Brazil and Mercosur at crossroads over Chavez
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| Published on Saturday, July 7, 2007 |
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By Raymond Colitt
BRASILIA, Brazil (Reuters): Following Venezuela's threat this week to withdraw its bid to join the Mercosur trading bloc, Brazil must decide whether it wants to lead a large and divided group or keep it small and agile to pursue trade deals around the world, analysts say.
Venezuelan President Hugo Chavez told Mercosur parliaments this week they must approve Venezuela's entry within three months or he would withdraw the application.
A few years ago Brazil and Venezuela saw Mercosur, which also includes Argentina, Paraguay and Uruguay, as a common platform to oppose U.S. trade interests in the region.
But Chavez is now unwilling to meet Mercosur tariff requirements and has grown distant from Brazilian President Luiz Inacio Lula da Silva, analysts say.
"Brazil needs to decide whether it wants a political club or a trade bloc opening new markets," said Andre Nassar, head of trade consulting firm Icone in Sao Paulo. "Venezuela is too volatile to move ahead with trade talks."
Both countries have been vying for influence in the region with Brazil, the leader and by far the largest economy in Mercosur, offering biofuels and Chavez offering poor countries petrodollars.
Since Lula, a former union leader, came to power in 2003, Brazil has focused on uniting developing countries to obtain trade concessions from wealthy nations.
It co-founded the G20 group of developing nations to demand freer farm trade and pushed Mercosur to include four Andean countries -- Ecuador, Bolivia, Colombia and Peru -- as associates, sidetracking US trade initiatives in the region.
Now, global trade talks could stall for good and Mercosur looks overstretched. Colombia and Peru negotiated trade deals with the United States, and Uruguay is contemplating the same.
UNLIKELY TO MEET DEADLINE
Lula's ruling Workers' Party has defended Venezuelan membership in Mercosur and many Brazilian companies are doing good business in oil-rich Venezuela.
But increasingly Brazilian business leaders are urging Lula to abandon Chavez, fearing that his aversion to market policies and questionable democratic principles could scare off new Mercosur trading partners, such as the European Union.
"Brazil needs to de-politicize its trade policies, it needs more economic and less political integration, particularly in Mercosur," said Mario Marconini, head of international relations at the Sao Paulo Federation of Commerce.
Prospects for a resumption in EU-Mercosur trade talks, which stalled in early 2005, are brighter following Argentina's economic recovery, most economists agree.
But some EU officials remain skeptical.
"Conditions to relaunch the talks are better but Venezuela is an obstacle," an EU diplomat said in Brasilia last week.
Argentine President Nestor Kirchner has urged Lula to lobby Brazil's Congress, which has dragged its feet and voiced concern about Venezuelan democracy, to meet Chavez's deadline.
Congress was not opposed to Venezuela's entry but unlikely to meet the deadline, Heraclito Fortes, head of the Senate Foreign Relations Committee, told Reuters.
Only Brazil and Paraguay have yet to approve Venezuela's membership.
Lula said on Wednesday "there are rules to enter Mercosur" but added that relations with Venezuela were excellent.
The former union leader is unlikely to stick his neck out for Chavez, who insulted Brazilian legislators, saying they were "parrots" of Washington, analysts say.
"Lula relies on Congress but doesn't want to offend Chavez, so he'll let the deadline pass without intervening, it could be a divorce by default between the two," said Icone's Nassar. | | | | Reads : 156 | | | |
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