanted constitutional reform, but in this case aimed at bringing the pension system, health and education back under state control. During the years of the dictatorship, Chile had become a hyper-liberal state and these sectors had been privatised along US lines. Application of this model had, over the years, had serious consequences, putting an acceptable minimum pension beyond the reach of most people, and making a university education inaccessible to the less well-off, to say nothing of universal healthcare. The government responded to the protests by calling in the army, in addition to the police, and imposing a curfew. To many people, the violence that followed looked very much like the start of a new dictatorship, and the international community, mindful of the events that preceded the 1973 coup d'état in Chile, immediately demanded a return to democratic rules. Faced with this pressure, the government was forced to call off the army and negotiate with the protesters. In short, on this occasion the international community was quick to respond to the first episodes of army violence, and succeeded in defusing the situation. Nevertheless, the attempted military intervention did garner some support from Brazil, under its newly elected president Bolsonaro, a former army captain.
  

Bolsonaro: President of “Brasil Primero”.

Several years ago, the extensive Lava Jato investigation into institutional corruption, a political scandal involving three former presidents, caused consternation and anger in Brazil, fueling popular protest and also a desire for a new leadership, in the Trump mould. Accordingly, Jair Bolsonaro won the 2019 presidential election on the back of a strong Brasil Primero message. At the UN Climate Change Conference that same year, he reiterated his position. In the very days that saw the world’s attention focused on catastrophic fires devouring the rainforest, he declared that “the Amazon is Brazil’s”, and that it is Brazil’s business what it does with it. The provocative and often arrogant tone of Bolsonaro’s public declarations[11] is disconcerting, as indeed are his frequent changes of opinion regarding Brazil’s role within Mercosur. During his election campaign, he repeatedly stressed that Brazil needed to be free to stipulate bilateral trade agreements outside the framework of the Mercosur agreements and the constraints they impose. Given Bolsonaro’s constant criticism of it, some commentators suggested that he might even pull Brazil out of the bloc.[12] Yet in spite of all this, and just as his criticisms were stoking political debate among the other member states, in June 2019, on the occasion of a bilateral meeting with the then Argentinian president Macri, Bolsonaro unexpectedly proposed creating a single Mercosur currency: the peso-real. The Argentinian president was taken unawares, having had no advance warning of the proposal, nevertheless he expressed an interest in it. Meanwhile, the Central Bank of Brazil, in a public statement, declared that no studies were under way to support such a project.[13] Therefore, most people took the proposal as just another of Bolsonaro’s typical impromptu declarations.In actual fact, back in 1997, the National Economic Development Bank of Brazil had already formulated a common currency project for the nations of the area, envisaging its implementation by 2012. Then, too, the intention had been to follow Europe’s example, in that instance by replicating the European single currency project that, in 2001, had led to the birth of the euro.[14] However, the idea was strongly opposed by Argentina, then led by Menem, who preferred dollarisation as a means of stabilising his country’s disastrous finances.[15] Bolsonaro’s proposal nevertheless started a debate on the opportuneness of creating a common currency within Mercosur. In general, nothing was ruled out, although all the institutions in the area adopted a very cautious stance on the matter. In the debate between economists and the member states’ central banks, it was underlined that this was, in any case, a project that would necessarily take a long time and have to proceed by gradual steps, as Europe’s experience had shown. Alberto Graña, president of the Central Bank of Uruguay, for example, made this clear when he said “… we have seen the difficulties [in the process] that led to the birth of the euro and the difficulties [the member states still] have, given their different fiscal policies […]. Objectively, thinking about a common currency means, among other things, [thinking about] alignment of macroeconomic, monetary and fiscal policies […] it will take time to analyse the path to follow in order to sustain this project”.[16] Bolsonaro, having raised this issue so unexpectedly, forgot it equally quickly, his attention being taken up, instead, with the presidential election campaign in Argentina, a debate he had waded into with some strong declarations. He even went so far as to claim that Brazil would leave Mercosur should the outgoing Argentinian president, Macri, fail to win another term, since Brazil would never be able to work alongside a Communist, which is how he viewed the Peronist candidate, Fernandez. At the end of 2019, Fernandez was elected President of Argentina. At this point, Bolsonaro, behaving as he had already done in other similar circumstances, initially made the new president the focus of some strong attacks, before then changing tack and underlining the need for close cooperation with Argentina, not least because, as some of his closest aides will have reminded him, Brazil and Argentina are each other’s main economic partner.[17]
  

The EU-Mercosur Trade Agreement.

In the summer of 2019, the outgoing president of the European Commission, Junker, announced, with great satisfaction, the reaching of a trade agreement with Mercosur. After almost 20 long years of negotiations, this promised to be a historic deal — “promised to be” because it was actually just a draft agreement, still needing to be discussed and ratified (a lengthy process) by all the member countries of each of the two blocs. The news immediately galvanized into action the opposing lobbies on both sides of the Atlantic. We refer in particular, to the farming lobby in the EU and the metalworking industry in South America. Under the terms of the draft agreement, 91% of the tariffs applied by Mercosur on goods coming from the EU would be eliminated and, at the same time, the EU would cut 92% of the tariffs it charges on goods entering Europe from Mercosur. The latter would mainly be agri-food products, while most of the Europe’s exports to Mercosur would be related to the metalworking sector, especially the automotive industry. The draft deal has, in fact, been criticised particularly vociferously by the automotive sector in Argentina and Brazil, since the reduction in tariffs, albeit to be phased in gradually over a period of seven years from the agreement’s entry into force, would obviously affect its industries. The agreement would encourage imports, into the Mercosur area, of luxury cars from Germany and Italy, both of which already have industrial operations in the region that, however, produce only commercial vehicle or mid-range car models. The lower tariffs would also affect local producers of agricultural machinery and car parts.But the strongest opposition to the draft agreement has come from Europe, where Austria has already said that it has no intention of signing any agreement, given President Bolsonaro’s refusal to acknowledge the dramatic Amazonian deforestation emergency linked to the need for new pasture land.[18] Other arguments raised against the lowering of tariffs on agri-food imports concern the issue of food safety: the standards and controls, particularly veterinary controls, required in the Mercosur area do not match those that European farmers are expected to meet. Furthermore, many crops in Argentina, Brazil and Uruguay are treated with genetically modified products and used for both human consumption and animal feed: practices prohibited in the European Union.[19] All in all, the future of this trade agreement remains uncertain, not least because all the member states of both blocs have, for the moment, suspended talks due to the pandemic. It is important to note that the agreement can come into force only with the unanimous agreement of all the countries involved, and therefore that it would be necessary to work on some of the national governments, given that the Austrian Parliament has already voted against the agreement, and France and Ireland have expressed markedly negative positions.

With regard to Mercosur’s pursuit of trade agreements, there is, however, another gathering cloud. The Argentinian government has said that it intends to veto any possible trade agreements with individual third-party nations as long as the debate on the content of the EU-Mercosur draft agreement is ongoing. In fact, trade agreements are currently being discussed between Mercosur and Canada, South Korea and India. Argentina considers the proposed deal with South Korea, in particular, to be dangerous, as it would put the automotive industry at risk and encourage imports of Korean brands; it is therefore firmly opposed to it. These trade agreements, too, to enter into force, would have to be unanimously ratified by all the member states. Although Argentina’s firm positions on this issue made it look as though it was this country’s turn to want to leave Mercosur, Buenos Aires has issued statements rejecting such an idea. It was actually the Brazilian vice premier, Mourao, who calmed the waters, highlighting the importance of keeping debate within Mercosur alive in order to guarantee and protect the interests of every one of its member states.[20]
 

A Future in the Balance.

The issues at the heart of political debate within Mercosur are the same ones encountered and addressed by Europeans and federalists in their fight for greater EU integration. Enlargement, the role of the region’s parliament, and that of a common currency are topics whose exploration could lead to a strong federalist initiative also in the Rio de La Plata region of South America. As we very well know, European integration is a process that has known periods of impasse or tension between the member states,[21] but also periods of great drive and energy, as well as important milestones, like the direct election of the European Parliament and the creation of the single currency. Throughout it all, France and Germany have always played a key role, just as Argentina and Brazil do in Mercosur. But what would happen, in Europe, were the French president or German chancellor to show each other the kind of disdain that Bolsonaro has shown the new Argentinian president? The EU would risk disintegration. Although in Mercosur, for the moment, there is no question of this happening, there are, nevertheless, clear signs of a general malaise: the crisis in Venezuela (still a member state but currently suspended); the situation in Bolivia (whose entry into Mercosur is at risk following the internal crisis that is impacting its relations with the bloc’s member states); the desertion of the project for direct elections of the Parlasur; and Brazil’s exceptionalist ambitions (Brasil primero), illustrated by its claims that it should be free to enter into bilateral agreements outside the framework of Mercosur. Furthermore, there is the question, herein merely raised, of the role being played, in the Brazilian government, by men with a military background. Bolsonaro is, as already mentioned, a former army officer, and on a number of occasions has celebrated the role played by dictatorships in the history of his country. The president aside, numerous representatives of the armed forces have been assigned ministerial roles in Brazil: the vice president and security minister (respectively, Mourao and Heleno) are both former generals, the defence minister (Azevedo) is a general, the science and technology minister (Pontes) is a former fighter pilot, and the secretary of government (dos Santos Cruz) a former general. As we have said, democracy in Brazil, as in the rest of the sub-continent, is still a very new phenomenon; having said that, even the EU has leaders that support illiberal democracy (in Hungary) or alter the Constitution to their own advantage (in Poland), restricting freedom of expression. Can these cases be taken as signs of a real threat to the democratic institutions and, with them, the ongoing processes of integration in Europe? Does the myth of national sovereignty hold greater sway than the desire for integration of peoples? These are profound issues that go beyond the scope of this short essay, but there is, nevertheless, one fact that needs to be underlined: the birth of Mercosur was possible precisely because of all that Europe had done from the Treaties of Rome onwards — the EU was its reference model. For this reason, it now falls to Europe to send out, once again, a very clear and strong message, this time by finally achieving federal reform of its institutions and by equipping itself with a government. But for these things to happen in the EU, a core group will need to succeed in overcoming the idea that national sovereignty is sacrosanct. In so doing, it would send out an important message not just to the rest of Europe, but also to the region, in South America, that has long watched the European Union, and continues to do so. It would also serve as an extraordinary response to all those Chilean resistance fighters who, in the midst of their street battles, have been known to sing the EU anthem, Schiller's Ode to Joy, which looks forward to a day when all men will finally be brothers again.[22] 

Stefano Spoltore


[1] Boletin Parlamento Mercosur (BPM), La Nación, Buenos Aires, 8 August 2017.

[2] Cf. Consejo del Mercado Común, Protocolo Constitutivo del Parlamento del Mercosur, 8 December 2005.

[3] BPM, www.ultimahora.com, Asunción and La Nación, Buenos Aires, 21 April 2019.

[4] BPM, ABC, Asunción, 24 November 2019.

[5] Art. 4 Protocolo, op. cit.

[6] BPM, www.ultimahora.com, Asunción, 21 and 23 April 2019.

[7] The Andean Community of Nations (CAN) comprised Colombia, Ecuador, Peru, Chile and Venezuela, until the latter decided to withdraw.

[8] On the Protocolo democratico and the crisis in Paraguay see also: S. Spoltore, Brasile e Argentina al bivio nel Mercosur, Il Federalista, 54 n. 3 (2012), p. 160.

[9] S. Spoltore, Venezuela e Mercosur: la difficile via verso la democrazia, Il Federalista, 59 n.2 (2017), p. 169.

[10] The Parlasur, in a statement issued on 11 November 2019, condemned the persecution of President Morales, forced into exile, and the intervention of the military both in Bolivia and Chile.

[11] Such as when he referred to Brazil’s native Indians as almost human beings, remarked that dictatorship had been good for Brazil, that climate change is not real, that coronavirus is little more than influenza and that many people had died in Italy because it was a country of “old folk”. And this is to say nothing of his anti-gay remarks.

[12] BPM, www.perfil.com, El brexit de Latinoamérica: la posible retirada del Brasil del Mercosur, Buenos Aires, 14 September 2019.

[13]  BPM, M24digital, Moneda común del Mercosur no es estrategia, es una irresponsabilidad, Buenos Aires, 18 June 2019.

[14] L’Espresso, 29 May 1997.

[15] Cf. S. Spoltore, Dollarisation in Latin America and the Mercosur Crisis, The Federalist, 43 n.2 (2001), p. 129.

[16] A similar tone was adopted by José Cantero, president of the Central Bank of Paraguay. BPM, El Observador, Montevideo, 7 August 2019.

[17] A. Mori, Argentina: debito e crisi sociale, due azzardi per Fernández, Ispionline.it, 2 December 2019, https://www.ispionline.it/it/pubblicazione/argentina-debito-e-crisi-sociale-due-azzardi-fernandez-24542. Cf. also: M. Rapoport, E. Madrid, Argentina Brasil de rivales a aliados, Capital Intelectual, Buenos Aires, 2011.

[18] Commercio, dopo Francia e Irlanda anche l'Austria boccia l'intesa Ue-Mercosur, Agrisole, Milan, 23 September 2019.

[19] Cf. UE Mercosur: l'Accordo della discordia, Agronotizie, 27 August 2019. The objections of Europe’s farmers were practically unanimous across all 27 member states.

[20] BPM, Clarin, Buenos Aires, 14 May 2020.

[21] One might think, for example, of recent debates over aid to be granted to states in difficulty owing to the coronavirus crisis.

[22] A. Dorfman, Exorcising Pinochet: The Incredible Unending Trial of General Augusto Pinochet. U.S., Seven Stories Press, 2003. According to this account, a crowd of 70,000 was present at the national stadium in Santiago on 12 March 1990, where they listened to “Ode to Joy” (joining in with the chorus) played by the Symphony Orchestra of Chile to celebrate the return to democracy.

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