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The significance of Venezuela's admission to Mercosur

By Thiago de Aragao.

The decision of the Senate Foreign Relations Commission to approve Venezuela's admission to Mercosur has brought the South American country very close to becoming a full member of the regional bloc. With the project having now passed through the Chamber, only Senate endorsement is required for Brazil to approve Venezuela's membership, which should take place this week. Venezuela's admission to the bloc has already been approved by the Argentine and Uruguayan Congresses. Paraguay is awaiting the Brazilian decision before voting on the membership protocol.

Despite the economic benefit of Venezuela's presence in Mercosur for Brazilian companies, the personal style of the Venezuelan President, Hugo Chavez, raises cause for concern in the member countries.

Chavez's political personality is the opposite of Lula's, which stresses moderation. There are therefore fears that Chavez's excessive nationalism will bring further challenges to Mercosur.

Venezuela's conflicts with Colombia, for example, will demand a stance from Brazil, Argentina, Uruguay and Paraguay as soon as Chavez's country becomes a full member of the regional bloc. There are also fears that Venezuela may prejudice negotiations for establishing a free trade accord between Mercosur and the European Union.

Supporters of Venezuela's entry to the bloc believe in turn that Venezuelan political circumstances cannot be allowed to impede the entry of another country into Mercosur. Furthermore, they believe that leaving Hugo Chavez isolated would be much worse. Despite these arguments it is unlikely that Chavez will not use Mercosur as yet another political platform, as he has done with Alba (The Bolivarian Alliance for the Americas) and Unasur (The Union of South American Nations).

In Venezuela, the country's admission to Mercosur is seen under a positive light. Even the mayor of Caracas, Antonio Ledezma, supports membership. The opposition expects that with the country's admission to the bloc there will be greater regional pressure for the Chavez government to comply with democratic conditions. Although that pressure will initially be somewhat limited, it is better than allowing the Venezuelan president to act independently.

Despite these political elements, the more important impact of Venezuela's entry into Mercosur will be economic, especially for Brazil. Last year's Brazil's trade balance with Venezuela amounted to US$ 5.7 billion, with a US$ 4.6 billion surplus for Brazil. Since 2007, Brazil has been the country's second trading partner, behind only the USA, the main consumer of Venezuelan oil. Venezuela imports 70% of what it consumes, mostly from Colombia and the United States. It is therefore possible that Venezuela's participation in Mercosur will strengthen the bloc's GDP.

It will also extend the bloc to northern South America, with influence in the Caribbean region and benefits for all States in northern Brazil.

Despite this optimism, Venezuela's interests in Mercosur will be different from those of Brazil, Argentina, Uruguay and Paraguay. While those countries expect Venezuela to contribute economically to the bloc, Hugo Chavez must be relying on Mercosur to further strengthen his political influence in the region. These contradictory objectives should lead to Venezuela's incorporation into Mercosur making little contribution to strengthening the bloc in the short term.

Several analysts and politicians believe that politicisation of the bloc is the great negative aspect that will come with Venezuela's admission. Despite Mercosur being relatively moribund, achieving much less than had been hoped when it was formed, it is still a commercial bloc. And although weak, Mercosur continues to have a commercial aspect, which prevents certain political disputes from being brought within its ambit. One recent example was the situation involving the Itaipu Plant. In this episode the disagreement between Brazil and Paraguay, together with its resolution – which often displayed aspects that were more political than financial – was confined to dialogue between the two.

Chavez has shown a history of politicising every area. One clear recent example involves relations with Colombia. This long-term trading partnership with Venezuela was gradually set aside through the personal – and above all political – decisions of Chavez. The aim of exchanging food supply from Colombia with Brazilian and Argentine products is, in a way, retaliation against the Alvaro Uribe government for its political disagreement with Chavez. There are clearly in this case "two weights, two measures". As soon as there is a commercial retaliation against a neighbor due to a politically opposing position (in that case North American bases in Colombia), there is an intervention in the affairs of another country. Foreign intervention is something totally rejected by Chavez.

There is a risk that purely commercial issues become the target of "gentle blackmail" for political will to prevail. It is worth recalling that through its president, Fernando Lugo, Paraguay has an "almost carnal" relationship with Venezuela. Just because the Paraguayan parliament has not yet approved Venezuela's admission does not mean that Paraguay does not support Chavez. In Argentina, the Kirchners have shown that they "dance according to the tune", and in this case it is Chavez who is closest to the couple's hearts.

Within this scenario, should the bloc become politicised, it is possible that Paraguay, Venezuela and Argentina will

always be united. Brazil might join the group or be always isolated with the tiny Uruguay. Another very interesting line of argument says that Venezuela is not Chavez and for that reason the country's admission will be beneficial for the bloc and for Brazil. Except they have forgotten to tell Chavez, who has created a system in which State and government are fused together around his image. Chavez today represents the Venezuelan state, the Venezuelan government, the Venezuelan people (since he controls the National Assembly), the Armed Forces (since his personal forces are greater than the Army) and the Venezuelan press. There is no way of dealing with Venezuelan institutions without them being 100% infected by the personal wishes of Hugo Chavez.

Yet Venezuela is infinitely greater than Chavez. Its people and its history mean that the country will always be most welcome in any bloc of which Brazil is a member. However, this fusion between an individual who acts according to his mood and antiquated ideology and a country and its institutions brings no benefits to a bloc of which Brazil is a member. Brazil finds itself in interesting international ascendancy, but insists in believing that it can add value with Venezuela and Iran, for example.

Finally, there are those who just look at the figures. Businesspeople who deal directly with Venezuela are more than happy with its admission to Mercosur. Yet one should not just look at the figures to justify admission of a country that violates human rights and freedom of the press. Does balance of trade have more value than the basic foundations of democracy? Should arithmetic ignore violations of democracy in another country? Some say yes, others say no. I do not believe that trade benefits are enough to justify disruption to day-to-day foreign policy and Brazilian trade policy. I believe that Brazil, within its stance towards global politics, should uphold certain basic values of democracy above a growth in balance of trade with a highly unstable country with no firm institutions.