Brave new world?

Venezuela’s entry into Mercosur on Tuesday was rapturously hailed in Brasilia as a quantum leap for the trade bloc but the gain seems highly relative — economic integration hardly began this week (especially where Argentina’s special relationship with Hugo Chávez is concerned) while to the extent that political unification is formalized, the presence of the Bolivarian country stands to be a liability for most of the outside world. Venezuela might seem a juicy morsel for the bloc as a major oil producer which is only 30 percent self-sufficient in all other markets but that potential was mostly tapped long ago — both Brazil and Argentina already enjoy hefty trade surpluses. Thus a strategic alliance between YPF and PDVSA oil companies was announced as a dazzling novelty as if Federal Planning Minister Julio De Vido were a complete stranger to Caracas. Tuesday’s boast from Brasilia was that Mercosur is now the world’s 5th economy but if Brazil was already the 6th by itself, where is the breakthrough? Little to gain economically, then, and something to lose politically by importing a born obstructionist like Chávez with a largely negative image abroad (and also economically if investor confidence is thus hit). But quite apart from the issue of sneaking in Venezuela during Paraguay’s suspension, question-marks hover over the completeness of the accession — is the pro-Iranian socialist Chávez comfortable with the bloc’s competitive norms, Common External Tariff and free trade agreement with Israel, just to mention a few minor details needed for full compliance?

One bilateral subtext in Brasilia was the tension between Argentina and Uruguay over River Plate dredging. The two presidents (Cristina Fernández de Kirchner and José Mujica) seem to have agreed to downplay the conflict into a truce without resolving anything. This is not the place to go into depth about this complex sideshow but one complicating factor has been Argentina’s astonishing U-turn in first ensuring the continuity of the current dredger by stalling contract renewal for six years and then expelling that company from the tender altogether in last weekend’s Foreign Ministry communiqués (the common denominator seems Argentine hostility to an independent deep-sea outlet for Uruguay).

Finally, CFK’s “21st century socialist” speech (in which she rejected calls for a commodity price ceiling by blaming global crisis on high finance, overlooking that commodities became a prime target for financial speculation once property markets collapsed) poses the question — will Venezuela be just a member of Mercosur or its template for governance?