Venezuela joins South American regional trade bloc

Deutsche Welle, 1 Aug 2012

South America's main trade bloc has welcomed Venezuela into its fold. But Caracas' membership could sow internal divisions within the organization.

Venezuela joined South America's regional trading bloc, Mercosur, on Tuesday after a six year wait, in a move that could sharpen political divisions within the organization.

Venezuelan President Hugo Chavez praised his country's admission into the trade bloc as a geopolitically advantageous move for Venezuela.

"Mercosur is, without a doubt, the most powerful engine to preserve our independence," the Venezuelan president said.

Venezuela, which has one of the largest proven oil reserves in the world, lends Mercosur additional economic weight. Mercosur now represents 83.2 percent of South America's gross domestic product (GDP) and a market of 270 million people. Argentina, Brazil and Uruguay are also members. Paraguay's membership has been suspended.

"Venezuela's entry increases the potential of the bloc, giving it greater geopolitical and global economic dimensions," Brazilian President Dilma Rousseff said. "Mercosur is the beginning phase, now we've expanded from Patagonia to the Caribbean."

Political divisions lurk ahead

Caracas' admission to Mercosur had long been blocked by Paraguay, where conservative lawmakers accuse Venezuelan President Hugo Chavez of undermining democracy. But Paraguay's recent suspension from the trade bloc paved the way for Venezuela to join the organization.

Mercosur had suspended Paraguay after the country's president, Fernando Lugo, was impeached in a two-hour trial over a land eviction, in which 17 people died in clashes between police and landless peasants. Argentina's president, Cristina Fernandez, had called out Paraguay, saying that the country's "democratic order was broken."

But with Paraguay able to rejoin the bloc after presidential elections next year, it remains unclear whether the country will accept Venezuela's membership.

"What was once an economic bloc has now been reduced to a political sideshow," Mario Marconini, a former Brazilian trade secretary who is now a business consultant in Sao Paolo, told the Reuters news agency.

Marconini said Mercosur's inclusion of Venezuela over Paraguay's previous vetoes "is a fatal blow to its economic credibility."

slk/jm (AP, AFP, Reuters)