Category Archives: International Institutions

FT Magazine – Brazil’s trajectory from colony to economic powerhouse is simply spectacular

February 22, 2013 7:29 pm

A place at the top of the tree

By Matias Spektor


AS/COA – The Emerging Atlantic Community

Eric Farnsworth / PODER


December 03, 2012


Opportunities exist for an alliance similar to that enjoyed by Pacific Rim countries, but the initial approach to Latin America and Africa is crucial.

With wars in the Middle East winding down and Europe in the economic doldrums, Washington has become fixated on Asia. In November 2011 the Obama administration announced a “pivot” to Asia, with a resulting shift in strategic focus including military assets to the region.

Trade policy in the administration centers on the Asia Pacific and negotiations to conclude the Trans-Pacific Partnership. On the campaign trail, Gov. Mitt Romney said repeatedly that he would designate China as a currency manipulator on “day one,” and China was a recurring theme this election cycle.

This is acknowledgement at the highest political levels that the weight of global economic and political influence is shifting toward Asia, away from the traditional North Atlantic relationships that have dominated global affairs since the end of World War II. This gives pause to some in the foreign policy community because the existing Atlantic alliance has been the bulwark for establishing and maintaining the postwar global order. As a result, questions are increasingly being asked whether it’s time to re-energize the Atlantic community as a means to match the dynamism of the Pacific community.

Nonetheless, something is different this time from the usual US-Canada-Europe approach: there is a growing recognition that a true Atlantic community must also include Latin America and Africa, two continents generally shut out of previous discussions. To make this work, a favorable nod from Brazil—Latin America’s largest economy by far, the world’s sixth largest, and geographically a nation positioned in the heart of the Atlantic—is critically important. Beginning under President Lula and continuing with Dilma Rousseff, Brazil has been focused on developing cross-Atlantic ties, particularly with Africa where Brazil has prioritized development and commercial issues. To this point, however, Brasilia has expressed little interest in participating in any full-blown pan-Atlantic arrangement that includes Europe and the United States, particularly given the likelihood that such vision would include, if not center on, formal military or trade frameworks. Brazilian reluctance to commit to a new pan-Atlantic vision, despite a well-known effort to play a larger role in global affairs, is not as surprising as it may sound. Brazil is forging an independent path, and leadership on South-South issues is a priority. This shows itself in a hemispheric trade policy that emphasizes the expansion of MERCOSUL over the moribund Free Trade Area of the Americas; a foreign policy that positions Brazil first and foremost as one of the BRICs; and a development policy that promotes assistance to and cooperation with Africa.

By entering into an Atlantic relationship that includes North America and Europe, Brazil’s interests could be constrained by the traditional North Atlantic partners. Symbolism matters, too: the colonial histories of Latin America and Africa cannot be ignored.

What, then, of the idea of a greater Atlantic community? Like most things, it’s best to begin with a concrete project and build out. This is particularly true given the vast differentials in development, size, and influence among nations in North America, Europe, Latin America, and Africa. The EU began with the coal and steel community of France and Germany; APEC began with the idea of greater economic integration but no explicit final goal; the Trans-Pacific Partnership began as a small “P4” trade negotiation including Brunei, Chile, New Zealand, and Singapore. A similar approach would be appropriate in building a greater Atlantic community, starting with areas of concrete mutual interest, including energy and agriculture.

Confidence-building measures must precede broader agreements to engage Latin America and Africa. Initial progress can be made among willing nations, for example North America with Europe and Mexico, Colombia, and Uruguay, holding the door open for others such as Argentina, Brazil, and Venezuela as well as African nations to see the benefits of joining a moving train.

Meanwhile, the United States and the EU are discussing the possibility of launching negotiations for a trade agreement at some point in 2013, to meet the vibrancy of the trans-Pacific efforts but on an even greater economic scale. To make such an effort fully consistent with U.S. interests in Asia and the Western Hemisphere, Canada and Mexico should also be included at the very beginning of any trade negotiations that kick-off with Europe.

The key is to develop a vision in the greater Atlantic—or the Pacific region or Latin America, for that matter—that is compelling enough for nations such as Brazil to see it and want to join, offering greater advantages for participation than for non-participation. It’s easy to just say “no” to an international grouping that offers little reward. That’s something for Atlanticists to keep in mind as they look for ways to build yet another cross-cutting regional bloc.

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AS/COA – Interview: BRICLab Co-Director Marcos Troyjo on the 2013 Outlook for the BRICs

December 13, 2012


After a decade of copying and adapting, [the BRICs] have to move on to a new decade of designing, formulating, and innovating.

Marcos TroyjoMarcos Troyjo serves as an adjunct professor of international affairs and as co-director of Columbia University’s BRICLab, a forum dedicated to the rise of the BRIC countries (Brazil, Russia, India, and China). AS/COA Online’s Rachel Glickhouse spoke to Troyjo about how the BRICs will fare next year in terms of technology and innovation, energy, and economic policies.

AS/COA Online: You’ve mentioned before that the BRICs need to change their DNA in terms of policies. What do you mean by that? 

Marcos Troyjo: One of the reasons the BRICs were considered rising countries back in 2001 is because they were capable of adapting creatively to the global economy. That is, their rise has more to do with adapting and copying practices and benchmarks from other economies instead of coming up with something of their own. So I think that the main way to explain the rise of BRICs from 2001 to 2011 was creative adaptation.

Creative adaption meant different things for Brazil, Russia, India, and China. For China, creative adaptation meant reorganizing their productive capacities to become an export-led country. So China received Most Favored Nation status in its trade with the United States. China devised a very intelligent program of public-private partnerships that allowed for the necessary capital to expand infrastructure. It capped wages and other factors of production, including the exchange rate, to provide for this competitive image.

Brazil’s creative adaption meant a policy of import substitution 2.0. Brazil was using the surpluses it acquired from commodities, particularly agriculture and mineral commodities trade with China. Brazil discovered rich deepwater offshore oil reserves, and was also able to devise one of the most advanced biofuels programs in the world. So these three characteristics created the necessary resources to allow for import substitution.

India adapted creatively in the past 25 years by providing cheaper alternatives in areas such as information technology, pharmaceuticals, and textiles. It also developed services such as call centers that could be outsourced from other countries.

Now, the traditional markets of the United States and Europe are stalled. Therefore, BRIC countries have to change their DNA in the sense that they have to grow not because of creative adaptation, but because of creative destruction. BRIC countries have to direct resources towards innovation. After a decade of copying and adapting, they have to move on to a new decade of designing, formulating, and innovating. If the BRICs are able to perform that DNA change, I think that they will continue to be some of the most dynamic growth markets in the world. If they’re not able to change their DNA, then they face a bumpy road ahead.

AS/COA Online: Local content policies require companies to purchase or produce a certain percentage of goods or services domestically in order to operate in a given country. In your opinion, how do local content policies impact the BRIC economies and trade strategies? Do you foresee any changes to these policies in the coming year?    

Troyjo: Local content is essential for the BRIC countries, although each of the BRIC countries approaches local content in different ways.

China, for example, is now implementing a number of countercyclical measures that have local content at the core. If you are an aircraft manufacturer and you want to sell your product to the most important client in China, which today is the Chinese government, you have to produce essentially 70 percent of those aircraft in China—therefore generating local taxes and local jobs. China has foreign exchange reserves at around $3.7 trillion as a countercyclical measure in order for companies to divert their production capacities to China and to have China as the final destination for their products. So China is operating a DNA change from export-led growth to growth that will also be fostered by domestic consumption.

Brazil’s local content policies are important in the sense that it has an industry to protect. Brazil has been deindustrializing very rapidly due to global competition, particularly Asia. One of the ways the Brazilian government came up with to reindustrialize is local content policies, especially by the so-called Brazilian champions: the large multinational corporations in which the Brazilian government owns the golden share. That is the case of Petrobras, Embraer, and Vale. Many of these companies play the role of the leading local content implementers.

Petrobras, for example, has to buy approximately 20 big oil tankers a year. If Petrobras were to buy these tankers in South Korea, China, or Singapore, the average price tag would be $65 million. Petrobras is prepared to pay $125 million for each of those ships if 65 percent of the ships are produced in Brazil. What’s the logic behind paying a $50 million premium on each ship? It’s that Brazil believes that there is a learning curve for the entire production chain in this particular sector—engineers, welders, technicians—that will allow for a 50 percent reduction in production costs over a period of 10 years. The remainder of the premium has to do with labor and fiscal regulation reforms to make the country’s companies more competitive.

Do I see any changes in how these countries will approach local content in the next few years? I don’t think so, because when it comes to international trade and investment, I think we’re about to see a much more de-globalized set of agreements and institutions in the next couple of years. That’s because countries are very much turned inward with insular policies.

AS/COA Online: You’ve discussed innovation and technology as key areas for the BRICs to invest in. How does Brazil compare to the other BRICs in terms of innovation and technology?

Troyjo: I think innovation is the result of the interplay of four factors: a stock of knowledge, a stock of capital, a stock of entrepreneurship, and the atmosphere that you have to create in order for these three to operate efficiently.

In this sense, Brazil did very well, as in the case of biofuels or aircraft. Look at Embraer, for example; it’s one of the top three air manufacturers in the world. In biofuels, when research was applied to industrial ends, Brazil fared very well. Today, eight out of 10 Brazilian automobiles run on flex fuel, which uses biofuel. Look at the case of agriculture. Brazil has a great research and development company called Embapra, which is responsible for raising the competitive advantages of seeds and of shortening the maturation process of some crops.

But when it comes to overall science and technology investments directed toward innovation, I am less optimistic. Brazil is only investing 1 percent of its GDP in research and development, whereas a country like South Korea—which many acknowledge as one of the top examples of growth through innovation—is investing in excess of 3 percent of its GDP in R&D. Ten years ago, China directed only 0.6 percent of its GDP to R&D. Now, it invests 1.5 percent, and by the time China overtakes the United States as the world’s largest economy between 2022 and 2025, China will be investing 2.5 percent of its GDP in research and development.

In India, we have a very uneven situation. When it comes to IT, biotechnology, and pharmaceuticals, it is very advanced, with a great deal of investment from the private sector. Multinational corporations do their research in India because of the relatively low cost of production and high level of intellectual human capital there. But throughout society, you will not find the same enthusiasm for R&D investment, and this is one of the reasons why you find such disparities. Today in India, there are more cell phones than toilets. There are more billionaires than in the UK and France put together. But it’s also a country where there are more poor people than on the entire African continent. I think that’s all a result of the many disparities that you have in research, development, and innovation investments.

Russia is one of the classic examples of the distance between pure research and research applied to markets. In the late 1970s, four out of 10 scientists in the world were working in the Soviet Union. This country was able to perform things that were really remarkable, like sending a man to outer space, but it couldn’t produce an alarm clock that would ring on time. So Russia’s problem is transforming its great level of science that it has into a market. Many of the market mechanisms that are so common in the United States—start-up capital, projects financed by companies, individual entrepreneurship—are not present in Russia. These are the bottlenecks that keep Russia from playing an even more important role in terms of innovation. Some of the more democracy-oriented characteristics of society that are so important for technological entrepreneurship are still missing in Russia.

AS/COA Online: President Dilma Rousseff is making efforts to reduce the so-called “Brazil cost,” a combination of insufficient infrastructure, high taxes, and bureaucracy that hinder businesses in Brazil. What legislation or reforms under consideration could have an impact on the Brazil cost next year? 

Troyjo: To be very honest, I see tactical movements by the Brazilian authorities, but I do not see anything that is either essential or structural. But I think that’s understandable.

Let me give the example of fiscal reform. In Brazil, the overall tax burden on society is about 37 percent of GDP, whereas in South Korea, for example, it’s only 26 percent. Why is Brazil’s tax burden so high? The Brazilian government is too big and this is a choice by society. Brazil keeps saying that it has achieved near full employment with one of the lowest unemployment rates in the Western Hemisphere. But if you analyze the organic composition of employment, you realize too many people are employed either by the city, state, or federal branches of government or in state companies and activities.

Not only is the government too big, but it’s too inefficient and too expensive. One structural reform to be enacted would be to reorganize Brazilian administration to allow for a decrease in the fiscal burden. It could happen, but it takes a lot of political will. The Brazilian government would have to sacrifice in the short term for the benefit of the long run. Because we have an electoral cycle every four years in a democracy, that’s a difficult bet to make. That’s true especially in Dilma’s case, where in terms of economic growth, the first two years of her administration have been nearly lost. Brazil only grew 2.7 percent last year and this year it’s only going to grow around 1 percent.

Labor reform would also be important. Labor costs are enormous in Brazil right now. The minimum wage is three times the minimum wage base in countries like Indonesia or Vietnam. If you’re a company establishing yourself in Brazil, you’re probably going to hire someone and pay one salary to the employee and the equivalent of another salary to government due to the absurd medieval requirements when it comes to labor protection and pensions. Once again, the government could enact reform in that area. It would have to pick a fight with the labor unions. Does it want to do so in the long term? I don’t think so.

But I do not see these two reforms on the radar in any way, shape or form in the next couple of years.  Whatever the government comes up with in terms of reforms is only tactical and short-term.

AS/COA Online: One of the Brazilian industries to watch in coming year is in oil and gas, as the first round of concessions in five years is due to take place in 2013. What are some of the opportunities and challenges in Brazil’s energy sector that will be important next year?

Troyjo: Well, I think there are three dimensions. One is the challenge related to the deepwater, pre-salt oil, so immense in scope that Petrobras will probably leave some of the onshore exploration opportunities to foreign companies or companies that could partner with other Brazilian players. So I see a lot of things coming from onshore, which is really not the tradition in Brazil and is really not where most of the attention is. But because Petrobras’ challenges in pre-salt oil are so huge, something is going to be left behind as far as onshore oil.

When it comes to pre-salt oil, it’s obvious that the technological challenge is huge. Think about the kind of remote robotics you have to have, the chemicals used in taking oil and gas out of a depth of about 7,000 meters (22,965 feet). Technological partnerships are key. The companies that are able to understand the workings of Petrobras, the requirements of local content, and mapping the area of technological demands can be very successful.

The third area of opportunity is biofuels. More and more countries are interested in the Brazilian model of flex fuel engines. Countries in Scandinavia are very interested; Sweden, for example, is already the top destination for Brazilian ethanol in Europe. The companies that want to partner in Brazil with biofuels will be able to join the Brazilian locomotive that may be destined to make ethanol a global commodity. If that happens, all of those companies that partnered with Brazilian companies in extending the global outreach of biofuels—particularly sugar cane-based biofuels—will have a lot to profit from.

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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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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.


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.


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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WPR – Regional Cooperation Key for Central American Security

By Jason Marczak, on 17 Jul 2012, Briefing

High levels of crime and violence have given Central America the inauspicious title of having the world’s highest homicide rate — about 10 times the world average. Reversing this trend will require collective, crossborder action and regional partnerships that include the private sector. Unfortunately, for this to be possible, the mechanisms needed to do so must be strengthened significantly.

Statistics paint a grim picture of what lies ahead if meaningful cooperation is not taken soon. Honduras, the most violent country, registered 91.6 homicides per 100,000 people in 2011 — nearly triple the rate observed in 2004, according to the U.N. Office on Drugs and Crime. In El Salvador, a March 2012 truce between two notorious gangshas reportedly halved the daily death toll, which stood at 69.2 deaths per 100,000 people in 2011. But the fragile accord leaves the door open for a return to high homicide rates should gang leaders decide the truce is not serving their interests. Following its southern neighbors, Guatemala — generally the last stop for illicit drugs before reaching Mexico and then the United States — registered a rate of 38.5 homicides per 100,000 people last year. Even Costa Rica, a bastion of stability and economic development in the region, saw its murder rate climb to 11.3 per 100,000 people by 2010, a 60 percent jump from 2004. By comparison, the U.S. registers 4.2 homicides per 100,000.

There is no one-size-fits-all solution to the violence. In El Salvador, the bulk of the insecurity is the result of criminal gangs that take advantage of high levels of inequality and scarce jobs to recruit youths with few other options. In neighboring Guatemala, the booming narcotics and weapons trade, accompanied by the arrival of notorious Mexican gangs such as the Zetas, led Guatemalans to elect President Otto Pérez Molina on the promise that he would take an iron fist (“mano dura”) approach to the narcotraffickers. In Honduras, the 2009 coup that deposed President Manuel Zelayahas exacerbated the country’s insecurity and weak rule of law.

Still, while country-specific solutions are needed, the region must also find better ways to develop and implement crossborder strategies. Without a comprehensive approach, one country’s success will likely mean greater violence for its neighbors.

The only regional institution currently set up to encourage dialogue and joint action is the Central American Integration System (SICA). The group is often maligned, and its recent presidential summit — which included the heads of state of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and the Dominican Republic — shows why.

Despite meeting under the slogan “Everyone’s Fight: The New Security Approach in Central America,” the eight leaders made little progress with regard to the 20-plus citizen security and law enforcement projects agreed to at the July 2011 summit. (They did manage to sign a comprehensive association agreement with the European Union.) Instead, according to El Salvadoran President Mauricio Funes, the leaders agreed to be “more expeditious, more aggressive in acquiring funds in order to succeed in financing the regional strategy” to fight crime.

Funding has been a major challenge for SICA since its creation in 1991. Nevertheless, multilateral institutions, such as the World Bank and the Inter-American Development Bank, and efforts by individual governments, such as the United States’ Central America Regional Security Initiative, stand ready to support regional security plans. Already, a combined $2.5 billion has been offered to help finance the projects agreed to last year. While securing pledged funds is always a challenge, the larger question is how to set up a regional mechanism to manage project implementation. Once that happens, the money will likely be there.

SICA is the logical choice for this role. But its history of inaction and infighting — not to mention its weak organizational structure — casts doubt on whether in its current form SICA has the institutional legitimacy to effectively manage a regional security plan.

That problematic history of infighting was yet again demonstrated following this year’s presidential summit, when Costa Rica announced it would not participate in “some political forums” while Nicaragua holds SICA’s rotating six-month presidency. The decision — made in protest of a border ruling by the Central American Court of Justice  — was the latest volley in the two countries’ still-simmering conflict over the disputed San Juan River region. But Costa Rica’s action further weakens SICA and indirectly undermines the region’s growing — and much-welcome — sentiment that a more multilateral response to crime is needed.

Rather than get sidetracked by intraregional conflicts, the focus should be on developing a stronger regional partnership that harnesses national-level security and violence-prevention efforts. This must involve both political leaders and the growing number of reform-minded, progressive business leaders who are ready and willing to develop public-private partnerships that address some of the root causes of crime: inequality, worker training, unemployment and unstable home environments, among others. Unlike governments, businesses see no borders. But they do recognize that creating a more secure environment is fundamental to foreign investment.

Cooperation won’t be easy. Given SICA’s tainted reputation, stakeholders are understandably wary about working with it. But for Central America to move forward in reducing insecurity, governments can no longer be content with issuing grand regional plans at regional summits and expecting them to move forward through pure inertia.

Instead, the door should be open to the business community — and civil society — to participate at a regional level in developing and implementing business-relevant security plans. Security is of course a public-sector responsibility. But addressing the underlying challenges that give rise to violence means working with business leaders through a formal mechanism during regional meetings. The private sector may not hold SICA in high regard, but for now it is the only game in town, and their participation in its meetings may just produce the concrete results that Central America requires.

Not only will private sector participation add greater transparency and credibility and put more pressure on governments to act, it will facilitate the crossborder solutions the region needs.

Jason Marczak is director of policy at Americas Society and Council of the Americas and senior editor of Americas Quarterly.

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