The Fifth Element

Córdoba, Argentina -- By late last Friday afternoon in Argentina's second largest city, the bi-annual summit of Mercosur had officially wrapped. But on a dusty rugby field at a nearby university, the changing face of this South American economic alliance was on full display.

"North American imperialism is endangering the welfare of the human species on this earth," said Venezuelan President Hugo Chávez, addressing thousands of chanting, banner-waving demonstrators who had come to hear him speak along with Cuban President Fidel Castro. "Imperialism is international, and the solution must be international, too."

His remarks came on the closing day of Venezuela's inaugural appearance as the fifth member of Mercosur, a regional agreement aimed at fostering free trade and economic integration in South America. The trade bloc was first established by Argentina, Brazil, Paraguay, and Uruguay in 1991.

For Chávez, membership in Mercosur means more than just favorable trade conditions. His harsh words highlighted two dominant themes of the four-day Mercosur summit: a continual movement toward independence for the trade bloc and a shift in its focus from strict economics to political and social goals.

As president of the country with the largest known petroleum reserves in Latin America, Chávez brings both financial capital and strategic strength to Mercosur. Including Venezuela, Mercosur member nations account for more than 75 percent of Latin America's total gross domestic product, and the country's petroleum supply has the potential to reduce energy shortages in countries like Argentina and Chile.

For a trade bloc whose exports grew by $94 billion between 1998 and 2005, the addition of a major oil exporter provides valuable negotiating power on the global stage. Heads of state at the Mercosur summit agreed on Friday to support Venezuela as it seeks a seat as a non-permanent member of the United Nations Security Council.

Chávez represents a faction within Mercosur increasingly eager to reduce its dependence on North American financial institutions like the World Bank and the International Monetary Fund (IMF), as well as on private international investors who controlled much of the region's infrastructure during the 1990s. In his address at the university, where Bolivia's leftist President, Evo Morales, was also originally scheduled to appear, Chávez described the neo-liberal capitalism espoused by organizations like the IMF as "the road to hell."

Chávez' penchant for such fiery rhetoric has alienated several of his neighbors interested in doing business with the United States. In late April, he strained relations with Ecuador, Columbia, and Peru when he threatened to leave the four-member "Andean Community of Nations" economic alliance because the other three nations were planning to seek trade agreements with the United States. At the Mercosur summit, the Uruguayan delegation announced a similar plan, but representatives of Uruguay said they would pursue any accord with the United States outside the scope of Mercosur.

Still, the Venezuelan leader's talk of economic independence is attractive to many in Mercosur, whose members last year rejected the U.S.-backed Free Trade Area of the Americas economic agreement. Brazil in particular opposed the accord, saying it did too little to reduce unfair subsidies to U.S. agriculture interests.

"The new membership of Venezuela is the most significant development within Mercosur in the last 10 years," said Reinaldo Gargano, the Uruguayan Minster of Foreign Relations, in a speech delivered earlier at the summit. "The neo-liberal economic policies that were applied historically left a giant wound in Latin America, but if we can unify now, it will have a lot of weight in the world."

Many of the accords reached during the four-day meeting were designed to accelerate such unification. The bloc agreed to create a regional development bank to finance infrastructure projects, a proposal that Argentine and Venezuelan officials initially suggested could follow their decision in early July to found a "Bond of the South" for the same purpose. The presidents also approved the participation of Bolivia, Paraguay, and Uruguay in the construction of a gas "Pipeline of the South" that would run from Caracas, Venezuela to Buenos Aires, Argentina. The pipeline is scheduled for completion in five to seven years.

But the development that is perhaps most indicative of Mercosur's growing independence -- and most directly in conflict with U.S. policy -- was the inking of a trade agreement with the Caribbean nation of Cuba. President Fidel Castro made a rare trip to attend the summit and sign the accord, the first of its kind between Cuba and other nations outside of the former Soviet Union since 1962. The agreement will expand from 1,300 to 2,700 the number of products that can be traded without tariffs between Cuba and Mercosur.

Castro's words at the summit, when not directed against U.S. policy, were primarily focused on his nation's efforts to eradicate illiteracy and provide widespread medical care. Those were fitting themes for a meeting that marked the debut of social interests as a substantive part of the Mercosur discourse. "Somos Mercosur," an alliance of non-governmental groups throughout Latin America, met in parallel with delegates and chancellors of the official Mercosur Council, to tackle themes like poverty and environmental degradation faced by member nations.

"Historically, Mercosur has been a strictly commercial project, and with such projects, the social themes get left out," said Carlos "Chacho" Alvarez, president of the Commission of Permanent Representatives of Mercosur, in a speech to members of Somos Mercosur. "But as an alliance, we have all the resources we need to seek a sustainable and autonomous development."

The degree to which that development will ultimately involve the United States remains unclear. But the introduction of Venezuela as a member nation of Mercosur raises questions about the long-term welfare of U.S. strategic interests in the region.

Speaking after the conference, Chávez reiterated his often-expressed wish to redirect petroleum exports headed for the United States to his fellow Mercosur members in the south. Venezuelan exports account for 11 percent of U.S. oil supply. According to a study released in June by the U.S. Congressional Research Service, a cutoff of such exports could cost the U.S. economy some $23 billion in the short term, while raising global oil prices by up to 15 percent.

"The U.S. government has said they have a ‘plan of transition' for Cuba when Fidel goes," Chávez told the university crowd. "But the ones who should be making a plan for transition are the gringos."

Nelson Harvey is a journalist living in Buenos Aires, Argentina.

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