This month’s summit of MERCOSUR in Rio de Janeiro made it clear that the bloc comprised of Brazil, Argentina, Venezuela, Paraguay and Uruguay must get ready for another stage of its development. When it was born in 1991, MERCOSUR was intended to be merely a customs union, a result of bilateral negotiations between Argentina and Brazil. Today, it is viewed as the principal vehicle for the political, economic and cultural integration of Latin America. However, its problems continue to grow because of disputes between its various member-states, especially between Argentina and Brazil. Those two nations lead the way in the changes that are taking place in the bloc’s internal and external relations. They will need to be careful about incorporating a nation into the bloc – i.e., Venezuela under the leadership of President Hugo Chávez — that does not agree with their international policy.


Before the MERCOSUR summit began, leaders of the bloc had to deal with some awkward international situations. The first case involved Argentina, which ignored a decision at the recently recreated Permanent Review Court of MERCOSUR by denouncing Brazil before the World Trade Organization. Argentina charged that Brazil’s anti-dumping measures, which were supposedly illegal, had been used in 2005 by the Brazilian government on imports from Argentina of PET resins. At the same time, Argentine president Nestor Kirchner denounced Uruguay before the International Court in The Hague [Netherlands] for establishing cellulose factories in the city of Fray Bentos, on the edge of the Uruguay River.


At the summit, Argentina’s “defiance” of Argentina isolated Brazil, which wants to become the leader in the bloc’s integration. Although all of the countries in the bloc continue to preach the cause of unity, other leaders approved of the break to address areas of particular interest. “It is not possible for Bolivia to continue to subsidize gas for Brazil,” said Evo Morales, Bolivia’s president. “For once and for all, we are going to do away with these inequities. We only want a fair price.” When Morales made those comments in an interview with the Brazilian press, it showed that a year of tough negotiations lies ahead for Brazilian president Luis Inácio Lula da Silva.


Nevertheless, experts agree that the problems caused by Argentina must not complicate negotiations for the integration of the bloc, which still has a long road ahead, or thwart the agenda of the Brazilian government, which hopes to strengthen its leadership role in South America. “The attitude of Argentina is valid, given current conditions. I don’t think that this will wind up causing problems for the bloc,” says Luis Fernando Ayerbe, professor of international relations at UNESP, the state university of São Paulo, Brazil. “In global negotiations, Brazil has a greater presence than Argentina, and Brazil also does a good job of resolving various issues among MERCOSUR members when they jointly deal with the European Union. Within the bloc, even in their direct relations with other countries, each member has autonomy to deal with its own problem areas.”


Nevertheless, several areas need to be resolved immediately if the members of MERCOSUR are to continue down the road to integration. One area involves the construction of an institutional framework to support progress in multilateral negotiations. Europe has various levels for negotiating and solving specific problems – such as the OECD (Organization for Economic Cooperation and Development) for economic topics. MERCOSUR not only lacks a solid structure but it has also failed to establish institutions that are fully credible. “Obviously, we have serious problems because there is no institution responsible for resolving conflicts,” says Theotonio dos Santos, a professor at the Fluminense Federal University (UFF) in Brazil. “This makes it harder to resolve a number of issues that can be resolved in a legal way before reaching the presidential level. Nowadays, every commercial problem has something of a political character, and that has negative repercussions,”


In that regard, MERCOSUR has taken an important step forward by creating a Parliament and Permanent Court. Its eventual goal could be the creation of a structure similar to that of the European Union. Nevertheless, reality in Brazil remains far behind reality in Europe. “MERCOSUR is very far from achieving that. Some people agree that the idea is to take the first steps toward that kind of integration but I don’t know if this is viable. You have to remember that these countries do not have great economic stability, which makes this sort of effort more difficult,” says Ayerbe. “The European Union is much more advanced than MERCOSUR, since it has achieved a plan for a common market with an all-inclusive proposal for the free circulation of labor. Over there, the more advanced countries already take a tolerant approach toward the less advanced countries when they deal with them,” he adds.


New Flare-up in Relationships


Until the middle of 1999, things were going well for MERCOSUR. Argentina and Brazil had managed to stabilize their economies, and the region was experiencing a political environment marked by relative tranquility. Nevertheless, when those two “big” countries began to suffer from external crises – and, later on, from their own internal crises – the situation deteriorated noticeably. New political leaders emerged at the end of the 1990s, creating conditions that sometimes reflected hostility. “From then on, relations, especially between Brazil and Argentina, toughened, and MERCOSUR has undergone a series of crises” ever since, says Pio Penna Filho, a professor at the Federal University of Mato Grosso state (UFMT). Penna Filho is also a researcher at the UNB, the University of Brasilia.


One of the most important conflicts within the bloc is the competition between Argentina, Brazil and Venezuela for political leadership of MERCOSUR. This conflict results from the countries’ frequent disagreements throughout the 1990s. During the six months when Brazil occupied the pro-tempore presidency of the bloc, it tried to show that it was the leader in the process of integration, going beyond trade and economic issues. Brazil also tried to promote events in various sectors where integration seemed possible, including education, culture and industry. At the same time, Brazil opted against controversy in its discussions with Bolivia and Venezuela. “This trend toward leading South American integration has been a goal of Brazilian foreign policy ever since President Fernando Enrique [Cardoso], and the Lula government has continued it,” explains Penna Filho.



One important factor that promises to shake up the bloc is the membership of Venezuela. Although it joined last year, Venezuela’s inclusion will have a more practical impact starting this year. Hugo Chávez, re-elected president of Venezuela, is talking about getting Congressional approval for powers that are practically unlimited, and his plans would guarantee his re-election for an indefinite period. These measures would permit him to govern through decrees. Meanwhile, Chávez has affirmed that he views MERCOSUR as the “liberation” of South America from the clutches of the United States. “The inclusion of Venezuela in MERCOSUR is a factor that brings instability,” says Penna Filho. “From the political point of view, the situation becomes a bit more unstable, given the foreign policy of Chávez.”


Nevertheless, the other member-states have had good reason to bring Venezuela into MERCOSUR. For Brazil especially, Venezuela has always had strategic importance in the region. Venezuela has great economic potential, since it is the largest petroleum producer in South America and its economic growth has outpaced the average in the region. According to Venezuela’s central bank, that country’s Gross Domestic Product grew by 9.3% in 2005. During the same period, Brazil recorded GDP growth of barely 2.6%. A second factor is that Venezuela has a great deal of influence on other countries in the region that want to join the MERCOSUR bloc, such as Bolivia, which will join this year, and Ecuador.


For Penna Filho, disputes will intensify elsewhere beyond the realm of economic and political negotiations. “What Chávez has done, indirectly, is to set a fire in MERCOSUR, by stoking areas where there are problems in other MERCOSUR countries, such as in Bolivia’s energy sector. Nevertheless, Brazil has had peaceful relations with Venezuela. In addition, we have shown enormous patience with Chávez. If you take a good look at the way MERCOSUR has evolved, you’ll notice that there have been differences between Argentina and Brazil but that these differences have been only in isolated areas from a commercial point of view. Now, things have taken a more ideological turn. Gradually, the president of Venezuela is creating an un-democratic system [in his country]. This creates a serious problem from a political point of view.”


The Year of “Small Rebels”


If 2007 is the year for Mercosur’s integration, 2006 was the year when “the small guys” showed that they realize they are at the mercy of Argentina and Brazil. Paraguay and Uruguay bared their claws, and indicated to the larger members of the bloc that if they are not taken seriously, they will leave MERCOSUR and run toward the outstretched arms of the United States. The U.S. has already suggested possible bilateral trade agreements with those two countries. Such a treaty would mean immediate exclusion from the South American bloc. Both two countries [Paraguay and Uruguay] have already given signals that they might not consider such an expulsion important. “Throughout 2006, we have witnessed the rebellion of the small players. If we look at the original group, we see that the President of Uruguay, Tabaré Vázquez, went to the United States and threatened to establish a trade agreement between his country and the U.S. This would mean Uruguay’s withdrawal from MERCOSUR, notes Penna Filho. “Next, Paraguay said that it might also make a change. In other words, we had a clear demonstration that the smaller countries are not satisfied.”


Even during the MERCOSUR summit meeting, Uruguayan president Tabaré Vázquez delivered a speech that was critical of MERCOSUR, in contrast with the commemorative comments delivered earlier by the presidents of Brazil and Argentina. “Uruguay is asking for fair treatment in the integration process,” Vázquez said in an interview with the Brazilian press. “It is true that the bloc has had some success but for small countries like Uruguay, the trade balance with MERCOSUR has been quite negative. Our reality must be viewed with flexibility now that Uruguay has already gone to court in October 2006 when we made a serious diagnosis of the situation.”


For Penna Filho, MERCOSUR has been strong enough to face up to the crisis, and nothing in the short term suggests that the bloc will come to an end. “All of these situations play a role in the natural maturation process in relations,” he says. In that sense, Penna Filho compares the situation with the crises that the European Union has experienced. Although the EU is far ahead of MERCOSUR, the European bloc has also faced its share of problems. In a plebiscite in France, for example, the population rejected the European Constitution. The flexibility of the richer countries [in the EU] with regard to the bloc’s poorer countries has been a fundamental factor in enabling Europe to stay united and begin to walk together. Day by day, the countries of Europe are already talking about creating a single system for higher education.



The Educational Road


Education can play a positive role in the integration of MERCOSUR. Although significant economic and political obstacles still exist, a growing number of proposals are addressing education. Because inequality has been a common heritage in the region, MERCOSUR member-states have had similar problems, and they are searching for joint solutions. In that sense, the members of the bloc have quietly come to a mutual understanding. When it comes to higher education, a number of detailed proposals are being implemented. One plan, known as Educational MERCOSUR, aims to bring together academic institutions from every country in the bloc so that students can enjoy [cross-border] mobility.


Dos Santos confirms that “educational integration is an extremely positive and necessary development. We need to be aware that university education needs to match each country’s historic level of development. This is a period of global inclusion, but higher education still does not fully reflect that change.” He adds, “We have to think about enabling students who begin their studies in one country to complete them in another country, which will require a great deal of interaction among the universities” of the region.


At first glance, this sort of plan might look a lot like the Treaty of Bologna that has been proposed in Europe. Nevertheless, the roots of the two projects are quite different. We need to make a great deal of progress in our educational systems in order to produce something similar to Bologna. For example, in Latin America we do not have any truly reliable way to evaluate foreign education. Nor have we advanced in making access to education more democratic. These kinds of similarities and shortcomings reinforce the need to come closer together. “Happily, we have made enough progress in integrating education. We have also managed to make appreciable progress in integrating our cultures. When it comes to education, we are slowly coming together, even more than we are in the world of politics,” says Penna Filho. “These sorts of initiatives go hand in hand. We will not achieve cultural integration if there is no political and economic integration. And we will not advance politically if the cultural foundations do not exist.”