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Saturday, January 20

Latin American governments air differences at Mercosur summit; Hugo Chavez dominates meeting

Chavez ... promised to "decontaminate" South America's main trade bloc of its founding ideas: U.S.-supported free market policies and privatization of state industries.

I am republishing the entire report because it's a good snapshot of current government relations in the Mercosur region. See report and Wikipedia for background on Mercosur.
Mercosur leaders grapple over direction
by Michael Astor
The Associated Press via Business Week, January 19.
Venezuelan President Hugo Chavez called Friday for South America's governments to take greater control of their economies, while Brazil's president urged respect for differences at a summit marked by sharply divergent visions for the Mercosur trade bloc.

As the two-day summit ended with 11 of South America's 12 leaders on hand, the heads of state engaged in a rare bout of public squabbling at their final session, an exchange of nation-on-nation criticism that illustrated deep divisions and raised questions over whether the fractured bloc can be revitalized and expanded.In comments broadcast to reporters live on closed circuit television, Bolivian President Evo Morales complained about the prices Brazil pays for Bolivian natural gas, then criticized Colombia's conservative President Alvaro Uribe over U.S. anti-drug aid to Colombia.

A clearly irritated Uribe used his speech to defend himself. Meanwhile, the leaders of Paraguay and Uruguay -- which have the smallest economies in the Mercosur bloc -- complained that their nations are constantly patronized by Argentina and Brazil, which have the continent's two largest economies.

Silva tried to smooth over the differences, saying that the leaders must "respect the internal political differences that our countries adopt to confront the challenge of development."The leaders themselves, split politically by a continental drift to the left, are struggling to determine whether Mercosur should continue on the free market path it's been on since it was founded in 1991, or veer toward Chavez' vision of South American socialism.

"One of the proposals I will dare to make is that in each one of the our countries the state have a greater presence in the economy," Chavez said, adding that he thought too much of the region's economy was controlled by multinational corporations.

Silva, who was elected as a leftist but who embraces free market economics, said the bloc was essential for the region to advance and become a bigger player on the world stage.

Despite its problems, Silva said, Mercosur trade has grown to $30 billion (23 billion euros) in 2006 from $4 billion (3 billion euros) in 1990.

"There has never been such a promising political climate for the integration of Mercosur," Silva said.

However, the summit was overshadowed by Chavez, who accused the United States of using Venezuela's largest phone company to spy on him and promised to "decontaminate" South America's main trade bloc of its founding ideas: U.S.-supported free market policies and privatization of state industries.

Brian Penn, a spokesman for the U.S. Embassy in the Venezuelan capital of Caracas, declined to comment on the accusation about spying.

Chavez's recent moves to shut down an opposition television station and rule by decree even seemed to place the country at odds with the group's commitment to democracy. [1]

Venezuela became a full Mercosur member last year, but the country has still not met all the criteria in terms of the common tariff structure.

Despite their differences on economic policy, Venezuela has grown to be one of the largest trading partners with Brazil and Argentina. Today Venezuela accounts for more of Brazilian trade than Britain or France.

And Silva and Chavez signed important oil deals to build a refinery in Brazil, explore for oil in Venezuela and begin technical studies on a natural gas pipeline stretching 3,100 miles from Venezuela to the northeastern Brazilian city of Recife.

Silva also welcomed Bolivia, which has just requested full-membership in the bloc, as well as any other nations that wanted to join.But Argentine President Nestor Kirchner questioned the wisdom of granting Bolivia exemptions to the bloc's common tariff and said he preferred to do more for Paraguay and Uruguay.

Paraguay and Uruguay are pondering trade deals with the United States out of frustration with Mercosur, and analysts say the bloc would be hurt if they left.

The inclusion of Bolivia and possibly Ecuador could also tilt the trade bloc even further to the left.Morales, a strident leftist, suggested he won't support boosting Bolivia's association with Mercosur to full membership until the bloc outlines its future path.

The Southern Cone Common Market, or Mercosur, unites some 250 million people with an annual economic output of $1 trillion, or about 76 percent of the total for South America.

Mercosur's full members are Argentina, Brazil, Paraguay, Uruguay and Venezuela. Bolivia, Chile, Ecuador and Peru hold associate membership, meaning they don't have voting rights and do not have to comply with Mercosur tariff rules on goods imported from outside the bloc
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1) Pulling the Plug on Anti-Chavez TV: Venezuela's Decision Not to Renew Station's License Draws Accusations of Censorship by Juan Forero, Washington Post Foreign Service, January 18, 2007
[...] The case has attracted widespread attention from officials in Washington and Latin America, for whom the non-renewal of a license has echoes of right-wing dictatorships of the past, when newspapers and broadcasters were closed if they veered from the party line. Though self-censorship and slayings of journalists remain common, particularly in Colombia and Mexico, the closing of a media outlet for political reasons has not occurred in years. [...]

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