Embattled Mercosur to suspend Venezuela amid attempts to boost regional trade
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Emerging Markets

Embattled Mercosur to suspend Venezuela amid attempts to boost regional trade

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Mercosur, the Latin American customs union, is threatening to expel Venezuela over violations of human rights in breach of the democratic clause in the club’s agreement

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Some rights reserved: OECD/ Andrew Wheeler/ Flickr

Mercosur, Latin America’s Southern cone customs union, has threatened to suspend Venezuela’s full membership on December 1 if it does not meet the group’s requirements, including the democratic clause. “We are in a stand-by position. Time will come,” said Santiago Peña, Paraguay’s finance minister, in an interview with Emerging Markets. “There is a date [that has been set]. They need to comply... If there is no progress, Argentina will probably take over [the rotating presidency] in January,” he said.

Venezuela, which joined Mercosur in 2012 thanks to the pressure of Brazil and other countries, now finds itself isolated as most other countries in the region have conservative governments that are blaming Nicolas Maduro’s economic policies for the economic collapse of the oil-rich country and for subsequent widespread shortages.

“We want to see improvement for the Venezuelan people, because we have witnessed what has happened in recent years. We want to see progress in Venezuela. It depends on the government to make that progress,” said Peña. Venezuela has also been accused of violating human rights, which is in breach of Mercosur’s democratic clause. 

Paraguay first denied the right to Venezuela to assume the rotating presidency of Mercosur a few months ago, and it was later joined by Brazil and Argentina. “Venezuela needs to meet all the legal requirements,” Peña said. “There has been no sign that it intends to do so.”

TOUGH NEIGHBOURHOOD

In 2012, Venezuela also forced the suspension of Paraguay from the regional grouping after the impeachment of its left wing president Fernando Lugo.

“We did approve Venezuela’s admission in Mercosur at the time. We do have enough authority to raise our voice because we have put the rule of law above political consideration,” said Penã. 

“It is a tough neighbourhood we have, and it is not going to change,” he said, in a reference to a 19th Century war when the landlocked country was crushed by a triple alliance between Brazil, Argentina and Uruguay.

While trade between Brazil and Argentina has fallen by almost 50% in five years (to $21bn per year), according to the Buenos Aires-based consultancy Abeceb, Paraguay, a small landlocked country, has described itself as a champion of free trade. “The current economic situation in the region is reminding us that we need to integrate. The lack of integration is a reason why South America is growing less than Asia,” Peña said.

Meanwhile, Arturo Valenzuela, a former US assistant secretary of state, has argued that there is too much pessimism in Washington regarding Mercosur.

“I think there is a significant change taking place in Mercosur on a whole range of ideas, including economic issues that are very important.

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