Monthly Archives: August 2012

AQ – President Hugo Chávez’ Campaign Vision for Venezuela: Militaristic and Top Down

AUGUST 22, 2012

BY

 JAVIER CORRALES

Venezuela’s President Hugo Chávez is running for a third re-election this coming October.  He has already released his platform.  For those hoping to see Venezuela turn more democratic, this platform offers no hope.

The platform is contained in a 39-page document entitled, “Proposal from the Fatherland’s Candidate, Commander Hugo Chávez.” The document is fairly clear about what Chávez intends to do if re-elected: he will convert Venezuelan society into a state-controlled commune, and the state, into a military-controlled body.

To be sure, the “Proposal” offers a large set of ideas that are pretty unremarkable, unobjectionable, and in some cases, desirable:  for example, deepen the fight against poverty, expand agricultural production, and guarantee the “survival of the human species” in the planet.  Other goals are plainly unrealistic:  turn Venezuela into a global “economic power,” make Venezuela into “the largest classroom in the world.”   But when the document refers to military and society affairs, the goals are darn-right scary.

The military is explicitly mentioned in at least 23 paragraphs.  The military is called upon not only to safeguard the borders, but also to be present in all the structures of the Venezuelan state” (emphasis added).   Chávez wants not only to increase military spending (already one of the largest in the Americas), but also to “fortify and increase” the military’s intelligence and counterintelligence services.

In fact, the document is emphatic about strengthening intelligence.  Chávez calls for the actual “massification” of efforts to “search for information that is useful to protect the country.”  This can only mean one thing:  turn ordinary citizens into informants for state security.  Chávez also wants to increase the number of “patriots” joining the Bolivarian militia—a paramilitary force directly under Chávez’ command (rather than under the command of official generals).  All of this is needed to produce a “point of no return” in the effort to “pulverize completely the bourgeois state.”

To my mind, no democratically elected government in the Americas has ever been this enamored with the military.  Certainly, no democracy has called for such a militarization of the state. You would think the government is getting ready to enter World War III.

Then comes the section on federalism.  Long before Chávez became president, Venezuela instituted a series of reforms that established it as a relatively decentralized, federal republic, in 1989 inaugurating elections for governors, mayors and municipal councils.  These subnational entities were given greater fiscal and administrative autonomy.  After decades of having local officials appointed by party bosses in Caracas, Venezuelans embraced the accountability and proximity brought by the reforms.  In fact, the injection of politics and competition at the local level, helped spawn new political movements and leaders, including many of the parties that supported Chávez’s first election in 1998.

Now, Chávez wants to do away with federalism.  In its place, he wants to create 39,000 communal councils.  This is an idea that Chávez has been toying with since 2006.  It was part of his 2007 proposal to reform the constitution, but the electorate rejected it.  Chávez is trying again.  In fact, Chávez wants to see “68 percent of Venezuela’s population” live under the Communal Council systems by 2019.

Nothing is said about how these councils will be selected.  There is no mention of democracy or elections in the more than 30 paragraphs dedicated to this topic.  All that we are told is that these councils will be given the “administrative competencies” currently assigned to governors, mayors and municipal bodies.  They will have “all control” over policy implementation.

Furthermore, the government plans to create a body of 4,500 “inspectors,” trained “socio-politically” (not just technically) to oversee these councils.  To help these councils do their job, the government will also create 250 “Salas de Batalla Social.”  The Proposal also calls for the creation of 43,029 “Prevention Committees” (or 6,174 yearly for the next six years), and all this organizational apparatus will be supervised by 3,000 government-appointed “Socialist Communes.”  Strangely (and perhaps tellingly) the platform provides no details about the territorial distribution, selection methods or budget authorities of any of these parallel state entities.

These two sets of proposals, on the military and the societal organizations do more than just end Venezuela’s decentralization.  They are nothing less than a call for the pyramidization of Venezuelan society under state tutelage, and the re-orientation of the state under greater military command.  It is an affront not just to federalism but to pluralism and the checks and balances of modern-day government.  It’s as if the totalitarianism that we thought got buried in the Twentieth Century is planning a comeback in a country that is 3-hour flight from Miami and one of the United States’s key oil supplier.

In the United States, where there is an abundance of veto players, we are used to discount party platforms as mostly promises.  But in Venezuela, Chávez has a pretty good track record of delivering on what he promises regarding state-society relations.  In the 1998 election, Chávez promised to end the party system, and he did.  In the 2000 elections, he promised to expand state control over oil, and he did.  In the 2006 he promised to accelerate nationalizations, and he did.  There is no reason to doubt him this time.

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AQ – Latin America and UN Peacekeeping

AUGUST 22, 2012

by Sabrina Karim

Where does Latin America stand when it comes to contributing peacekeepers to United Nations (UN) missions?

In general, there is a large presence of Latin American peacekeepers in Haiti, which is the only mission in the Western Hemisphere.  However, Latin American countries send their troops to many other missions around the world. Their contributions are not highlighted as much as the large presence of Latin American peacekeepers in Haiti. In terms of numbers, Brazil and Argentina send the most troops and police to missions around the world. At the same time, there is a general push to try to get more countries in the region to send peacekeepers through organizations such the Latin American Association of Training Centers for Peace (ALCOPAZ – Asociación Latinoamericana de Centros de Entrenamientos para Operaciones de Paz), based in Rio de Janeiro.

Since 2009, the following countries from the Americas have contributed to UN peacekeeping missions including:

Argentina: Liberia, Ivory Coast,  Middle East, South Sudan, Cyprus, East Timor, Haiti, and the Western Sahara.

Bolivia: Haiti, the DRC, Darfur, Afghanistan, Liberia, South Sudan, and the Ivory Coast.

Brazil: Chad, the Western Sahara, Haiti, Darfur, Cyprus, Lebanon, South Sudan Liberia, Nepal, East Timor, and the Ivory Coast.

Chile: Haiti, Georgia, Cyprus, India/Pakistan, the Middle East, and the Ivory Coast.

Ecuador: Haiti, Darfur, Liberia, South Sudan, Ivory Coast, and East Timor.

El Salvador: Western Sahara, Haiti, Darfur, Cyprus, Afghanistan, South Sudan and the Ivory Coast.

Grenada: Haiti, the DRC, Nepal, Lebanon, South Sudan, and Ivory Coast.

Guatemala: Haiti, the DRC, Darfur, Lebanon, South Sudan, Nepal, and the Ivory Coast.

Jamaica: Haiti, Darfur, Liberia. South Sudan, East Timor, and the Middle East.

Paraguay: Western Sahara, Haiti, the DRC, Afghanistan, Cyprus, Liberia, Nepal, South Sudan, and the Ivory Coast.

Peru: Haiti, the DRC, Cyprus, Liberia Darfur, South Sudan, and the Ivory Coast.

Uruguay: Western Sahara, Haiti, the DRC, Afghanistan, Liberia, Nepal, South Sudan, East Timor, Georgia, Ivory Coast.

Canada: Haiti, the DRC, Afghanistan, Darfur, Cyprus, South Sudan, the Ivory Coast, East Timor, and the Middle East.

The U.S.: Chad, Haiti, the DRC, Afghanistan, Iraq, Liberia, South Sudan, and the Middle East.

Colombia has only contributed to Haiti (although they have also contributed to Afghanistan with the help of Spain) and Honduras has only contributed to the Western Sahara.

Almost all countries contribute personnel to Haiti and Brazil has dominated the mission from its inception. The large presence in Haiti makes sense.  Scholars argue that countries contribute troops to areas where they have the most vested interest.

Despite their large international presence, peacekeepers are no longer welcome in Haiti due to the many issues associated with the mission. Although some argue that peacekeepers have made a real difference, the UN is drawing down forces to pre-hurricane levels.  The question then becomes if Latin America will continue to contribute as much worldwide if the Haiti mission is reduced.

Uruguay seems to be an exemplary mission outside of the Western Hemisphere. The country contributes around 1,300 troops annually to the UN mission in the DRC.  Unlike Brazil and Argentina that compete with one another to be the main regional power in South America, Uruguay sees peacekeeping as a way to transform and advance their own military. Despite its small size, El Salvador has also increasingly sent more troops abroad.  Peru has historically been involved in international peace. It is one of the earliest examples of Latin America’s major involvement in UN peace operations with the “batallón Peru;” from 1968-1974, a unit of the Peruvian army was dispatched to serve as peacekeepers after the war between Israel and Egypt.

Mexico does not participate in such missions. The constitution bans its military from leaving Mexican territory unless war is declared. Since the violence in Mexico has escalated, a group of Mexican business men have called for a UN mission to the border between the U.S. and Mexico to help curb the violence in Juarez.  It may be time for Mexico to start reconsidering its decision to refrain from peacekeeping missions.  For troop contributing countries, missions serve as a way to train and gain experience while having the UN pay for most of the costs.

Moreover, to be taken seriously as an emerging global power, many countries have to demonstrate their international presence.  With its narcotics problems, Mexico may want to keep as much security personnel at home as possible.  But, on the other hand, they may want to change their image as a country that needs peacekeepers to one that contributes to global peace.  Moreover, training their military and police could translate into loyalty toward the Mexican authorities, something that has been a major problem for the government.

In sum, despite its participation in various missions, Latin America appears to be an untapped resource for UN peacekeeping operations.  The hemisphere is at peace and many countries are emerging as global actors.  The UN should attempt to recruit more peacekeepers from Latin America both because of its military and police experience in handling conflict and because many countries have invested resources in their security forces.  Latin America has a lot to give when it comes to peace and security; the UN should take more advantage of it.

Sabrina Karim is a contributing blogger to AQ Online and is currently living in Lima, Peru as part of a Fulbright Fellowship.

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Reuters – Analysis: Brazil’s Rousseff boldly shuns base, embraces business

By Brian Winter

BRASILIA | Wed Aug 22, 2012 2:12pm EDT

(Reuters) – When President Dilma Rousseff announced a $65 billion privatization of Brazilian highways and railroads last week, she could hear air horns and furious chanting coming from outside the presidential palace.

“Dilma, why have you abandoned us?” read a hand-made sign held up by one of the several hundred striking public-sector workers who had gathered to demand wage increases.

For anyone who follows Brazilian politics, the juxtaposition was surprising: a left-leaning president from the Workers’ Party, which has its roots in the 1980s trade union movement, auctioning off government property to private investors while jilted public servants protested outside.

Yet the scene was no accident. Rousseff has in recent weeks deepened her embrace of the business world while playing hardball with her leftist base, a bold shift she hopes will protect public finances while providing a needed jolt of investment for Brazil’s lackluster economy.

Her tactics have heartened many on Wall Street, but they could backfire on several fronts.

While most of the public sector is still functioning normally, strikes by federal police and other workers have sporadically crippled operations at airports and some key ministries. Other areas of the economy, from agricultural exports to public-sector banks to Brazil’s preparations for the World Cup soccer tournament in 2014, could be disrupted if the unrest spreads.

Rousseff’s approval rating is high at 75 percent, and public opinion appears to be with her rather than the strikers, who already enjoyed healthy raises in recent years. Yet a protracted conflict could put renewed strain on Rousseff’s multi-party coalition, which she has struggled to manage since taking office, especially as October municipal elections draw closer.

Senior officials told Reuters that Rousseff is willing to negotiate higher wages within a small margin, but she will go to court if necessary to get striking workers to go back to work.

Meanwhile, Rousseff has said she will announce plans for more concessions to the private sector — this time, for airports and seaports — in coming weeks.

“The number-one priority right now is stimulating the economy while controlling inflation,” said one aide close to the president. “If you look at our recent actions, we’re acting on both fronts.”

The confrontation has physically transformed Brasilia’s Esplanade of Ministries — the complex of modernist government buildings designed by famed architect Oscar Niemeyer in the late 1950s. Red flyers with slogans like “Raises, now!” cover many of the buildings, while striking public workers in jeans and T-shirts mill about aimlessly in the parking lots outside.

“Dilma! Dilma! Dilma! Negotiate with public servants!” blares one of the songs played repeatedly over loudspeakers.

“She has no choice but to give us what we want,” said Almiro Rodrigues, a federal policeman. “The government says there’s no money, but we know that to be false.”

TRADITION OF PRAGMATISM

Rousseff’s stance does not come as a total shock. During a decade in power, the Workers’ Party has practiced a much more pragmatic leftism than ruling parties in Venezuela and Argentina, exercising relative fiscal discipline while also cultivating investment from businesses at home and abroad.

However, her predecessor — Luiz Inacio Lula da Silva, the Workers’ Party founder and a former union leader himself — was far less shy about spending on public salaries. Brazil’s public sector wage bill more than doubled in nominal terms during Lula’s 2003-2010 presidency, well outstripping inflation.

Rousseff has been more tight-fisted — largely out of necessity. A burst of government spending during Lula’s final year helped him to secure Rousseff’s election victory in 2010, but also left a legacy of heavy inflationary pressure for her to deal with.

Rousseff’s current offer to public-sector unions is a wage increase of about 16 percent over the next three years — which might not even keep up with inflation.

Any raise beyond that could imperil several policy goals, including her quest to drive down interest rates. The central bank’s most recent inflation report, published in June, identified wage negotiations as “an important risk” to future price movements.

Whatever raise Rousseff grants to the public sector will serve as a baseline in the private sector, where unions in the oil, automobile and other sectors are also engaged in contentious wage talks for next year.

Complicating matters further, the economy has ground to a near-halt as years of under-investment in infrastructure, and over-reliance on consumer credit as a motor for growth, appear to have finally caught up with Brazil. Growth was just 2.7 percent in 2011, and an even more lackluster 1.7 percent expansion is expected this year.

PRIVATE CONCESSIONS

That backdrop also explains Rousseff’s decision to embrace a private concession model as a way to boost infrastructure spending. That decision, more than any other, was seen as heresy by many in the party after Lula spent most of his political career loudly denouncing privatizations made in the 1990s.

Rousseff herself decried privatizations in her 2010 presidential campaign. The topic is so sensitive that the Workers’ Party president, Rui Falcão, issued a five-paragraph statement on the night of Rousseff’s announcement explaining why it would not result in “scandalous highway tolls” or other repeats of past mistakes.

Still, the decision seems destined to mark a milestone in Rousseff’s relationship with big business, which was already reasonably good. Bernardo Figueiredo, a top aide charged with overseeing the infrastructure plan, told Reuters the policy had been designed after extensive consultations with Brazilian business leaders. Wall Street brokerages including Morgan Stanley praised Rousseff for taking measures to stimulate supply rather than focusing primarily on consumer demand.

The reaction from mainstream parties has been relatively muted. That indicates that Rousseff is likely to face little resistance to her upcoming plans to involve private enterprise in airports in Rio de Janeiro and elsewhere — key to efforts to prepare for the World Cup and the 2016 Olympic Games.

Yet, more broadly, her recent decisions have opened up an opportunity for many politicians — especially among the wide gamut of parties on the hard left — to accuse Rousseff of being unfair to some of the country’s most powerful unions.

That criticism could become more poignant if the economy fails to pick up in coming months.

“(Rousseff) has a policy of freezing salaries,” Ana Luiza Figueiredo, candidate for mayor of Sao Paulo from the far-left party PSTU, said in an interview with local newspaper O Estado de S.Paulo. “She’s not negotiating and she’s criminalizing workers’ movements.

“The Workers’ Party is divorcing itself from its history,” she said.

(Additional reporting by Alonso Soto in Brasilia and Silvio Cascione in Sao Paulo; Editing by Todd Benson and Kieran Murray)

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BBC – Venezuela en el Mercosur: optimistas, pesimistas y todos los demás

Abraham Zamorano

BBC Mundo, Caracas

Martes, 31 de julio de 2012

Lo último que se esperaban los parlamentarios paraguayos cuando depusieron a Fernando Lugo era que servirían en bandeja el acceso de Venezuela al Mercosur, pero así fue, casi a trompicones.

El presidente Hugo Chávez certifica este martes en Brasilia la entrada de Venezuela al bloque mientras en su país está abierto un intenso debate entre optimistas y pesimistas.

Chávez, a la cabeza de los optimistas, habla de “una bendición” que va a generar cientos de miles de empleos y que puede atraer la instalación en su país de grandes empresas brasileñas y argentinas atraídas por la energía y la materia prima barata con puertas al Caribe.

Los más pesimistas, economistas e internacionalistas –muchos de oposición– lo dudan porque recuerdan que Venezuela es una economía monoexportadora de petróleo (que representa hasta el 95% de lo que vende al exterior) y muy dependiente de las importaciones (hasta el 70% de los alimentos que consume viene de fuera). Aseguran que el ganador evidente es Brasil.

Más allá de ese debate, están las dudas en torno a cómo van a encajar en el Mercosur los acuerdos económicos de Caracas con China, dónde queda la Alianza Boliviariana de las Américas (ALBA) o las intenciones del presidente Chávez de salirse del Sistema Interamericano de Derechos Humanos.

En cualquier caso, por delante quedan largas negociaciones pues el protocolo de adhesión, firmado en 2006, contempla que Caracas tendrá cuatro años para adaptarse a los muchos cambios que derivarán de incorporarse al bloque sudamericano.

Los Optimistas

Quienes reciben con satisfacción la entrada de Venezuela al bloque destacan que la superpotencia petrolera, en tanto una economía de tamaño medio, aportará energía y equilibrios a lo que hasta ahora eran dos grandes (Argentina y Brasil) ante dos pequeños (Paraguay y Uruguay). “Su incursión en el bloque regional rompe ese círculo vicioso”, afirmó el brasileño Emir Sader.

Según el analista e internacionalista Nícmer Evans, “Venezuela entra en un momento perfecto para ser además, dentro de la polaridad entre las dos grandes potencias, ser un punto medio perfecto, una bisagra que va a permitir estabilizar aún más, generar más equilibrio”.

“Mercosur nace con esencia neoliberal, no lo podemos negar, pero ha evolucionado como consecuencia de las disparidades, los mecanismos de integración han tenido que irse afinando para evolucionar de una estructura de competencia y libre mercado a una solidaridad y complementariedad que toma en cuenta las asimetrías, si no fuese así, ya Uruguay y Paraguay estarían quebrados y no tendrían beneficios de mantenerse”, le dijo Evans a BBC Mundo.

Evans no niega la debilidad del sector exportador no petrolero de Venezuela, pero se muestra optimista ante el hecho de que “se abre un mercado de 400 millones de personas”. “Y de principio podemos potenciar energéticamente al granero del mundo en función de las búsquedas de los equilibrios”.

“El Estado está empezando a asumir la inversión para la expansión de la capacidad productiva y tener capacidad de exportación. Eso no va a pasar de un día para otro, tendrá que pasar un mediano tiempo, pero se abre la posibilidad”, comentó.

“Los que critican el ingreso al Mercosur son los que aplaudirían el ingreso al ALCA. ¿Qué es más perjudicial entrar a competir con EE.UU. o tratar de generar un mercado de equilibrios y compensaciones con Argentina, Brasil, Uruguay y Paraguay? Sin duda alguna, nuestros vecinos y hermanos son la alternativa lógica”.

Los Pesimistas

Sobre todo desde las filas de la oposición a Hugo Chávez se han alzado voces críticas con la adhesión al Mercosur, con la forma aparentemente precipitada en que al final ha resultado y con la perspectiva de peligros que puede representar para el sector productivo interno la apertura del mercado sudamericano.

Las exportaciones no petroleras de Venezuela no alcanzaron los US$4.500 millones. Es decir, de cada US$100 que entraron al país, US$95 provenían de petróleo. Las importaciones representaron casi el 33% del Producto Interno Bruto. Esto, junto a una inflación de más del 25% y una moneda sobrevaluada por el estricto control de cambios se traduce en una debilidad severa de la capacidad exportadora de cualquier cosa que no sea petróleo.

Así, a los países del Mercosur no se les escapa el apetecible mercado que representará Venezuela, a priori, incapaz de competir fuera de sus fronteras.

“Preocupa el efecto en la industria nacional, que no puede competir en buena lid por los controles de precios y cambiarios, que va a seguir funcionando. Temo que va a destruir muchas empresas nacionales, que están muy controladas y perturbadas en su funcionamiento”, le dijo a BBC Mundo Jorge Luis Suárez, experto en integración internacional.

Además, lo que desde el chavismo se ve como positivo, el hecho de que el Mercosur amplíe sus fronteras más allá de lo estrictamente económico y el impulso que Venezuela pretende dar en ese sentido, en la oposición se denuncia como prueba de las oscuras intenciones del mandatario.

“Para Chávez, más que la incorporación a un esquema de integración, el ingreso es un fin político. Él ha dicho que quiere un Mercosur moderno y quiere que se ocupe más de cuestiones políticas”, le dijo a BBC Mundo el diplomático e internacionalista Adolfo Taylhardat.

Y todos los demás

Con la integración venezolana, Chávez pone sobre la mesa las mayores reservas probadas de petróleo del mundo, pero también un no demasiado transparente acuerdo económico con China así como su compromiso con la Alianza Bolivariana para América (ALBA).

Según Nícmer Evans, “Mercosur no limita la posibilidad de la profundización o la autodeterminación de las políticas estratégicas con otros países sin necesidad de que sean del bloque”.

“Aun cuando el Mercosur tiene una política específica con China, Venezuela tiene otra que quizás pueda servir para discutir si el bloque se pliega o se mantienen como están. La relación de Venezuela y China tiene condiciones distintas al resto, pero no hay limitación seguramente deberá establecerse mecanismos de control”, agrega el analista.

No en vano, en principio, como es natural en todo bloque, el Mercosur negocia este tipo de tratados en conjunto. Así, los acuerdos de Caracas con terceros no son en esencia incompatibles con el grupo sudamericano, pero tienen que ser estudiados para determinar su validez.

“A futuro, el Mercosur va a poder exigir revisar ciertos tratados que considere que choquen con su bloque”, afirma Suárez. “También lo de China, aunque pudiera ser que se observe que hay compatibilidad, para eso es necesario un inventario que debió haberse hecho antes de decidir entrar o no”.

Según el experto en integración, “ha pasado un poco lo de ponerse primero los zapatos y luego las medias”, pues no ha habido tal inventario de los ajustes debidos: “Ha habido mucho interés político y petrolero en lugar de verdadera revisión de la situación”.

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Reuters – Analysis: Venezuela joins trade bloc big on politics, protectionism

By Guido Nejamkis

BUENOS AIRES | Mon Jul 30, 2012 3:06pm EDT

(Reuters) – The South American trade group Mercosur welcomes Venezuela as its newest member this week but growing protectionism in the bloc’s leading economies and political posturing have reduced it to a shadow of its former self.

When regional heavyweights Argentina and Brazil teamed up with Paraguay and Uruguay to form the customs union in 1995, they hoped to boost regional trade and investment by forging a bigger market along the lines of the European Union.

Trade within Mercosur has since quadrupled to $51 billion in 2011 but with economic growth slowing and Argentina and Brazil locked in a series of trade disputes over everything from cars to olives, analysts expect it to fall this year.

“Argentina is seen as hostile to foreign capital, Paraguay is fragile and unstable, Uruguay has an open economy but it’s very small, and Brazil continues to draw investment. Mercosur, as a whole, does not,” said Jose Botafogo Goncalves, a former Brazilian diplomat and representative to the bloc.

The decision last month to allow Venezuela’s entry into Mercosur stirred further controversy within the group and fueled criticism that it has become little more than a political club for left-leaning leaders who harbor ambitions of Latin American unity.

Venezuela’s socialist President Hugo Chavez shares such ideals but his country’s membership, pending since 2006, had been blocked because it did not have the support of Paraguay’s Congress, dominated by rightist parties.

When the same Congress ousted leftist President Fernando Lugo in a lightning-quick impeachment trial in June, the other Mercosur countries suspended Paraguay from the trade bloc and took advantage of its absence to let Venezuela in.

Mercosur will formally welcome Venezuela into the fold at a presidential summit in Brasilia on Tuesday.

GRUMBLING AND REPRISALS

When Mercosur got its start, the only products that were exempted from free trade were automobiles and sugar.

All other goods were supposed to be traded freely within the bloc or gradually stripped of duties, a goal that was largely met until Argentina expanded the use of non-automatic import licenses in 2011 and imposed a new system to pre-approve nearly all purchases abroad in February.

Last month, Brazil and Argentina got Mercosur’s approval to raise import tariffs on up to 200 products of their own choosing, further diluting the objective of a common tariff, on the grounds that each nation must protect its industry as economies get hit by fallout from Europe’s debt crisis.

Trying to safeguard its cherished trade surplus, Argentina has used the non-automatic licenses and new approvals system to block imports, affecting goods such as farm machinery and textiles from Brazil and shoes and food products from Uruguay.

It is a clear violation of Mercosur norms, but the response from within Mercosur has been muted grumbling and a raft of reprisals by Brazil’s government, which like Argentina is under pressure to revive flagging local industry.

Brazil has sporadically restricted the entry of some Argentine goods, including fruit, olive oil and cookies.

The decision by Argentina and Brazil to virtually abandon the common external tariff – the backbone of Mercosur – allows individual members to raise tariffs as high as 35 percent, compared with current levels of about 10 percent to 12 percent.

“Argentina has a protectionist model, taking tariffs to 35 percent. It doesn’t allow imports and it’s methodology differs greatly from the original spirit of Mercosur,” said Sergio Abreu, a former government minister in Uruguay.

WREAKING HAVOC

For international companies using regional bases to supply the Mercosur market, the protectionist hurdles among member states are wreaking havoc.

“In the new Mercosur, foreign investment is discouraged,” Abreu said.

Canada-based McCain Foods, the world’s largest producer of French fries, laid off hundreds of workers at its Buenos Aires plant last month because Brazilian trade barriers were preventing it from supplying Burger King and McDonald’s branches across the border.

“They had to supply the Brazilian market from Canada and Europe and rent warehouse space to store some of the production that they couldn’t sell,” a spokesman in Buenos Aires said.

The squabbles between Mercosur’s two heavyweights have also proved a headache for the bloc’s smaller members.

All three of Uruguay’s car assembly plants – run by Chery Socma, Nordex SA and Effa Motors – have threatened to close and have laid off hundreds of employees since October, when import restrictions in Argentina and Brazil began taking a toll on their shipments.

McCain set up shop in Argentina in 1995 with an eye on the lucrative market in Brazil, Latin America’s biggest economy with a population of about 200 million.

Access to Brazil’s market once allowed Argentina to attract investment that would not have landed there otherwise, particularly in the food-processing and automotive sectors.

“But the way things are now, Argentina will probably have more trouble getting investments that were aimed at tapping a bigger market,” said Mauricio Claveri, a trade expert at Abeceb consulting group in Buenos Aires.

Last year, Brazil received $66.66 billion in foreign direct investment compared with Argentina’s $7.24 billion. In the 1990s, when Mercosur was created, Argentina received one dollar for every four dollars that entered Brazil, U.N. data shows.

“Argentina would never have been able to become a top 20 automobile manufacturer if it hadn’t belonged to Mercosur,” said Marcelo Elizondo, an international trade specialist at Argentine consulting firm DNI Negocios Internacionales.

For the first time since Mercosur’s creation, the new protectionist measures are hitting trade flows. Trade between Brazil and Argentina slumped 12 percent in the first half of the year and shrank 32 percent in June alone.

And while Venezuela’s Chavez hails his country’s membership in the bloc after a six-year wait, producers in the Caribbean nation are skeptical about the potential benefits.

The target dates for reducing tariffs that were set in 2006, when Venezuela’s incorporation was first agreed in principle, must be overhauled and details governing its membership will take a long time to hash out.

Trade between the Caribbean country and the bloc totaled $8.76 billion in 2011, with Mercosur tallying a roughly $5 billion trade surplus.

“From the point of view of manufacturing or agriculture … we can’t compete,” said Manuel Heredia, president of Venezuela’s National Federation of Ranchers, or Fedenaga.

(Additional reporting by Alejandro Lifschitz in Buenos Aires, Eyanir Chinea in Caracas and Hugo Bachega in Brasilia; Writing by Helen Popper and Hilary Burke; Editing by Kieran Murray; Desking by Vicki Allen)

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Washington Post – Top US general: Venezuela not a national security threat

By Associated Press, Published: July 31

LIMA, Peru — The Air Force general responsible for U.S. military operations in most of Latin America said Tuesday that he does not believe Venezuela, despite ongoing arms purchases and close ties to Iran, poses a national security threat to the United States.

Gen. Douglas Fraser also said he would like to see more counterdrug cooperation from Venezuela, from which most northbound cocaine smuggling flights continue to originate, according to U.S. and Colombian officials.

Fraser was asked if he thought Venezuela’s newly announced development of unmanned aerial vehicles and continued purchase of billions of dollars’ worth of weaponry, including anti-aircraft missiles from Russia and other nations, did not present a danger to his country.

“From my standpoint, no, I don’t see it that way,” he told The Associated Press in a phone interview. “I don’t see them as a national security threat.”

Fraser, chief of the U.S. Southern Command, said from his headquarters in Miami that he views the anti-aircraft missile purchases in particular as primarily defensive in nature.

He also said he did not consider Iran’s ties with Chavez’s socialist government to amount to a military alliance.

“As I look at Iran and their connection with Venezuela, I see that still primarily as a diplomatic and economic relationship,” he said, with Iran using it to counter international sanctions over its alleged development of nuclear weapons.

Fraser’s comments echo a July 11 statement by U.S. President Barack Obama that drew criticism from his presumed Republican challenger in November elections, Mitt Romney.

Obama said his “overall sense is that what Mr. Chavez has done over the past several years has not had a serious national security impact on us.”

Romney responded by saying it was “simply naive” to think Chavez does not pose a threat to the United States.

Chavez, who is himself up for re-election on Oct. 7, denies his government Venezuela poses any threat to the United States, the chief purchaser of Venezuelan oil.

The United States is also the No. 1 cocaine-consuming nation. U.S. officials say most northbound cocaine, produced in the Andes, is smuggled by sea but the vast majority of U.S.-bound cocaine smuggled by air in recent years has originated in southwestern Venezuela and lands primarily in Honduras before continuing north.

The U.S. Treasury Department alleges several current and retired senior Venezuelan military officials including Defense Minister Gen. Henry Rangel Silva have enriched themselves through drug trafficking in collusion with leftist Colombian rebels, and Fraser said he has seen nothing to indicate that has changed.

He said, however, that interdiction efforts outside Venezuela have reduced the number of northbound drug flights by 40 percent in the first six months of this year as compared to the first half of 2011.

He credits international cooperation, including Colombian monitoring of Venezuela’s airspace, for the success.

“We have also seen a decrease in the Caribbean maritime (smuggling) traffic of 40 percent,” he said.

However, a similar decrease has not been noted in the Pacific, where cocaine is smuggled in everything from semisubmersibles to fishing trawlers, speedboats and freighters.

Fraser said he is retiring in the fall. He is to be succeeded by Marine Lt. Gen. John Kelly, currently senior military adviser to U.S. Secretary of Defense Leon Panetta.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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